PP 7767/09/2010(025354)

18 August 2010

Malaysia Corporate Highlights

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

R e su lt s N o te
18 August 2010
MARKET DATELINE

Hunza Properties Share Price

Fair Value
:
:
RM1.40
RM1.58
Above expectations again… Recom : Trading Buy
(Upgraded)

Table 1 : Investment Statistics (HUNZPTY; Code: 5018) Bloomberg: HPB MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing GDY
June (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2010 248.7 50.9 26.7 40.3 5.2 23.5 5.1 0.7 12.4 0.1 5.8
2011F 242.5 49.8 26.1 (2.2) 5.4 24.7 5.2 0.6 11.1 0.0 4.0
2012F 152.0 30.1 15.8 (39.5) 8.9 13.5 8.3 0.6 6.4 0.1 4.0
2013F 155.0 30.2 15.8 0.1 8.9 - 8.2 0.5 6.2 0.1 4.0
Main Market Listing / Trustee Stock/Syariah Approved Stock By The SC * Consensus Based On IBES Estimates

RHBRI Vs. Consensus

Above
♦ Above expectations. Hunza Properties’ FY06/10 net profit of RM50.9m came
In Line
in above our and consensus estimates by 10% and 6%, respectively.
Below
Sequential turnover and net profit rose 25.8% and 23.2%, respectively, mainly
attributed to faster pace in the construction of Gurney Paragon residential Issued Capital (m shares) 195.9
blocks. Sales for Hunza’s built-then-sell bungalow project - Mutiara Seputeh Market Cap (RMm) 272.1
Daily Trading Vol (m shs) 0.5
has also picked up with a take-up rate of 34%. Full year FY10 revenue and net
52wk Price Range (RM) 1.138-1.653
profit increased remarkedbly by 171.1% and 84.6%, as property sales were hit
Major Shareholders: (%)
by the global economic crisis last year. As at Jun 2010, Hunza’s unbilled sales
Dato' Khor Teng Tong 53.4
stood at RM103m, declined by 38.6% from RM167.7m in the previous quarter. Lembaga Tabung Haji 8.3
Hunza declared a final dividend of 5.6 sen. Including the 2.5 sen special interim Yayasan Bumiputra Pulau 7.5
dividend in 3QFY10 (to commemorate its 10th year anniversary), total dividend Pinang
amounted to 8.1 sen, translating into a yield of 5.8%.
FYE June FY11 FY12 FY13

♦ Take-up rates improved slightly. Take up rates for Hunza’s project

EPS chg (%)
Var to Cons (%)
5.5 4.6 -
-
5.6 16.8
continued to improve from the previous quarter. Gurney Paragon and
Infiniti take-up rates achieved 63% and 87%, compared to last quarter’s PE Band Chart
61% and 80%, respectively. We believe the minimal improvement in
Gurney Paragon’s sales continues to reflect the lack of confidence of PER = 10x
PER = 8x
potential buyers on the project, given its stop-work order previously. PER = 6x
PER = 4x
Currently, superstructure of Gurney Paragon condo is in progress, while
East Tower is up to Level 43, and West Tower is up to level 40. Overall
progress is about 74% completed. As for Gurney Paragon mall, which will
be held by Hunza as investment property, piling works were completed,
and basement construction works have reached 14%.
Relative Performance To FBM KLCI
♦ Forecast. We revise our FY11 – FY12 earnings forecast by 4.6 – 5.5%, in view
of the stronger-than-expected margins achieved in FY10. We also introduce our Hunza Properties
projections for FY13. Growth will be flattish, mainly underpinned by its
FBM KLCI
upcoming project Alila II (GDV: RM300m) that will be launched in 3Q2011.

♦ Risks. The risks include: 1) slow down in take up rate due to potential negative
perception on Gurney Paragon after the stop-work incident; 2) competition
from other developers in Penang; and 3) delays in launches and approvals.

♦ Investment case. After we update the latest FY10 balance sheet, our fair
value on Hunza is revised up to RM1.58 (from RM1.43), based on an Coverage Under CMDF – Bursa
unchanged 50% discount to RNAV. Given a 13% upside from current share Research Scheme
price, we upgrade the stock to Trading Buy, from Market Perform previously.
Joshua Ng
(603) 92802237
joshuang@rhb.com.my

Please read important disclosures at the end of this report. Page 1 of 3

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 18 August 2010

Table 2. Hunza Properties Quarterly Results

QoQ YoY
FYE June (RMm) 4Q09 3Q10 4Q10 FY09 FY10 YoY (%) Comments
(%) (%)
Turnover 23.3 58.5 73.6 25.8 216.4 91.7 248.7 171.1 Qoq improvement in revenue was
mainly due to faster pace of
construction for Gurney Paragon
residential blocks and hence stronger
progress billings. As at June 2010,
Hunza has unbilled sales of RM103m,
mainly contributed by Gurney
Paragon.
EBIT 13.2 14.8 23.6 60.2 79.5 40.5 73.7 82.1
Net interest (0.2) (0.2) (0.2) 23.3 0.8 (1.4) (0.9) (36.2) Net gearing continued to improve to
0.05x in 4Q10 from 0.06x in 3Q10.
Pretax profit 12.9 14.6 19.7 35.2 52.2 39.1 69.1 76.7
Taxation (3.4) (3.3) (5.9) 75.8 71.6 (10.9) (18.3) 68.3
Minority interest (0.1) 0.1 0.1 41.7 (185.0) (0.7) 0.1 (112.1)
Net profit 9.4 11.3 13.9 23.2 47.7 27.6 50.9 84.6 Above our and consensus estimates.
EPS (sen) 6.5 7.0 7.4 6.0 14.1 19.0 32.1 68.7
Net DPS (sen) 5.6 2.5 5.6 124.0 (0.0) 5.6 8.1 44.6
NTA/share (RM) 2.2 2.1 2.2 2.8 (2.7) 2.2 2.2
EBIT margin (%) 56.6 25.2 32.1 44.1 29.6
Pretax margin (%) 55.6 24.9 26.7 42.7 27.8
Tax rate (%) 26.4 22.9 29.7 27.8 26.4

Source: Company, RHBRI

Table 3: RNAV Estimate

Area Book Mkt Value Surplus

Assets (Acres) (RMm) (RMm) (RMm)

For development:
Kedah 585 13.78 10.2 (3.6)
Penang Island 11.4 109.18 130.2 21.0
Penang - Seberang Prai 701 18.84 207.6 188.8
Klang Valley 22 34.41 76.7 42.3
Total 1,319.4 176.2 424.7 248.5
For investment:
Penang - Seberang Perai 43.87 22.5 9.6 (12.9)
Grand total 1,363.3 198.71 434.3 235.5

Shareholder fund as at June 2010 411.2

Total RNAV 646.7
Proceeds from outstanding warrants 49.7
(new)
Proceeds from rights issue 49.7
Fully diluted share capital 236.0
FD RNAV per share (RM) 3.16

Table 4. Earnings Forecasts

FYE June (RMm) FY10a FY11F FY12F FY13F

Revenue 248.7 242.5 152.0 155.0

Operating profit 70.0 67.9 41.8 41.9
Interest expenses (0.9) (1.6) (1.8) (1.7)
PBT 69.1 66.3 40.0 40.1
Tax (18.3) (16.6) (10.0) (10.0)
Net profit 50.9 49.8 30.1 30.2
EPS (sen) 26.7 26.1 15.8 15.8
DPS (sen) 8.1 5.6 5.6 5.6
Source: Company data, RHBRI estimates

Page 2 of 3

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
 18 August 2010

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 Berhad
(previously known as RHB Sakura Merchant Bankers Berhad). 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 : -

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.

Page 3 of 3

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com