PP 7767/09/2010(025354)

30 April 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Marke t Upda te
30 April 2010
MARKET DATELINE

Taking Stock
Position For More Volatility Ahead

♦ More volatile market ahead. We expect the market volatility to

Table 1. Star Performers
continue due to changing external factors including rising interest rates,
Rel. Price FV Rec
fluctuating exchange rates, rising commodity prices, and balanced against
YTD* (RM) (RM)
the global economic recovery. Athough the benchmark FBM KLCI is still
(%)
positive (+4.7%) YTD, we note that most of the top 30 stocks (including
Unisem 98.9 3.34 3.74 OP
banks, plantation, power and telecom) have been relatively lacklustre
MCIL 49.5 0.83 1.09 OP
over the last two months, as investors focused on the smaller caps.
Tan Chong 44.6 4.66 5.26 OP
♦ Looking ahead to the May effect ... We caution that May has tended to Kossan 39.5 7.83 10.74 OP
be volatile with the FBM EMAS and FBM KLCI showing a decline for end- Daibochi 37.9 3.28 4.40 OP
May vs. end-Apr prices in six out of the last 10 years (see Table 4). The Faber 34.4 2.24 3.30 OP
only years with positive May performance for the two indices were in Media Prima 30.0 2.25 2.55 OP
2009 (anticipation of economic recovery), 2007 (bullish sentiment despite * Relative performance vs. FBM KLCI
plunge in Shanghai bourse in Feb), 2003 (recovery from SARS outbreak) # As at 28 Apr
and 2001 (recovery after the dotcom bust). Source: Bloomberg, RHBRI

♦ … as well as the World Cup effect. We also see potentially reduced Table 2. Laggards
trading volumes during the 2010 FIFA World Cup in South Africa in Rel. Price FV Rec
Jun/Jul. Price charts for the last five World Cup years indicate the FBM YTD* (RM) (RM)
EMAS and FBM KLCI generally having a downswing in the early part of (%)
each event. However, we also note that in 1990, 1994 and 2006, a Gent Spore (38.2) 0.87 1.35 OP
market rally followed almost immediately after the end of the event. Sino Hua-An (15.9) 0.44 0.59 OP

♦ Focus on liquid stocks with value, trading stocks may suffer. We

Genting (14.8) 6.60 8.95 OP
Sime Darby (7.1) 8.76 9.85 OP
believe there is nothing fundamentally wrong with the market, although
RCE Capital (6.2) 0.66 1.08 OP
2010 valuations may not appear cheap relative to the post-crisis mean of
IJM Land (6.0) 2.32 3.19 OP
15x. We continue to advocate our top picks of liquid and fundamentally-
Maxis (5.9) 5.31 6.20 OP
robust stocks with a 12-month view, i.e. stocks which should be able to
AMMB (5.5) 4.96 6.13 OP
ride out the near-term volatility. However, we note that trading stocks
IOI Corp (5.5) 5.43 6.65 OP
that have outperformed the market (on M&A themes and GLC links) may
UMW (4.3) 6.38 7.52 OP
experience further profit taking in the near term.
Tenaga (3.8) 8.48 10.40 OP
♦ Stars and laggards. We note that some star performers including KL Kepong (3.8) 16.66 18.40 OP
Daibochi, Faber and Kossan have already seen some correction in the last * Relative performance vs. FBM KLCI
five days if not the last month, while others such as Unisem, Tan Chong # As at 28 Apr
and Media Prima have continued to outperform. Nevertheless, we remain Source: Bloomberg, RHBRI
bullish on star performers whose strong earnings growth through FY11
should sustain share price performance through the volatility. We also
highlight YTD performance laggards like Genting Bhd, IOI, KLK, TNB, IJM
Land and Maxis (see Table 2) which we believe deserve more attention,
given their resilient earnings and better stock liquidity.

♦ Longer-term outlook still positive, caution on near-term volatility.

While the early-stage recovery in global economies has to some extent
already been priced in to the market, we see price weakness as an
opportunity to accumulate the big banks, commodities (plantations and
O&G) and power (TNB) stocks as well as consumer-related stocks like Tan
Yap Huey Chiang
Chong, IJM Land and Notion Vtec. We also advocate a balanced portfolio
(603) 92802171
to include Alpha+ stocks such as Maxis, PLUS and Carlsberg that have yap.huey.chiang@rhb.com.my
resilient earnings as well as attractive dividend yields.

Please read important disclosures at the end of this report.

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 30 April 2010

Position For More Volatile Market Ahead

♦ More volatile market ahead. We expect the market volatility to continue due to changing external factors
including rising interest rates, fluctuating exchange rates, rising commodity prices, and balanced against the
global economic recovery. Athough the benchmark FBM KLCI is still positive (+4.7%) YTD, we note that most of
the top 30 stocks (including banks, plantation, power and telecom) have been relatively lacklustre over the last
two months, as investors focused on the smaller caps.

Table 3. FBM KLCI Stocks – YTD Performance

Company Price (RM)* Index Weight (%)# YTD Rel. Perf. Vs. FBM KLCI
CIMB Group 14.16 12.2 5.6
Public Bank 12.00 10.3 2.7
Maybank 7.45 9.6 4.2
Sime Darby 8.76 9.6 (6.9)
Tenaga Nasional 8.48 6.7 (3.5)
IOI Corp 5.43 6.6 (5.4)
Axiata Group 3.77 5.8 17.8
Genting 6.60 4.5 (13.3)
MISC 8.94 2.9 5.0
Maxis 5.31 2.9 (5.7)
AMMB Holdings 4.96 2.7 (5.4)
PPB Group 17.78 2.6 9.4
Telekom Malaysia 3.45 2.3 8.4
Kuala Lumpur Kepong 16.66 2.2 (4.0)
Genting Malaysia 2.82 2.0 (3.3)
YTL Corp 7.40 1.7 (3.4)
Digi.Com 22.20 1.7 (3.4)
PLUS Expressways 3.39 1.7 (0.6)
BAT 43.02 1.5 (4.1)
Petronas Gas 9.95 1.4 (3.9)
Hong Leong Bank 8.71 1.3 1.5
UMW Holdings 6.38 1.3 (4.4)
YTL Power International 2.19 1.1 (6.4)
Berjaya Sports Toto 4.48 1.1 (1.8)
Tanjong Plc 17.46 0.9 (0.3)
Astro All Asia Networks PLC 4.24 0.8 35.0
MMC Corp 2.46 0.7 (4.3)
Petronas Dagangan 8.91 0.6 (2.2)
RHB Capital 6.10 0.6 10.6
Nestle 35.04 0.6 1.37
* Based on 28 Apr # RHBRI estimates Source: Bloomberg, RHBRI

Table 4. EPS Growth And Valuations

EPS Growth (%) PER (x)
2010 2011 2010 2011
RHBRI universe of stocks 18.1 15.0 15.2 13.2
FBM KLCI stocks = Heavyweights 14.3 14.8 17.9 15.4
Non FBM KLCI stocks:
Mid caps = Mkt cap >RM700m 28.3 14.8 12.8 11.1
Small caps = Mkt cap <RM700m 22.5 25.3 8.8 7.0
Note: Average estimates are weighted by market cap
2010 and 2011 average PER are based on latest share prices calculated against 2010 and 2011 earnings
Source: RHBRI estimates

♦ Valuations related to size ... Some of this can be attributed to relative valuations. The heavyweights (i.e. the
FBM KLCI stocks under RHBRI coverage) are on average trading at 2010-2011 PERs of 17.9x and 15.4x. This
compares with the mid caps (i.e. the non-FBM KLCI stocks under RHBRI coverage with market cap above
RM700m) which are trading at 12.8x and 11.1x respectively, and the small caps (with market cap below
RM700m) at 8.8x and 7.0x respectively (see Table 4).

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 30 April 2010

Table 5. Historical Valuations

2006 2007 2008 2009 2010 2011
Simple average forward PER (x):
FBM KLCI stocks = Heavyweights 13.4 13.3 16.6 14.2 17.9 15.4
Non FBM KLCI stocks:
Mid caps = Mkt cap >RM700m 9.6 12.0 14.6 9.5 12.8 11.1
Small caps = Mkt cap <RM700m 7.6 8.8 11.3 6.9 8.8 7.0
% Discounts between:
Mid caps and FBM KLCI big caps -28 -10 -12 -33 -29 -28
Small caps and Mid caps -20 -27 -23 -27 -31 -37
2010 and 2011 average PER are based on latest share prices calculated against 2010 and 2011 earnings
Source: RHBRI estimates

♦ … suggest that the market has normalised. For 2010, the market has thus imputed a 29% discount in
terms of valuations between the mid and big caps, and a 31% discount for small vs. mid caps. Historical data for
2006-2009 (see Table 5) indicate that average discounts between each category can fluctuate depending on the
“flavour” of the market. Latest valuation data suggests the broader market is still moving in tandem although
the gap between the mid and small caps appears to have widened. We believe this may due to investors’
concerns on individual stock liquidity.

Double Whammy – The May Effect Followed By World Cup In June/July

♦ Looking ahead to the May effect ... We caution that May has tended to be volatile with the FBM EMAS and
FBM KLCI showing a decline in terms of end-May prices vs. end-Apr in six out of the last ten years (see Table 6).
The only years with positive May performance for the two indices were in 2009 (anticipation of economic
recovery), 2007 (bullish sentiment despite plunge in Shanghai bourse in Feb), 2003 (recovery from SARS
outbreak) and 2001 (recovery after the dotcom bust).

Table 6. May Performance (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
FBM KLCI 1.46 (1.99) (6.58) 6.52 (3.29) (2.07) (2.26) 1.86 (0.29) 5.39
FBM EMAS 0.10 (1.31) (6.71) 7.20 (4.50) (3.93) (2.86) 1.87 (1.15) 6.76
Source: Bloomberg

♦ … in addition to the World Cup effect. We also see potential volatility in the equity market during the 2010
FIFA World Cup in South Africa from the first match on 11 Jun (10pm Malaysia time) to the final on 11 Jul (or
2.30am on 12 Jul in Malaysia). Price charts for the last five World Cup years indicate the FBM EMAS and FBM
KLCI generally having a downswing in the early part of each event. However, we also note that in 1990, 1994
and 2006, the market volatility during the World Cup was followed almost immediately by a big upswing in the
FBM KLCI (see Charts 1-5).

Chart 1. FBM KLCI 8 Jun – 8 Jul 1990 (Italy) Chart 2. FBM KLCI 17 Jun – 17 Jul 1994 (US)

Source: Bloomberg Source: Bloomberg

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 30 April 2010

Chart 3. FBM KLCI 10 Jun – 12 Jul 1998 (France) Chart 4. FBM KLCI 31 May – 30 Jun 2002 (S. Korea/Japan)

Source: Bloomberg Source: Bloomberg

Chart 5. FBM KLCI 9 Jun – 9 Jul 2006 (Germany) Chart 6. FBM KLCI 11 Jun – 11 Jul 2010 (S. Africa)

Source: Bloomberg Source: Bloomberg

Taking Stock

♦ Focus on liquid stocks with value, trading stocks may suffer. We believe there is nothing fundamentally
wrong with the market, although 2010 valuations may not appear cheap relative to the post-crisis mean of 15x.
Therefore, even though 65% of the stocks under our coverage have underperformed the FBM KLCI over the last
month, we continue to advocate our top picks of liquid and fundamentally-robust stocks over a 12-month view,
i.e. stocks which should be able to ride out the near-term volatility. However, during this volatile period, trading
stocks that have outperformed the market (on M&A themes and GLC links) may experience further profit taking.

Table 7. Star Performers

Rel. YTD Abs. 1 Abs. 5
Price (RM/s) Market Cap Change month Chg month
Company 28-Apr FV (RM/s) (RMm) (%)* (%) Change (%) Recom
Unisem 3.34 3.74 1,742 98.9 21.5 0.9 OP
MCIL 0.83 1.09 1,381 49.5 5.8 1.2 OP
Tan Chong 4.66 5.26 3,118 44.6 24.9 1.5 OP
Kossan 7.83 10.74 1,257 39.5 (3.1) (1.3) OP
Daibochi 3.28 4.40 247 37.9 (11.8) 0.3 OP
Faber 2.24 3.30 817 34.4 (7.8) (3.0) OP
Media Prima 2.25 2.55 2,209 30.0 6.6 - OP
* Relative performance vs. FBM KLCI
Source: Bloomberg, RHBRI estimates

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 30 April 2010

♦ Stars and laggards. We note that some star performers including Daibochi, Faber and Kossan have already
seen some correction in the last five days if not the last month, while others such as Unisem, Tan Chong and
Media Prima have continued to outperform. Nevertheless, we remain bullish on these stocks as their strong
earnings growth through FY11 should sustain share price performance through the volatility. At the other end of
the spectrum, we also highlight YTD performance laggards like Genting Bhd, IOI, KLK, TNB, IJM Land and Maxis,
which we have rated as Outperform stocks. We believe these laggards deserve more attention, given their
resilient earnings and better stock liquidity.

Table 8. Laggards
Rel. YTD Abs. 1 Abs. 5
Price (RM/s) Market Cap Change month Chg month
Company 28-Apr FV (RM/s) (RMm) (%)* (%) change (%) Recom
Gent Spore 0.87 1.35 11,379 (38.2) (6.0) 0.6 OP
Sino Hua-An 0.44 0.59 499 (15.9) (11.1) (4.3) OP
Genting 6.60 8.95 24,714 (14.8) (1.8) (1.0) OP
CBIP 2.67 3.60 366 (13.3) (8.9) (2.2) OP
Sime Darby 8.76 9.85 52,643 (7.1) 0.7 (1.6) OP
RCE Capital 0.66 1.08 516 (6.2) (3.7) (2.2) OP
IJM Land 2.32 3.19 2,549 (6.0) (0.4) (0.9) OP
Maxis 5.31 6.20 39,825 (5.9) (1.5) (0.2) OP
AMMB 4.96 6.13 14,920 (5.5) (0.4) (0.4) OP
IOI Corp 5.43 6.65 36,248 (5.5) 0.6 (0.9) OP
UMW 6.38 7.52 7,194 (4.3) 1.1 (1.1) OP
Tenaga 8.48 10.40 36,920 (3.8) 5.7 1.2 OP
KL Kepong 16.66 18.40 17,742 (3.8) 1.3 (1.3) OP
* Relative performance vs. FBM KLCI
Source: Bloomberg, RHBRI estimates

♦ Longer-term outlook still positive, caution on near-term volatility. While the early-stage recovery in
global economies has to some extent already been priced in to the market, we see price weakness as an
opportunity to accumulate the big banks, commodities (plantations and O&G) and power (TNB) stocks as well as
consumer-related stocks like Tan Chong, IJM Land and Notion Vtec. We also advocate a balanced portfolio to
include Alpha+ stocks such as Maxis, PLUS and Carlsberg that have resilient earnings as well as attractive
dividend yields.

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 30 April 2010

Table 9. Forecasts And Valuations

Rel
perf
Price FV vs. EPS EPS Growth PER PBV PCF GDY
FYE (RM/s) (RM/s) KLCI (sen) (%) (x) (x) (x) (%) Rec
28-Apr YTD FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
Stars
Performers
Unisem Dec 3.34 3.74 98.9 24.9 34.1 116.1 36.9 13.4 9.8 2.0 5.7 1.5 OP
MCIL^ Mar 0.83 1.09 49.5 8.8 8.4 19.4 (4.1) 9.4 9.8 1.1 7.4 5.5 OP
Tan Chong Dec 4.66 5.26 44.6 39.0 40.2 72.0 3.1 12.0 11.6 1.9 10.1 2.4 OP
Kossan Dec 7.83 10.74 39.5 82.6 103.0 10.3 24.7 9.5 7.6 2.6 8.3 1.3 OP
Daibochi Dec 3.28 4.40 37.9 36.7 39.9 22.4 8.8 8.9 8.2 1.8 7.6 7.2 OP
Faber Dec 2.24 3.30 34.4 26.5 24.2 16.4 (8.8) 8.4 9.3 1.7 5.3 3.1 OP
Media Prima Dec 2.25 2.55 30.0 16.3 18.0 +>100.0 10.1 13.8 12.5 2.2 7.0 4.4 OP

Laggards
Gent Spore Dec 0.87 1.35 (38.2) 2.7 3.8 +>100 37.9 31.7 23.0 2.3 8.4 0.0 OP
Sino Hua-An Dec 0.44 0.59 (15.9) 4.9 4.8 +>100 (2.4) 9.0 9.2 0.6 n.m 0.0 OP
Genting Dec 6.60 8.95 (14.8) 45.8 56.1 38.9 22.5 14.4 11.8 1.5 5.8 1.4 OP
Sime Darby Jun 8.76 9.70 (7.1) 39.6 48.3 5.4 22.2 22.1 18.1 2.3 15.6 2.5 OP
RCE Capital^ Mar 0.66 1.08 (6.2) 10.6 11.3 5.9 6.1 6.2 5.8 1.1 n.m 1.5 OP
IJM Land^ Mar 2.32 3.19 (6.0) 18.4 34.4 88.5 87.2 12.6 6.7 1.4 4.7 0.9 OP
Maxis Dec 5.31 6.20 (5.9) 33.2 36.2 6.6 9.1 16.0 14.7 3.9 10.3 6.3 OP
AMMB^ Mar 4.96 6.13 (5.5) 39.9 45.7 19.0 14.6 12.4 10.9 1.6 n.a. 2.0 OP
IOI Corp Jun 5.43 6.65 (5.5) 27.9 31.5 (13.0) 13.0 19.5 17.2 3.7 17.1 2.2 OP
UMW Dec 6.38 7.52 (4.3) 51.2 52.5 52.3 2.5 12.5 12.2 2.0 8.9 3.7 OP
Tenaga Aug 8.48 10.40 (3.8) 70.7 80.9 42.0 14.4 12.0 10.5 1.3 4.6 3.3 OP
KL Kepong Sep 16.66 18.40 (3.8) 87.5 123.3 23.7 40.8 19.0 13.5 2.9 15.3 2.7 OP

Alpha+Picks
PLUS Dec 3.39 4.13 (0.8) 23.6 36.3 (0.3) 53.5 14.3 9.3 2.8 8.7 5.3 OP
Carlsberg Dec 5.32 5.90 12.4 42.1 44.3 68.1 5.3 12.7 12.0 3.0 24.2 4.7 OP
Notion Vtec Sep 3.22 4.64 13.6 36.2 46.4 41.5 28.4 8.9 6.9 2.4 6.5 2.0 OP
Wah Seong Dec 2.52 3.09 5.1 19.3 20.8 46.1 8.0 13.1 12.1 2.5 4.7 3.0 OP
Dialog Jun 1.10 1.29 12.2 6.4 9.3 (3.4) 45.4 17.3 11.9 4.3 15.0 3.2 OP
#
^ FY10-11 valuations refer to those of FY11-FY12 Consensus estimates Source: RHBRI, Bloomberg

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions
and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be
contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts
any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing
investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB
Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity
securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

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 30 April 2010

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or
more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take
on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for
the actions of third parties in this respect.

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