OSK - Small Caps Top 100 Jewels - 2007 Edition - Final Consolidated

TOP MALAYSIAN SMALL CAP COMPANIES
100 JEWELS 2007 Edition
This report is published by OSK Research Sdn. Bhd (OSKRSB)., a wholly-owned subsidiary of OSK Holdings Berhad (OSKHB). The research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This report is prepared for internal circulation. Any recommendation contained in this report does not have regard to the specic investment objectives, nancial situation and the particular needs of any specic addressee. This report is for the information of addresses only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or nancial advice. OSKRSB and OSKHB accept no liability whatsoever for any direct or consequential loss arising from any use of this report or further communication given in relation to this report. This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. This report is for the use of intended recipients only and may not be reproduced, distributed or published for any purpose with prior consent of OSKRSB. OSKRSB, OSKHB and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other services for the companies covered in this report. No part of this publication may be re-printed, re-produced or transmitted in any manner whatsoever without expressed permission from OSK Research Sdn.Bhd. All Rights Reserved. Published and printed by :OSK INVESTMENT BANK BERHAD (206591-V) (A wholly-owned subsidiary of OSK Holdings Berhad)
Kuala Lumpur
Malaysia Headquarters OSK Investment Bank Bhd.
(formerly OSK Securities Bhd.)
Hong Kong
Hong Kong Ofce OSK Asia Securities Ltd. 1201-1203, 12/F, World-Wide House 19 Des Voeux Road Central, Hong Kong Tel : + (852) 2525 1118 Fax : + (852) 2537 1332
Singapore
Singapore Ofce DMG & Partners Securities Pte. Ltd. #22-01 Ocean Towers 20 Rafes Place Singapore 048620 Tel : +(65) 6438 8810 Fax : +(65) 6535 4809 E-mail: clientservices@dmgaps.com.sg
20th Floor, Plaza OSK Jalan Ampang 50450 Kuala Lumpur Malaysia Tel : + (60) 3 2333 8333 Fax : + (60) 3 2175 3202
CONTENT S
Listing of Top 10 By Alphabetical Order
Ahmad Zaki Resources .......................................................................................................................................11 Alam Maritim Resources .....................................................................................................................................13 Cymao Holdings ..................................................................................................................................................15 Hai-O Enterprise ..................................................................................................................................................17 Hiap Teck Venture ...............................................................................................................................................19 Kim Loong Resources .........................................................................................................................................21 Mudajaya Group .................................................................................................................................................23 TMC Life Sciences ..............................................................................................................................................25 Tong Herr Resources ..........................................................................................................................................27 United Malayan Land...........................................................................................................................................29 .................................................................................................................................................................................
Listing of Companies By Alphabetical Order

Acoustech ............................................................................................................................................................31 ACP Industries.....................................................................................................................................................33 Ajiya .....................................................................................................................................................................35 BCT Technology ..................................................................................................................................................37 BP Plastics Holdings ...........................................................................................................................................39 Cheetah Holdings ................................................................................................................................................41 Choo Bee Metal Industries ..................................................................................................................................43 Coastal Contracts ................................................................................................................................................45 Cocoaland Holdings ............................................................................................................................................47 Crescendo Corporation .......................................................................................................................................49 Crest Builder Holdings .........................................................................................................................................51 Dominant Enterprise ............................................................................................................................................53 DPS Resources ...................................................................................................................................................55 Dutch Lady Milk ...................................................................................................................................................57 Eastern Pacic Ind. Corp .....................................................................................................................................59 Efcient E-Solutions ............................................................................................................................................61 Eng Kah Corporation ...........................................................................................................................................63 Eonmetal .............................................................................................................................................................65 Euro Holdings ......................................................................................................................................................67 Favelle Favco ......................................................................................................................................................69 Fitters Holdings....................................................................................................................................................71 Freight Management Holdings ............................................................................................................................73 Guan Chong ........................................................................................................................................................75 Hexagon Holdings ...............................................................................................................................................77 Hock Seng Lee ....................................................................................................................................................79 Hovid ...................................................................................................................................................................81 Hunza Properties .................................................................................................................................................83 IJM Plantations ....................................................................................................................................................85 Imaspro Corporation ............................................................................................................................................87 Industrial Concrete Products ...............................................................................................................................89 I-Power ................................................................................................................................................................91 Jobstreet Corporation ..........................................................................................................................................93 Johor Land...........................................................................................................................................................95 Johore Tin............................................................................................................................................................97 Kawan Food ........................................................................................................................................................99
Kencana Petroleum ...........................................................................................................................................101 Kian Joo Can Factory ........................................................................................................................................103 Kinsteel ..............................................................................................................................................................105 Kossan Rubber Industries .................................................................................................................................107 Latitude Tree Holdings ......................................................................................................................................109 LCL Corporation ................................................................................................................................................111 Leader Universal Holdings ................................................................................................................................113 Leweko Resources ............................................................................................................................................115 LNG Resources .................................................................................................................................................117 Loh & Loh ..........................................................................................................................................................119 London Biscuits .................................................................................................................................................121 LTKM .................................................................................................................................................................123 Malaysian AE Models Holdings .........................................................................................................................125 Maxtral Industry .................................................................................................................................................127 MBM Resources ................................................................................................................................................129 MEMS Technology ............................................................................................................................................131 Metro Kajang Holdings ......................................................................................................................................133 Metrod (Malaysia) ..............................................................................................................................................135 Muhibbah Engineering (M) ................................................................................................................................137 Mycron Steel......................................................................................................................................................139 Naim Cendera Holdings ....................................................................................................................................141 New Hoong Fatt.................................................................................................................................................143 NTPM Holdlings.................................................................................................................................................145 Ornasteel Holdings ............................................................................................................................................147 Pantech Group Holdings ...................................................................................................................................149 Pelangi Publishing ............................................................................................................................................151 Pintaras Jaya .....................................................................................................................................................153 Plenitude............................................................................................................................................................155 Prestar Resources .............................................................................................................................................157 Prinsiptek Corporation .......................................................................................................................................159 Progressive Impact Corporation ........................................................................................................................161 Protasco ............................................................................................................................................................163 Putrajaya Perdana .............................................................................................................................................165 QL Resources....................................................................................................................................................167 Ramunia Holdings .............................................................................................................................................169 Ranhill................................................................................................................................................................171 Ranhill Utilities ...................................................................................................................................................173 Rohas-Euco Industries ......................................................................................................................................175 Sanichi Technology ...........................................................................................................................................177 Scicom (MSC) ...................................................................................................................................................179 Scientex Incorporated........................................................................................................................................181 SHL Consolidated..............................................................................................................................................183 Supermax Corporation ......................................................................................................................................185 Taliworks ..........................................................................................................................................................187 Tanjung Offshore ...............................................................................................................................................189 Tek Seng Holdings ............................................................................................................................................191 The Store Corporation .......................................................................................................................................193 TRC Synergy .....................................................................................................................................................195 TSH Resources .................................................................................................................................................197 TSR Capital .......................................................................................................................................................199 UAC ...................................................................................................................................................................201 VADS .................................................................................................................................................................203 Yi-Lai .................................................................................................................................................................205 YLI Holdings ......................................................................................................................................................207 YNH Property ....................................................................................................................................................209
CONTENT S
Listing of Companies By Industry Sector
Autoparts MBM Resources...........................................................................................................................................129 New Hoong Fatt ...........................................................................................................................................143 Building Materials Ajiya ...............................................................................................................................................................35 UAC..............................................................................................................................................................201 Yi-Lai ............................................................................................................................................................205 Construction ACP Industries ...............................................................................................................................................33 Ahmad Zaki Resources ..................................................................................................................................11 Crest Builder ..................................................................................................................................................51 Hock Seng Lee...............................................................................................................................................79 Loh & Loh .....................................................................................................................................................119 Mudajaya........................................................................................................................................................23 Muhibbah Engineering (M) ...........................................................................................................................137 Naim Cendera Holdings ...............................................................................................................................141 Pintaras Jaya ...............................................................................................................................................153 Prinsiptek Corporation..................................................................................................................................159 Protasco .......................................................................................................................................................163 Ranhill ..........................................................................................................................................................171 TSR Capital ..................................................................................................................................................199 Consumer Acoustech ......................................................................................................................................................31 Cheetah..........................................................................................................................................................41 Dutch Lady .....................................................................................................................................................57 Eng Kah Corp.................................................................................................................................................63 Guan Chong ...................................................................................................................................................75 Hai-O Enterprise ............................................................................................................................................17 Kawan Food ...................................................................................................................................................99 Kian Joo Can Factory...................................................................................................................................103 Kossan Rubber Industries ............................................................................................................................107 LNG Resources............................................................................................................................................117 NTPM Holdlings ...........................................................................................................................................145 Pelangi Publishing Group.............................................................................................................................151 The Store .....................................................................................................................................................193 Supermax Corp ............................................................................................................................................185 Consumer Food London Biscuits ............................................................................................................................................121 LTKM............................................................................................................................................................123 QL Resources ..............................................................................................................................................167
Furnishings Euro Holdings.................................................................................................................................................67 Latitude Tree Holdings .................................................................................................................................109 LCL Corp ......................................................................................................................................................111 Healthcare Hovid ..............................................................................................................................................................81 TMC Life Sciences .........................................................................................................................................25 Industrial BP Plastics Holdings ......................................................................................................................................39 Hexagon Holdings ..........................................................................................................................................77 Imaspro Corp .................................................................................................................................................87 Industrial Concrete Products ..........................................................................................................................89 Johore Tin ......................................................................................................................................................97 Leader Universal Holdings ...........................................................................................................................113 Malaysian AE Models Holdings....................................................................................................................125 Pantech Group Holdings ..............................................................................................................................149 Rohas-Euco Industries .................................................................................................................................175 Scientex Incorporated ..................................................................................................................................181 Tek Seng Holdings .......................................................................................................................................191 TRC Synergy................................................................................................................................................195 Oil and Gas Alam Maritim Resources ................................................................................................................................13 Coastal Contracts...........................................................................................................................................45 Eastern Pacic Ind. Corp ...............................................................................................................................59 Favelle Favco .................................................................................................................................................69 Kencana Petroleum......................................................................................................................................101 Ramunia Holdings ........................................................................................................................................169 Tanjung Offshore .........................................................................................................................................189 Others Cocoaland Holdings .......................................................................................................................................47 Efcient E-Solutions .......................................................................................................................................61 Fitters Holdings ..............................................................................................................................................71 Freight Management Holdings .......................................................................................................................73 Jobstreet Corp................................................................................................................................................93 Progressive Impact Corp..............................................................................................................................161 Taliworks Corp .............................................................................................................................................187 Plantations IJM Plantations...............................................................................................................................................85 Kim Loong Resources ....................................................................................................................................21 TSH Resources ............................................................................................................................................197
Property Crescendo Corporation ..................................................................................................................................49 Hunza Properties ...........................................................................................................................................83 Johor Land .....................................................................................................................................................95 Metro Kajang Holdings .................................................................................................................................133 Plenitude ......................................................................................................................................................155 Putrajaya Perdana .......................................................................................................................................165 SHL Consolidated ........................................................................................................................................183 United Malayan Land .....................................................................................................................................29 YNH Property ...............................................................................................................................................209 Steel Choo Bee Metal Industries .............................................................................................................................43 Eonmetal Group .............................................................................................................................................65 Hiap Teck Venture .........................................................................................................................................19 Kinsteel ........................................................................................................................................................105 Metrod (Malaysia) ........................................................................................................................................135 Mycron Steel ................................................................................................................................................139 Ornasteel Holdings.......................................................................................................................................147 Prestar Resources .......................................................................................................................................157 Tong Herr Resources .....................................................................................................................................27 Technology BCT Technology ............................................................................................................................................37 I-Power ...........................................................................................................................................................91 MEMS Technology .......................................................................................................................................131 Sanichi Technology ......................................................................................................................................177 Scicom (MSC) ..............................................................................................................................................179 VADS ...........................................................................................................................................................203 Timber/Wood Products Cymao Holdings .............................................................................................................................................15 Dominant Enterprise ......................................................................................................................................53 DPS Resources..............................................................................................................................................55 Leweko Resources.......................................................................................................................................115 Maxtral Industry............................................................................................................................................127 Water Ranhill Utilities..............................................................................................................................................173 YLI Holdings .................................................................................................................................................207
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PREFACE
Welcome to the Third Volume of OSK Top Malaysian Small Cap Companies a.k.a The 100 Jewels. The latest edition of this indispensable compendium is most timely as it heralds a new phase for the OSK Group as a fulledged Investment Bank. We continue to spearhead the small cap franchise in the industry with the widest and most comprehensive research coverage. The latest volume sees the addition of 45 new companies while 55 from Volume 2 were retained. As before, the selection of companies reects both the quantitative and qualitative assessment of their underlying prospects with greater focus placed on track record. We continue to seek value in companies that are both under-researched and under-appreciated. With Malaysias economic fundamentals poised to further strengthen in 2007 driven by notable catalysts such as the 9th Malaysia Plan (9MP) and the rmer Ringgit, our small caps earnings universe is projected to grow 26.5% y-o-y. This is above that of the 18.5% y-o-y growth projected for our KLCI universe. While the superior growth is a function of the investment risks in smaller cap stocks, we take comfort in that the chosen companies embrace the best of breed credentials for the more risk averse investors. Once again, we would like to take this opportunity to extend our deepest gratitude to the management of the companies for taking precious time off their busy schedules to meet us, without which the updates will not be possible. In OSK, we are committed to taking client relationships to a higher level as we embark on the next phase of our growth. We look forward to your continued and invaluable support. Happy Investing!
The Malaysia Research Team OSK Research Sdn. Bhd. 6th, Floor, Plaza OSK Jalan Ampang 50450 Kuala Lumpur April 17 2007
Part 1 - Introduction
The search for Malaysias Top 100 Small Caps continues to reect our commitment towards discovering companies that are nancially sound, fundamentally efcient and operationally capable. For the latest volume, we raised the market capitalisation threshold from RM750m previously to RM1bn. This is to reect the improved stock market sentiment over the past 12 months, and where a wider scope of selection would be more reective of the liquidity prole of the stocks concerned. Few cosmetic enhancements were made on the report template without compromising on the already investor-friendly interface. While every care has been taken to ensure that the companies selected are based on their fundamental and qualitative attributes, OSK Research does not in any way warrants that share prices will adjust to the level or upside as depicted by their target prices. The latter is not the underlying basis and objective of this publication. It is hoped that with the greater visibility accorded, the companies valuation will adjust to their true intrinsic worth over time. Finally, kudos to the research team for their utmost dedication to ensure the smooth execution of this tireless undertaking. DONE.
A Preview on Small Caps

In view of the broad-based buying interests on the local bourse from institutional, retail as well as foreign investors, this latest compilation of the 100 Jewels should certainly be an indispensable reference. Unlike previous years, where many were reluctant to even consider having a look at these companies, we are condent that 2007 will be the rebirth of the small/mid caps, underpinned by the surge in liquidity, further supported by positive newsows. While it is understood that the illiquid nature of these stocks continue to be the major grouse among investors, we believe this would be compensated by potential gains to be realised from capital appreciation. Although some of the companies featured may not translate into exciting upsides, we remain positive on them given their strong prospects and solid management. Based on our small cap universe, the average P/E of the 100 Jewels stands at 12.3x (this compares with the KLCI universe of 18x), while earnings growth is expected to be solid at 26.5% y-o-y vis--vis the KLCIs components of 18.5% y-o-y. All said, we are convinced that our selection would continue to offer investors pleasant surprises and for those whom have been avid followers of this publication, they should already be very happy at this moment in time.
Part 2 - The Screening Methodology The selection of the Top 100 Small Cap stocks are based on the following investment considerations Additionally, few qualitative assessment tools were employed such as management track record, competitive positioning, earnings quality and ability of the companies to respond to structural changes within the sector and/or economy. Market capitalization ( <= RM1bn) Protability track record Price Earnings Ratio (PER) Price to NTA (P/NTA); Debt/Cash position Return on Equity (ROE) Compounded Annual Growth Rates In Earnings Dividend payment Altman Z-Score ROC/WACC The stocks have also been screened based on the following criteria to reect differing risk proles of investors. 1) 2) 3) 4) 5) 6) 7) Forward FY07 PER Forward FY07 Price/Book Value Highest FY07 Gross Dividend Yield Highest FY07 ROE Highest 3 year EPS CAGR Lowest Price/Earnings Growth (PEG) Lowest Relative Sector PER
The companies covered in this volume are in the following sectors : 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) Automotive parts Building Materials Construction Consumer Consumer Food Furnishings Healthcare Industrial Oil & Gas Plantation Property Steel Technology Timber Trading/Services
OSK
Ranking Based On Forward FY07 PER (x)

Stock
RANHILL UTILITIES BHD LCL CORP BHD SCIENTEX INCORPORATED BHD CYMAO HOLDINGS BHD PINTARAS JAYA BHD ROHAS-EUCO INDUSTRIES BERHAD CREST BUILDER HOLDINGS BHD PRINSIPTEK CORPORATION BHD DPS RESOURCES BHD AJIYA BHD
(x)
3.1 3.9 4.2 4.4 4.5 4.5 4.6 4.6 5.0 5.0
Stocks trading at attractive P/Es of less than 6x. Upside for these stocks should be substantial on re-rating
Ranking Based On Forward FY07 P/BV (x)

Stock
JOHORE TIN BHD LTKM BHD AJIYA BHD PLENITUDE BHD MAXTRAL INDUSTRY BHD UNITED MALAYAN LAND BHD RANHILL UTILITIES BHD MYCRON STEEL BHD METRO KAJANG HOLDINGS BHD PRINSIPTEK CORPORATION BHD
(x)
0.4 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.7
Stocks which trade at a discount to their book values. The majority of these are property stocks
Ranking Based On Highest FY07 Gross Dividend Yield (%)

Stock
PRESTAR RESOURCES BHD FITTERS HOLDINGS BHD EFFICIENT E-SOLUTIONS BHD ACOUSTECH BHD LNG RESOURCES BHD YI-LAI BHD CYMAO HOLDINGS BHD TONG HERR RESOURCES BERHAD PROTASCO BHD JOHORE TIN BHD
(%)
14.5 13.1 13.0 11.5 11.3 10.6 10.5 10.4 9.1 8.8
Stocks with high dividend yields provide a good hedge against market volatility and are suitable for investors with lower risk appetite.
Ranking Based On Highest FY07 ROE (%)

Stock
I-POWER BHD SANICHI TECHNOLOGY BHD BCT TECHNOLOGY BHD DUTCH LADY MILK INDS BHD TANJUNG OFFSHORE BHD JOBSTREET CORP BHD LNG RESOURCES BHD VADS BHD SCIENTEX INCORPORATED BHD SCICOM (MSC) BHD
(%)
86.3 50.6 41.6 36.9 35.5 35.0 32.6 32.4 32.1 32.0
These stocks provide the best return to shareholders given their superior prots
OSK
Ranking Based On Highest 3-Year CAGR (FY04-FY07) (%)

Stock
AHMAD ZAKI RESOURCES BERHAD ACP INDUSTRIES BHD BCT TECHNOLOGY BHD PANTECH GROUP HOLDINGS BHD MUHIBBAH ENGINEERING (M) BHD TANJUNG OFFSHORE BHD HEXAGON HOLDINGS BHD I-POWER BHD SANICHI TECHNOLOGY BHD KINSTEEL BHD
(%)
237.8 157.0 132.1 127.3 82.1 72.1 70.6 69.4 62.0 61.6
CAGR measures the earnings propensity over a 3 year period. The top 4 companies are emerging from a low base
Ranking Based On Lowest PEG (x)

Stock
AHMAD ZAKI RESOURCES BERHAD BCT TECHNOLOGY BHD RANHILL UTILITIES BHD I-POWER BHD PANTECH GROUP HOLDINGS BHD SANICHI TECHNOLOGY BHD ROHAS-EUCO INDUSTRIES BERHAD KINSTEEL BHD BP PLASTICS HOLDING BHD PINTARAS JAYA BHD
(X)
0.02 0.06 0.08 0.09 0.09 0.10 0.10 0.12 0.12 0.13
Stocks with the strongest earnings prospects command the lowest PEG. This can also be construed as earnings growth having outpaced that of valuations.
Our Top Sector Picks

Top Sector Picks
Company New Hoong Fatt Industrial Concrete Mudajaya Hai-O Enterprise QL Resources LCL Corp. TMC Life Sciences Hexagon Alam Maritim IJM Plantations United Malayan Land Hiap Teck Venture Mems Technology Cymao Sector Autoparts Building Materials Construction Consumer Consumer Food Furnishings Healthcare Industrial Oil & Gas Plantation Property Steel Technology Timber EPS (sen) FY07 FY08 30.7 32.5 14.1 19.0 15.2 24.7 47.9 6.9 34.4 24.4 8.0 18.9 26.2 3.1 35.8 18.8 20.7 23.8 28.3 66.5 9.0 44.6 30.2 15.3 22.7 30.4 7.1 43.5 DY (%) FY07 FY08 7.0 7.0 4.0 2.0 4.0 3.4 7.8 1.0 0.0 0.0 2.0 4.2 2.9 0.0 10.5 5.4 5.5 8.4 3.6 10.9 1.0 0.0 0.0 2.0 4.2 3.4 0.0 10.5 P/BV (x) FY07 FY08 0.8 0.8 3.5 2.4 1.4 2.1 1.0 2.8 3.1 2.6 1.6 0.6 1.5 4.8 0.7 3.2 1.0 1.3 1.8 0.9 2.3 2.4 2.1 1.5 0.6 1.2 3.6 0.6 ROE (%) FY07 FY08 13.7 13.5 17.1 16.0 17.1 20.1 27.1 21.5 22.0 18.9 7.6 5.6 22.7 21.1 14.9 21.1 12.6 16.8 19.9 32.9 2.3 22.2 18.6 13.7 6.3 21.7 40.3 17.0 PER (x) FY07 FY08 1.5 6.3 21.5 15.8 13.3 11.3 3.9 14.3 16.0 15.3 21.4 11.2 7.3 23.5 4.4 16.1 8.0 8.5 9.9 2.8 10.9 12.3 12.4 11.2 9.4 6.3 10.2 3.7
Note : Share prices as at March 30, 2007
OSK
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EPS (sen) EPS (sen) GDPS (sen) BVPS (RM) PER (X) PER (X) PBV (X) GDivYld 12-M FYE Mkt Cap Price (FY) (CY) (FY) (FY) ROE (%) (FY) (CY) (FY) (%) (FY) Target (RMm) (RM) 2005 2006 2007 2005 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 (RM) Dec Dec Dec Apr Jul Jan Dec Dec Dec Dec 542.5 2.12 11.4 15.7 18.9 11.4 15.7 18.9 9.0 414.6 4.38 31.4 58.8 73.3 31.4 167.5 0.985 4.6 5.2 6.9 4.6 5.2 6.9 1.0 403.9 3.00 9.1 12.1 19.0 9.1 12.1 19.0 6.0 315.9 1.73 7.3 6.3 12.4 6.3 11.9 21.5 7.0 10.0 1.75 1.83 3.3 6.9 27.5 635.2 1.91 11.4 9.7 26.2 10.7 16.5 27.9 2.5 5.5 1.03 1.27 9.7 22.7 19.7 135.6 2.02 8.2 15.2 23.8 12.9 21.0 25.1 2.5 8.0 1.33 1.46 11.9 17.1 13.3 8.5 9.6 122.3 1.59 21.2 28.1 35.8 21.2 28.1 35.8 13.9 16.7 2.41 2.40 12.6 14.9 5.7 4.4 5.7 4.4 8.0 6.8 14.0 14.5 8.0 15.8 24.8 15.8 14.3 18.9 14.3 7.4 4.8 5.6 13.5 6.0 7.4 6.0 11.2 13.5 11.2 182.9 2.54 26.2 32.9 42.9 26.2 32.9 42.9 15.0 15.0 2.01 2.32 19.8 17.7 7.7 5.9 7.7 5.9 1.3 0.7 1.5 1.9 1.0 2.7 3.4 1.6 0.6 650.6 3.74 11.4 31.7 24.4 11.4 31.7 24.4 - 1.13 1.45 28.9 18.9 11.8 15.3 11.8 15.3 3.3 2.6 1.1 0.7 1.4 1.5 0.9 2.4 2.8 1.4 0.6 5.9 - 4.40 5.9 3.48 8.7 10.5 2.60 1.2 1.3 4.0 2.0 1.0 4.8 4.2 4.0 2.33 2.9 3.10 5.8 2.36 2.0 4.32 1.0 1.39 6.2 7.02 4.2 3.57 7.3 11.6 6.0 1.12 1.25 11.2 16.0 24.8 1.0 0.29 0.35 19.6 21.5 18.9 58.8 73.3 21.1 27.1 2.68 3.19 24.1 25.0 9.0 3.32 3.49
Our Top Ten List
Top Ten List
Company
Sector
Alam Maritim
Oil & Gas
Ahmad Zaki Resources
Construction
Cymao
Timber
Hai-O
Consumer
Hiap Teck
Steel
Kim Loong Resources
Plantation
Mudajaya Holdings
Construction
TMC Life Sciences
Healthcare
Tong Herr
Steel
UM Land
Property
Note : Share prices as at March 30, 2007
Guide To Report Format - Page 1

Target Price Intrinsic valuation of the stock based on various methodologies
Share Price Share Prole / Statistics Key stock data including cashow and efciency measures such as Altman Z-score* and ROC/WACC* KLCI target as at cut-off date Market price of the stock as at cut-off date of March 30, 2007 Investment Merits Key attractions and selling points of the stock including but not limited to growth prospects, earnings drivers Major Shareholder Top shareholders of the company based on latest available data and valuation fundamentals Company Prole Principal activities Brief history of the companys Share Performance Shows the absolute and relative performance vs. underlying benchmark index of the stock over a period of time development Revenue contributors Location of operations Key Highlights Existing and potential contracts/ orders New ventures Strategic alliance Expansion plan
Guide To Report Format - Page 2
Key Statistics The nancial statements income statement and balance sheet Various nancial ratios for horizontal statement analysis Company Report Card Fair value, historical and forward PER and sector PER Historical and forward ROE perspective Management profile and experience Dividend policy
Recommendation Fundamental valuation of the stock based on various valuation methodologies Includes target price, dividend yield and total holding period returns where necessary over a 12 month period
* Denition of Altman Z-score A predictive model created by Edward Altman in the 1960s. This model combines ve different nancial ratios to determine the likelihood of bankruptcy amongst companies. The general rule of thumb is that the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. Scores in between 1.8 and 3 lie in a grey area. This is a relatively accurate model -real world application of the Z-Score successfully predicted 72% of corporate bankruptcies two years prior to these companies ling for bankruptcies. * Denition of ROC/WACC A calculation used to assess a companys potential to be a quality investment by determining how well (i.e. protably) a companys management is able to allocate capital into its operations. Comparing a companys ROC with its cost of capital (WACC) reveals whether invested capital was used effectively. WACC is a calculation of a rms cost of capital in which each category of capital is proportionately weighted. All capital sources - common stock, preferred stock, bonds and any other long-term debt - are included in a WACC calculation. WACC is calculated by multiplying the cost of each capital component by its proportional weight and then summing it up. A rms WACC is the overall required return on the rm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. It is the appropriate discount rate to use for cash ows with risk that is similar to that of the overall rm.
OSK
10
Ahmad Zaki Resources

Joining The Ranks Of The Juggernauts
Construction
Target : RM3.48 Price : RM2.54
Share Prole/Statistics
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) AZR MK 66.76 169.56 2.85 | 1.80 77.23 0.32 Net Cash 1.75 1.64 0.87 1.76
INVESTMENT MERITS
Strong outstanding orderbook of RM1.2bn to last for the next 3 years Profound reputation, strong management team and balance sheet. AZRB stands out as one of the most competitive contenders for more infrastructure works to be rolled out from the 9MP Strong balance sheet. Sitting on a huge cash pile of RM146.2m (net cash of RM78.5m or RM1.18/share) Upcoming oil palm plantation (20,500ha) by 2010 will contribute signicantly to AZRBs earnings post 9MP 3-year (FY05-FY08) net prot CAGR of 25.5% Cheap entry to 9MP boom. Trading at PER of 5.6x and 4.7x for FY07 and FY08 respectively vs. peer average of 13.0x
Major Shareholders (%)

Zaki Holdings (M) SB Employees Provident Fund HSBC Nominees (T) SB 60.35 2.97 2.01
Share Performance (%)

Month 1m 3m 6m 12m Absolute 2.01 14.41 20.95 46.27 Relative (1.14) 0.59 (6.82) 2.03
COMPANY PROFILE
Ahmad Zaki Resources Bhd (AZRB), with its history dating back to 1982, was listed on the Second Board in 1999 and subsequently transferred to the Main Board in 2003. The Group is involved in civil and structural construction works, property development, supply of marine fuels and lubricants at Kemaman Port. Recently the Group also ventured into oil palm plantations in Indonesia as part of its diversication strategy. The actual eld planting for the oil palm commenced in October 2006 and expected to be completed by year 2009/10. The construction division makes up about 87.4% of revenue in 2006, followed by 12.1% in the oil & gas division. The oil palm division measuring about 20,500ha, however, is expected to generate revenue for the Group in year 2010 and onwards.
Share Price Performance

3.40 3.20 3.00 2.80 2.60 2.40 2.20 2.00 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Strong outstanding orderbook. Comfortably sitting on a strong outstanding orderbook of RM1.2bn on the back of RM1.7bn orderbook, AZRB is poised to register double-digit growth for at least the next 2 years. Such strong outstanding orderbook will keep the Group busy over the next 3 years. 9MP will continue to underpin AZRBs earnings. It is no secret that AZRB will be one of the prime beneciaries of the 9MP. Having already secured two prime projects worth RM499m in the East Coast in mid-2006, the next immediate target is that of the East Coast Expressway Phase 2 (ECE2). Currently with a balance of about RM2.0bn to be awarded, it is believed that AZRB will be one of the strongest contenders for the ECE2 and other 9MP infrastructure projects to be rolled out, given the Groups competency and strong management team.
11
Oil & Gas spurting out like gold, to fund the upcoming plantation division. Currently in a 5-year contract with Petronas Dagangan with another 5 year renewal option (the current one will expire on 31st May 2008) to supply highspeed diesel to marine and offshore vessels, AZRB has the mandate to be the only sole supplier of that product in Port Kemaman. With a total capacity of 400m litres and utilisation rate of 50% only, the division will poise to contribute to the Groups top and bottom line going forward given the recent increased offshore activities in Port Kemaman. All the divisions assets have been fully depreciated. The division will continue to act as a cash cow for the Group to fund its plantation activities in Kalimantan (still at its infancy). Oil palm plantation to be one of the prime catalysts post year 2010. Located in the town of Ngabang, West Kalimantan, AZRB owns the rights to cultivate palm oil on 20,500ha land. Acquired at a cost of only RM7m, the plantable area has well exceeded 85%, above industry average. The Group has already commenced eld planting operations. Earnings contribution from this division is expected to kick-in in year 2010 onwards. Assuming a net plantable area of 17,435ha, an average yield of 30tonnes/ha FFB in Kalimantan, OER (oil extraction rate) of 21%, and an average CPO price going forward to be about RM1700/tonne, the division could potentially contribute about RM187m to AZRBs top line going forward, which is about 41% to AZRBs turnover in FY06. Capex going forward is envisaged to be RM35m.
Income Statement (RMm)

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 257.9 243.7 432.2 669.7 (15.7) (5.5) 77.3 55.0 24.5 30.1 41.3 50.4 (4.1) 27.5 36.3 46.5 (11.7) 18.2 23.7 30.0 (17.6) 27.3 35.6 45.0 (190.5) n.m. 30.5 26.4 1.53 1.75 2.01 2.35 7.0 15.0 15.0 15.0 2.8 5.9 5.9 5.9 (14.4) 9.3 7.1 5.6 1.7 1.5 1.3 1.1 1.46 1.52 1.18 1.94
Balance Sheet (RMm)

FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 21.7 25.2 35.4 47.4 Current Assets 229.8 241.8 327.9 414.9 Current Liabilities (149.7) (152.7) (193.4) (283.3) Others 28.9 28.0 34.4 18.4 Total 130.7 142.3 204.3 197.4 Share capital 66.3 66.7 66.7 66.7 Reserves 55.8 38.7 53.6 71.1 Shareholder Fund 122.1 105.4 120.3 137.8 LT Liabilities 7.1 35.2 82.5 56.9 Others 1.5 1.6 1.5 2.7 Total 130.7 142.1 204.2 197.3 Gross Debt 5.5 11.8 52.7 67.7 Net Cash/ (Debt) 95.2 97.7 101.4 78.5
COMPANY REPORT CARD

ROE. Registering a 16.7% and 18.9% ROE in FY05 and FY06 respectively, we expect the Group to post a strong ROE of 20.6% and 21.0% in FY07 and FY08 respectively. Management. Strong fundamentals are not the only selling points of the Group. Its determined and experienced management team has been the key driving force. Dividend. The Group has been declaring a gross dividend of 15sen for the past few years. Going forward, management has indicated that it would at least maintain the dividend payout level.
Cash Flow Statement (RMm)

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 8.0 21.2 16.5 1.0 (12.0) (21.8) (6.2) 37.6 (1.2) 2.9 46.9 (6.5) 99.0 101.9 148.7 (0.0) (0.0) 0.2 101.9 148.7 142.5
RECOMMENDATION
The illiquidity of the stock has been one of the prime reasons why its price is still a laggard compared to its peers. Given its current strong fundamentals and capacity, AZRB may switch its attention soon to address the issue of its stock liquidity via a capital management exercise. Trading at a forward PER of only 5.6x and 4.7x in FY07 and FY08, AZRB offers investors a great bargain for enhanced exposure to the 9MP boom.
OSK
12
Alam Maritim Resources

A Vessel for Success
Oil & Gas
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) AMRB MK 162.63 608.24 3.96 | 1.65 129.55 60.0 1.41 0.91
INVESTMENT MERITS
Robust demand for marine support vessels in the oil & gas industry spurred by greenfield developments offshore Malaysia Adding on 9 new vessels over 2007/8 will reduce reliance on third party chartering and boost group margins Healthy order book of RM600m and continuously bidding for >RM1bn in contracts >20% growth seen in FY08, bringing forward PE to a reasonable 11.6x 17.6% upside to our target price of RM4.40

SAR Venture Forum Vest S/B 55.4 16.4

Month 1m 3m 6m 12m Absolute 6.3 19.1 69.2 Relative (0.8) 4.7 31.6 -
COMPANY PROFILE
AMRBs humble beginnings trace back to 1998 when one of its subsidiaries began providing the chartering of third-party vessels. In 1999, the Group made their rst purchase of a vessel to capture higher margins from ship ownership. Seven years on, AMRBs eet has ballooned to 16 ships marking them as the 4th largest oil and gas maritime company in terms of tonnage of Malaysian agged vessels. AMRBs vessels consist of Anchor Handling Tugs, Supply Vessels, Work Boats, Utility Vessels, Diving Support vessels as well as Dynamic Positioning Vessels. Besides ship chartering, AMRB also offers a range of oil and gas support services ranging from sub-sea engineering, underwater survey, ROV services, as well as offshore facility decommissioning and abandonment.

4.00 3.80 3.60 3.40 3.20 3.00 2.80 2.60 2.40 2.20 2.00 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
High vessel demand in Malaysia. Currently, locally agged vessels only meets 40% of Malaysias offshore oil & gas industrys demand. With the many deepwater developments to take off over the next few years, demand for vessels is going to mount. All local players are bound to succeed in such operating conditions as under the Petronas Production Sharing Contracts, Malaysian agged vessels will get rst right of refusal for contracts before foreign ships are sourced. To note, Petronas has recently issued a tender for 23 ships needed to cater to its upcoming 65 platforms over the next 5 years. In addition, a second tender of 30 vessels is expected to be open for bidding soon. Youthful eet. Younger eets are able to command more favorable charter rates and are more inclined to win bids in the industry due to their capability in meeting harsher operating environments and reducing downtime due to repairs. AMRB holds a competitive edge in terms of eet age with only 6.6
13
years compared to the average of 13.4 years for Malaysian agged ships. In fact, 75% of the Groups eet is within the 1-5 years age category. Research gures show that only 14% of the worlds offshore support vessels are in the 1-5 year category while 68% of vessels are more than 20 years old. Less third party chartering, more prots. Vessel chartering is divided into two segments: chartering of own vessels and third party chartering. Gross prot margins for third party chartering are signicantly lower than of own vessels were used with a differential of 15% for 3rd party to >50% for own vessels. Hence, going forward, with 9 vessels to be delivered over 2007/8 ballooning the Groups eet to 25 vessels, AMRB will reduce its reliance on 3rd party chartering hence prots will be boosted. To note, on average, 7-10 3rd party vessels are on charter during a year. Steady charter rates seen. With the prevalence of demand for vessels and continuing high oil prices, we expect that charter rates should be able to be maintained or increase over the coming 2-3 years. Current charter rates are at US$1.50 per break horse power compared to US$1.30 only a year ago.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 137.7 214.2 217.1 245.9 26.9 34.0 36.5 39.8 37.1 72.8 79.3 97.8 29.3 69.2 58.2 72.0 19.7 55.1 42.5 52.5 12.1 19.3 26.1 32.3 (0.9) 59.8 35.0 23.7 1.06 1.13 1.45 1.79 0.0 1.5 0.0 0.0 0.0 0.0 0.0 0.0 30.9 19.3 14.3 11.6 3.5 3.3 2.6 2.1 0.6 0.1 0.2 0.5
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 268.7 370.6 - 157.6 194.0 - (62.5) (116.5) 0.0 0.0 - 363.8 448.2 - 93.3 81.3 - 18.3 47.0 - 170.2 170.2 - 191.7 263.8 1.9 14.3 - 363.8 448.2 - 187.8 266.7 5.1 0.4
COMPANY REPORT CARD

ROE. AMRB has a strong ROE which has consistently been above 25%. We expect this to be sustainable going forward with >20% core net prot growth in 2008 when new vessels are delivered. Management. AMRB is managed by its founder Encik Azmi, who joined the marine industry in 1994. He is supported by Chairman, Dato Capt. Ahmad Suan, who also has extensive experience in Malaysias shipping industry. Dividend. We identify AMRB as a growth stock, thus do not expect any dividends in the coming years. Prots of the company are reinvested for the purchase of new vessels.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - 24.4 - (324.2) - 318.2 - 18.4 0.0 0.0 - 18.4
RECOMMENDATION
All in all, there is a good deal of upside to be seen from Alam Maritim. The Group is in the right place at the right time, and most importantly, armed with the right strategy to capture the huge demand for marine vessels in Malaysias booming oil & gas industry. Order book is currently well padded with some RM600m worth of long term contracts and the Group continues to bid for contracts in excess of RM1bn. Besides that, 9 new vessels to be delivered over 2007/08, which will drive earnings and boost margins in 2008. We value AMRB at RM4.40 with a BUY call, derived by pegging our oil & gas industry standard PE of 15x in combination with a price to book of 3.5x to FY08 forecasts.
OSK
14
Cymao Holdings
A Value Buy
Timber/Wood Products
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CYM MK 75.00 119.25 1.89 | 0.94 397.09 (0.09) 0.02 4.12 0.81 1.27 1.65
INVESTMENT MERITS
Poised to benet from strong timber prices Decent fundamentals with low gearing, good cash ows and stable earnings growth Looking out for acquisition opportunities A value buy among the small cap timber players
COMPANY PROFILE
Cymao, which was founded by a Taiwanese Lin Tsai-Rong, was listed on the Main Board on 19th Mar 2004. The company started in 1991 in Sandakan, Sabah, with sawn timber production but this was phased out in 1992 when the company ventured into plywood manufacturing and value added plywood secondary processing. The company does not own any timber concession, but it currently has two perpetual log supply agreements which are able to satisfy about 70% of the total log requirements. Currently >70% of the groups turnover comes from plywood manufacturing and 75% comes from export sales. Cymaos foothold in Europe, which is the largest export destination country, is further strengthened after obtaining its CE certication in end-2005. The company also has a sound R&D team under the stewardship of Lin TsaiRong and his sons with strong background in forestry studies.

Lin Tsai-Rong Tsay Chung Wen Hsu How Tong 28.1 6.6 5.5

Month 1m 3m 6m 12m Absolute 6.71 (5.36) 17.78 49.46 Relative 4.59 (16.79) (14.13) 3.29

KEY HIGHLIGHTS
Beneciary of strong timber prices. Cymao is set to benet from strong timber prices. Although average plywood prices have surged by >12% last year, we expect general timber prices to sustain at high levels for the next few years due to strong demand from Japan, Europe and the US amid tight supply from Indonesia. Moreover, the company has a niche in producing premium decorative and lay-on plywood, which are mainly exported to the US. Despite the ongoing housing correction in the US, we see minimal impact on the demand for premium plywood as it is mostly used for home refurbishment. We also note that premium plywood is priced almost 30% higher than the selling price of generic product. Sound fundamentals. Cymao has relatively good fundamentals as a small timber player in the sector. The company currently has a net gearing of about 10% while generating strong cash ows. Although earnings history is limited, earnings are considered stable over the past three years. Moreover, with the companys internationally recognised certications (CE markings and FSC COC) for its products, Cymao can further strengthen its foothold in the European markets and easily enter into markets with restrictive regulations on the legality of imported wood.
15
Looking out for acquisition opportunities. Cymao has started searching for both domestic as well as overseas acquisition opportunities. The company is planning to expand its production capacity as its plywood manufacturing capacity has already reached 90% utilisation rate. Funding for the acquisitions could come from both borrowings and also issuance of shares.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 195.1 245.8 254.4 291.4 876.1 26.0 3.5 14.5 31.8 21.3 36.7 44.4 25.3 13.4 23.7 30.5 21.0 16.3 21.6 27.6 37.8 27.1 32.0 36.7 650.1 (22.5) 32.9 27.6 2.01 2.06 2.41 2.40 17.4 10.4 13.9 16.7 10.9 6.6 8.7 10.5 3.7 5.2 4.4 3.8 0.8 0.8 0.7 0.7 0.2 0.0 (0.2) (0.2)
COMPANY REPORT CARD

ROE. Cymao reported satisfactory ROE over the last three years, ranging from 1522%. This is comparable to the average ROE of 1222% of the big timber players. Management. Cymao is currently under the management of its largest shareholders, Lin Tsai-Rong (MD), with >40 years of experience, and his sons Lin Kai-Hsuan (ED) and Lin Kai-Min (ED) with strong background in forestry studies as well as business management. The Lins family collectively holds a total of 28.1% stake in Cymao. Dividend. Cymaos dividend yield has been very attractive over the past few years. It paid out 10sen tax exempt DPS in 2006, representing a gross yield of 8.7%. We believe the company will continue with its attractive dividend policy given its stable cash ows and earnings.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 43.1 77.4 (20.1) 0.0 100.5 51.0 21.9 75.7 0.0 24.8 100.5 6.6 (1.0) FY04 49.9 96.6 (9.8) 0.0 136.7 60.0 32.4 111.7 0.2 24.8 136.7 0.0 11.2 FY05 45.2 122.3 (13.0) 0.0 154.6 60.0 32.4 123.4 6.3 24.8 154.6 10.9 0.5 FY06 101.5 115.9 (39.7) 0.0 177.7 75.0 17.3 162.9 14.8 0.0 177.7 27.2 (15.8)
RECOMMENDATION
Cymao is heavily undervalued compared to its peers. We expect the companys EPS to grow by about 27% for 2007 mainly due to strong plywood prices as well as bigger capacity as a result of the acquisition of Inovwood last year. At the current price, the stock is trading at a FY07f PE of only 3.8x while its earnings and cash ows are strong. We value Cymao at 7x PE, which is near to the average valuations of its small cap peers, ranging from 7.5x to 9x PE. Hence, we derive a fair value of RM2.60 for Cymao, which is slightly higher than its IPO price of RM2.50. Key risk for the stock is its illiquidity with only 75m shares outstanding. Nevertheless, stronger-than-expected timber prices or M&A activities may warrant a re-rating on the stock.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 14.5 (20.8) 11.4 5.2 5.6 0.0 11.2 FY05 FY06 (5.9) 37.3 (0.2) (39.8) 6.4 2.1 0.2 (0.4) 11.2 11.4 0.0 (1.8) 11.4 9.6
OSK
16
Hai-O Enterprise
Consumer
Healthy Growth With Health Care Products

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HAIO MK 68.13 136.26 2.19 | 1.17 100.81 0.23 (0.17) 4.08 1.25 1.03 1.36
INVESTMENT MERITS
One of the leading healthcare companies in Malaysia with more than 30 years of experience Strengthening of Ringgit against USD will reduce import cost Halal certication on selected products enable penetration into Malay market Expect net prot to grow by about 22% CAGR for the next 3 years Attractive dividend payout of at least 50% from net prot to shareholders

Tan Kai Hee & Family Excellent Communication SB 22.9 5.3
COMPANY PROFILE
Long establishment. Hai-O has become a famous household name offering a wide range of Chinese medicines, medicated wines and health care products since 1975. The company was successfully listed on the Bursa Malaysia Securities Berhad in 1996, being the rst traditional healthcare company on the stock exchange. The principal business of the company involves wholesaling, retailing, multi-level marketing (MLM), pharmaceutical factory and modern Chinese Medicinal Clinics. For the past three decades, Hai-O had honed its expertise by building an extensive and efcient distribution network and strong marketing strategies.

Month 1m 3m 6m 12m Absolute 9.29 12.51 59.77 79.74 Relative 5.16 (3.11) 15.28 24.25

KEY HIGHLIGHTS
Strong presence and wide network. Hai-O is the rst traditional herbal health care company with 54 outlets, including 15 franchise shops located throughout Peninsular Malaysia which adopt a truly homegrown franchise programme. Huge potential in MLM. MLM is the fastest growing division in the company with a CAGR of more than 40% in the past 3 years. Currently it is contributing about 38% to the companys total turnover and will highly increase in the future. This division has over 50,000 distribution agents, and over 50 stockists & branches nationwide. Active members in MLM have increased from 14% in 2002 to about 30% currently. We expect active members to increase as the management has stressed the importance of this division by effective training programmes.
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Promoting Pu-Er tea as its growth driver. Pu-Er tea is a premium grade of tea which has health benets and the only tea which increases in investment value over time. Hai-O has secured the sole distributorship of Pu-Er tea from several established Pu-Er producer in Yunnan Province. The group has made Pu-Er tea as one of its core products and plans to expand the business of this unique tea in the next few years. For FY06, Pu-Er tea has contributed approximately 10% of the groups total PBT. Besides Pu-Er tea, additional revenue and earnings contribution will come from new products/new agencies from China such as Fu Yuan Tang series products (ie. Ganoderma Lucidum Spore Cordyceps Sinensis Capsule, G-Balance Capsule, Ganoderna Lucidum), Bioa Aura Energy Water Filter and other house-owned brand products to be launched during the year. Halal certication on selected products. The halal certication on selected products enables Hai-O to have an edge over other Chinese traditional medicine and supplements products sellers to tap into the Malay market in Malaysia and 90% of its products channelled through MLM are purchased by the Malay community. Moreover, with the halal certicate, this can be a great opportunity to penetrate the Middle-East countries. Strengthening of Ringgit benecial to the company. Imports account for 60% of the groups total purchases. We expect for every 1% appreciation in Ringgit, Hai-Os gross prot margin will be increased by 0.3%-0.4%.

FYE 30 Apr Turnover Growth (%) EBITDA Pretax Net Earnings FD EPS (sen) Growth (%) NTA/Share Div (Gross) Div (Yield) PER P/NTA Net Cash/ Share FY05 FY06 FY07f FY08f 139.3 144.3 166.7 186.4 16.6 3.6 15.6 11.8 12.8 17.1 24.2 25.9 10.3 15.1 24.2 26.1 5.5 10.2 16.0 17.2 8.2 15.1 23.8 25.7 41.6 84.9 57.0 7.9 1.21 1.33 1.44 1.57 2.5 8.0 17.0 18.0 1.2 4.0 8.4 8.9 24.7 13.3 8.5 7.9 1.7 1.5 1.4 1.3 0.2 0.1 0.3 0.4
Balance Sheet (RMm)

FYE 30 Apr FY03 FY04 FY05 FY06 Fixed Assets 47.6 49.8 48.3 45.0 Current Assets 52.8 55.5 64.5 70.6 (19.7) (24.6) (31.0) (31.1) Current Liabilities Others 3.4 4.7 4.9 9.6 Total 84.1 85.3 86.7 94.0 Share capital 65.6 65.7 65.8 66.3 Reserves 14.4 14.9 16.1 23.1 Shareholder Funds 80.0 80.6 81.9 89.4 LT Liabilities 0.2 0.4 0.2 0.0 Others 3.9 4.3 4.6 4.6 Total 84.1 85.3 86.7 94.0 Gross Debt 5.8 6.1 5.6 4.4 Net Debt 7.7 6.8 11.8 8.7
COMPANY REPORT CARD

ROE. We expect Hai-O to register net earnings of RM16.0m and RM17.2m for FY07 and FY08 respectively, boosted by rapid growth in the MLM division and disposal of non-protable businesses. Net earnings growth is expected to be around 22% CAGR from FY06-FY09. ROE for FY07 and FY08 should be above 16%. Management. Managing Director Mr Tan Kai Hee has over 30 years in the industry and his management team is very hands on and dedicated to the business. Dividend. Hai-O has promised to pay at least 50% of net prot as dividend to shareholders. For FY07, we expect the company to pay dividend of at least 17 sen per share translating into yield of more than 8%.

FYE 30 Apr Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 7.4 (4.9) (3.0) (0.5) 13.3 0.0 12.8 FY05 FY06 8.9 11.2 0.3 (11.7) (4.5) (3.8) 4.6 (4.3) 12.8 17.4 0.0 0.0 17.4 13.1
RECOMMENDATION
We peg a fair value of RM2.33 by applying the composite average of 9x PER over FY08 EPS of 25.7 sen, P/BV of 1.5x and Gordon Growth Model. A 15% potential upside may not seem very high; however, Hai-O is backed by strong dividend yield exceeding 8% placing them as a defensive bet. Furthermore, we believe the company has a strong prot track record and has the potential to transfer into the Main Board, and therefore could possibly generate more buying interests on the stock.
OSK
18
Hiap Teck Venture

Giant Pipe Maker In The Making
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HTVB MK 327.40 625.33 1.98 | 0.69 2026.16 0.52 1.09 2.39 0.79 1.25 1.04
INVESTMENT MERITS
Key pipe maker with 60% of revenue derived from manufacturing and the remainder from the trading of steel products 9MP- the most anticipated impetus to the companys domestic sales Exports remain favourable with penetration into new markets leveraging on its mid and big diameters SHS Huge spare capacity for big diameter pipes and impending 60,000 tpy new capacity offers room to improve production gures, prot margin and resolve present 4 month production backlog Huge earnings potential from API and water pipe replacement projects yet to factor in

KHL SB United Coconut Fibre SB Lembaga Tabung Haji 26.1 14.2 5.1

Month 1m 3m 6m 12m Absolute 8.52 36.64 117.70 153.16 Relative 1.37 19.10 67.84 88.01
COMPANY PROFILE
Hiap Teck Venture originated in 1987 by setting up of a steel mill in Klang to produce scaffolding. Despite being a relatively new player in the steel industry, its founder Mr. Kua Hock Lai has been in the industry for more than 40 years. Hiap Teck is also involved in the trading of steel related products and reputed to be a one stop steel trading centre. The company was listed on the Main Board of Bursa Malaysia in 2003 and presently operates 6 plant in Klang, Selangor, manufacturing a broad range of at steel products such as steel pipes (round and rectangular), scaffolding and steel service centre that have a wide application. The company achieved a milestone in November 2005, with the commissioning of a 300,000MT pipes mills that is set to focus on the big diameter pipes and square hollow section (SHS).

KEY HIGHLIGHTS
9MP - the countdown begins. We already saw positive momentum on the domestic steel industry especially after recent increase in steel prices (since 3QFY06) following the stocking up exercise in anticipation for the execution of the 9MP. The increase in development expenditure under Budget 2007 to RM46.5bn for the development of schools, universities and housing may push demand for steel products including Hiap Tecks SHS, scaffolding and other trading items from March 2007 onward. Exports remain robust. Hiap Teck being the few producers of 18 diameter round and square Electrical Resistance Welded (ERW) pipes in the region has beneted from improved exports. The company had since 4QFY06 exported to Canada and the US on bulk shipments >6,000 MT per delivery. Hiap Teck is currently focusing into Australia following the merger of the 2 national pipe mills where stockists previously under both mills were omitted from the
19
restructuring hence inadvertently created a multiplying of independent distributors in Australia. Apart from that, the 2 upcoming integrated resorts (IR) at Marina Bay and Sentosa plus the booming construction industry has seen improving export to Singapore. Room to bump up production. Hiap Tecks new big diameter mill has a rated capacity of 300,000 tpy and is currently running at 35% to 40% utilisation rate hence ample room to ramp up production and lowering average conversion costs from improved efciencies. Apart from that, the company is installing a new production line with 60,000 tpy for 2 to 6 inches diameter pipes (round and square) to resolve a 4 month production backlog in the existing small and mid diameter plant. The new plant is also set to be American Petroleum Institute (API) compliant in order to widen its API pipes range, hence improving its competitiveness within the oil and gas industry. We expect contribution from the new line to kick in latest by early FY08. Huge earnings potential for API & water projects. Hiap Tecks investment in the new big diameter plant is set to be API certied (application submitted in Feb 2007) where prospects look exciting with the burgeoning oil & gas exploration in the region plus the advent of bio-diesel projects in Malaysia. On top of that, we observed some light at the end of the tunnel for the long overdue massive water pipe replacement projects following the RM2bn indicative allocation under the 9MP. Although the current trend favours ductile iron (DI) pipes from mild steel (MS) pipes, prevailing constrains in the local DI capacity may inadvertently be positive to Hiap Tecks big diameter pipes. Nonetheless, we prefer to take a more prudent stance in our earnings forecasts without factoring in any contribution from the API pipes at this juncture and deem impending demand for water pipes being a bonus to the company.

FYE 31 Jul Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share ^ FY05 FY06^ FY07f FY08f 756.0 1008.3 1384.8 1631.9 10.2 33.4 37.3 17.8 75.4 81.9 156.5 163.5 55.0 51.7 119.2 121.4 37.9 39.2 87.0 101.1 11.6 12.0 26.6 30.9 (8.3) 6.2 116.3 16.1 0.96 1.04 1.27 1.53 2.5 2.5 5.5 6.4 1.3 1.3 2.9 3.4 16.5 15.9 7.2 6.2 2.0 1.8 1.5 1.2 (0.73) (1.13) (1.55) (1.65)
FY06 gures were adjusted against impairment of plant & equipment that non-operating and non-recurring (assume 28% effective tax rate)
Balance Sheet (RMm)

FYE 31 Jul FY03 FY04 FY05 FY06 Fixed Assets 153.1 198.8 239.0 241.6 Current Assets 372.0 404.6 548.1 713.2 Current Liabilities (232.8) (266.1) (400.4) (477.1) Others 0.8 0.8 0.0 0.0 Total 293.2 338.0 386.7 477.6 Share capital 163.7 163.7 163.7 163.7 Reserves 121.2 149.6 175.2 252.2 Shareholder Fund 284.9 313.3 338.9 415.9 LT Liabilities 8.3 24.7 47.8 61.7 Others 0.0 0.0 0.0 0.0 Total 293.2 338.0 386.7 477.6 Gross Debt 186.7 250.7 399.9 524.0 Net Cash/ (Debt) (175.1) (237.6) (369.5) (508.9)
COMPANY REPORT CARD

ROE. Based on the robust growth ahead, we believe the company to record ROE >20% going forward. Management. Founder, Mr. Kua Hock Lai is actively involved in Hiap Tecks operation. With his rich experience in the steel business, Mr. Kua is spearheading a team of dedicated personnel. Dividend. Hiap Teck has not been lacking in rewarding its shareholders. We expect a decent dividend yield of 2.9% and 3.4% for FY07 and FY08 respectively based on the previous dividend payout.

FYE 31 Jul Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (0.6) (66.2) (109.7) (54.7) (20.0) (19.7) 56.8 103.6 108.0 1.5 17.4 (21.4) 11.6 13.1 30.5 0.0 0.0 6.0 13.1 30.5 15.1
RECOMMENDATION
Hiap Tecks share price gained 148% since our BUY call on 14 June 2006 amid the much improved market sentiment. Incorporating prevailing positive catalysts, the company remains our top pick for small cap and steel sector. We maintain our BUY recommendation with a 12 month target price of RM3.10 or 62.3% upside potential. The fair value is derived from a blended valuation of peer PER and historical peak PER. Couple with the dividend yield of 3.1% for CY07, the stock may potentially deliver a 12-month total return of 65.4%.
OSK
20
Kim Loong Resources

Fruitful Year Ahead
Plantation
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KIML MK 171.62 296.91 1.85 | 1.20 167.41 0.09 0.00 3.00 0.47 0.86 1.74
INVESTMENT MERITS
Brighter outlook as youthful tree prole is set to bear more fruits plus higher CPO price assumption @ RM2,150/MT for CY07 Better FFB production in Keningau, Sabah estate to increase internal FFB supply to palm oil milling thus enhancing utilisation and prot Commissioning of solvent extraction plant may push Oil Extraction Rate (OER) higher by 0.6%, hence higher extraction margin Nutraceutical plant expects to begin tocotrienol (Vitamin E) extraction soon Bio-fertilizer plant and venture into biogas plant are expected to contribute more income from the palm waste

Syarikat Kim Loong SB 66.5

Month 1m 3m 6m 12m Absolute 5.49 5.49 24.95 50.87 Relative (1.47) (7.26) (4.58) 6.25
COMPANY PROFILE
Kim Loong Resources rst commenced its business in 1967 with a 405 ha rubber plantation at Ulu Tiram, Johor, and subsequently ventured into oil palm planting a year later. The company then acquired more plantation land bank and built its rst palm oil mill in 1980. Kim Loong was listed on the main board of Bursa Malaysia on 27 November 2000. Presently, the company has 2 palm oil mills located at Kota Tinggi, Johor and Keningau, Sabah. The companys plantation land bank now stands at 13,562 ha with 89% located in Sabah and the rest located in Johor. Besides being involved in the traditional palm oil business, Kim Loong also ventured into (i) nutraceutical projects to extract tocotrienol (vitamin E), (ii) makes use of oil palm waste to produce bio-fertilizer and (iii) into biogas from palm efuents that qualies for certied emission reduction (CER) and can be sold as carbon credits in the EU.

KEY HIGHLIGHTS
Management of Kim Loong with the Gooi family at its helm, has always been forward looking with ventures into other synergistic businesses. More to come from oil palm plantation. Kim Loongs plantation division is expected to contribute more signicantly going forward as (i) its tree prole averaging between 5-9 years accounting for 62.3% of planted areas will increase FFB by 10.7% for FY1/08, (ii) higher margin from improving CPO price expected to average up to RM2,150/MT in CY07 and (iii) ongoing land bank expansion assuring sustainable long term growth. Palm oil milling higher margins ahead. Kim Loongs Kota Tinggi mill is in the nal stage of test run for its solvent extraction plant, the company expects
21
a 0.6% improvement in OER rate once in commercial operation. The Keningau mill may record better milling margin from improved internal FFB supply. Apart from that, the company is planning to set up a 3rd mill in 2HFY08 in order to cater for upcoming internal FFB from the Telupid estate. Extracting the jewel in CPO. A 70-30 JV in a nutraceutical project to extract tocotrienol concentrates (vitamin E family) and other supplements from Crude Palm Oil (CPO) looks promising and is in the nal stages of commercial test run after a few minor hiccups. We are optimistic of its prospects as the emphasis on health is now more pronounced with demand for health supplements like tocotrienol likely to increase Nonetheless, we take a prudent stance incorporating only minor income contribution for FY09 on the absence of track record. Lets waste not Kim Loong bio-fertilizer from palm oil waste has been gaining momentum from the recent expansion and expect less than 3-year payback period. The company in the midst of constructing its biogas plant to enhance environmental issue as well as qualify them for the certied emission reduction (CER) and can be sold as carbon credits in the EU under the Kyoto protocol that practices mandatory emission limitations for the reduction of greenhouse gas emissions on the signatory nations. In addition, the biogas plant is also set to replace the existing mini biomass plant supplying electricity for its CPO mill, hence reduce usage of palm biomass that may be sold for additional income.

FYE 31 Jan Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 230.7 17.6 31.9 16.4 13.3 11.8 (2.6) 1.99 7.0 4.0 14.6 0.9 (0.57) FY06 FY07 FY08f 218.7 263.1 381.5 (5.2) 20.3 45.0 30.1 46.0 73.1 14.3 30.6 58.7 11.4 22.7 40.7 6.7 13.2 23.7 (43.4) 98.0 79.3 1.74 1.83 1.99 7.0 10.0 16.5 4.0 5.8 9.5 25.9 13.1 7.3 1.0 0.9 0.9 (0.05) 0.06 0.13
Balance Sheet (RMm)

FYE 31 Jan Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY04 318.1 24.3 (23.9) 1.6 320.1 106.8 110.0 216.8 97.0 6.3 320.1 63.2 (61.3) FY05 335.7 27.8 (32.3) 1.6 332.9 106.8 117.8 224.6 100.8 7.5 332.9 70.7 (63.4) FY06 339.4 53.9 (25.6) 1.6 369.3 170.9 127.9 298.8 61.7 8.8 369.3 40.9 (8.2) FY07 341.6 64.9 (27.9) 0.0 378.6 171.5 142.5 314.0 54.3 10.3 378.6 29.1 10.7
COMPANY REPORT CARD

ROE. Having suffered momentarily from lower FFB yield for the past years, Kim Loong bottomline grew 98.7% and ROE improve to 7.4% in FY1/07 following strong 22.6% growth in FFB and higher CPO prices. Management. Predominantly under the Gooi family, so far the companys track record speaks for itself. Dividend. Kim Loongs management has been generous in rewarding investors. The board has proposed a generous dividend of 10 sen less tax in FY1/07 that translates into a gross dividend yield of 5.8%. Therefore, a generous policy to stay ahead.

FYE 31 Jan Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY05 FY06 FY07 24.2 20.0 38.7 (20.8) (16.3) (13.1) (2.0) 25.1 (17.7) 1.4 28.8 8.0 0.6 1.9 30.7 0.0 0.0 0.0 1.9 30.7 38.7
RECOMMENDATION
We believe Kim Loong share price is still relatively undervalued, trading at 9.4x CY07 EPS and 0.9x P/B ratio a deep discount to plantation peers under OSK universe, hence our BUY recommendation. We tagged our 12 month target price at RM2.36 or 36.6% upside derived from a composition of peer PER, peer P/B, 5 year average PEBD and GGM on fully diluted CY07 gures.
OSK
22
Mudajaya Group
Powering in a Niche
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MDJ MK 136.00 408.00 3.82 | 0.91 678.46 1.58 (0.28) 5.42 1.13 1.47 0.98
INVESTMENT MERITS
Power plant specialist with completed the civil and construction work for 9 power stations in the country Its rst foray into Indian power scene kicked off in a big way, where the group has struck a deal to build a 1,400MW power station for RM4.0b and will hold a 26% stake in the IPP The company also specializes in the pre-cast pre-stressed beams, which mainly used for bridges and viaducts. Order book at RM40m In 1997, the company embarked on the development of Batu Kawah township near Kuching with a GDV of 1.2b FY08 net prot could reach RM58.8m, thus at 10x forward PER, fair valuation would be at RM4.32/share

Dataran Sentral (M) Sdn Bhd Tiararibu (M) Sdn Bhd United Flagship Sdn Bhd 32 24 14

Month 1m 3m 6m 12m Absolute (7.28) 106.34 166.36 184.68 Relative (8.90) 85.75 111.63 114.45
COMPANY PROFILE
Mudajaya Group, via its wholly-owned subsidiary Mudajaya Corporation Bhd, is involved in construction, property development, project management, manufacturing and trading businesses. The group was formed in 1965 and was listed on the Main Board on 10 May 2004. To date, the group has successfully completed more than RM3.0b worth of contracts, mainly in the construction of roads and highways, power stations, buildings and marine structures. It has business exposures in both domestic and overseas construction works, mainly in India.

3.50 3.00 2.50 2.00 1.50 1.00 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Power plant specialist. The group has completed the civil and construction work for 9 power stations in the country, namely at Kulim Hi-Tech Park, Prai, Manjung, Tg. Kling, Melaka, Port Klang, Serdang, Port Dickson, Paka and in Bihar, India. The current construction outstanding order book is at about RM2.0b inclusive of RM660m Phase 1 of the India power plant. Expanding into IPP. Its rst foray into Indian power scene kicked off in a big way, where the group has struck a deal to build a 1,400MW power station, worth RM4.0b, and will hold a 26% stake in the IPP. Construction will begin in late 07 and is divided into 4 phases at 350MW each. The project is expected to take 4 years to complete. The PPA has already been signed with the Chhattisgarh State Electricity Board where 300MW of electricity would be taken up for 20 years at an average of RM0.19/kWh. Power hungry nation. The India Energy Ministry may increase the existing 120,000MW capacity to about 400,000MW by 2030 when the population
23
reaches 1.4b. The Indian government assumes an energy growth rate of 5% per annum. 9MP to lead domestic growth. Given its successful track record in the construction of highway and building, we are optimistic that the company could secure some of the RM1.0b worth of new projects it is bidding under the 9MP. Pre-cast concrete business could spring a surprise. The company specializes in the pre-cast pre-stressed beams, which is mainly used for bridges and viaducts. The company was involved in the supply of beams to Rawang-Ipoh Double Tracking and Guthrie Corridor Expressway projects. The factory is in Ijok, Selangor with installed capacity of 70,000MT per annum. Order book is at about RM40m. Property in Sarawak. In 1997, the company embarked on the development of Batu Kawah township near Kuching with a GDV of 1.2b with full completion in 2015. Phase 1 though 5 were fully sold while Phase 6 was launched in 2004. To date, overall take-up rate is estimated at 80% and we are optimistic that the pace could sustain until 2015. In early 2007, the company has entered into a MoA with Koperasi Peneroka Felda Chini Tiga Bhd and Promi-Quest (M) Sdn Bhd for the construction of 15,000 single-storey semi-detached house at a cost of about RM900m. Earnings improvement. We expect a strong 57% rise in net prot for FY07 from the pick up in construction activities as well as higher billings from property development. The company is looking at RM1.0b order book replenishment that would result in further upside in earnings.

FYE 31 Dec Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 385.1 27.5 37.4 36.6 24.4 18.6 14.0 0.99 6.0 2.0 16.1 3.03 0.57 FY05 FY06 FY07f 293.1 285.9 357.4 (23.9) (2.5) 25.0 24.4 31.6 42.9 24 31.6 43.1 12.3 16.3 25.6 9.1 12 18.8 (49.6) 32.5 57.1 1.04 1.12 1.25 6.0 6.0 6.0 2.0 2.0 2.0 33.0 25.0 16.0 2.88 2.68 2.40 0.47 0.34 0.36
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 16.3 154.9 (64.6) 106.6 68.0 37.3 96.6 10.0 106.6 6.1 FY04 21.8 183.7 (58.7) 146.7 68.0 65.9 133.9 13.1 146.9 38.5 FY05 17.6 194.4 (58.9) 153.1 68.0 72.1 140.1 13.0 153.1 65.6 FY06 13.7 196.1 (44.9) 164.9 68.0 81.4 149.4 15.5 164.9 45.7
COMPANY REPORT CARD

ROE. ROE for the past 3 years averaged at 17% but we expect improvement given the estimated three-fold increase in net prot. Management. The company is a product of a MBO, led by the current MD, Mr. Ng Yin Loong, who has been with the company for more than 20 years. Dividend. The company has a good dividend track record averaging 6 sen per share. No dividend policy is in place but we are not concern given the historical payout exercises.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 35.1 35.5 (9.8) (7.6) (6.8) (5.1) 4.9 (21.6) (4.0) 32.4 26.1 (18.8) 6.1 38.5 64.6 37.5 64.6 45.7
RECOMMENDATION
We are upbeat on the prospect of Mudajaya and concern over the Indian IPP is allayed after the signing of the PPA. We are expecting further upside from the Indian project with construction activities could start late in 2007 of which it will provide a much stronger upside for FY08 earnings which we estimated to reach RM58.8m. Earnings should be enhanced once the IPP commence operation. Valuation is pegged at 10x FY08 earnings, translating into a fair valuation of RM4.32/share.
OSK
24
TMC Life Sciences

Creating The Next Generation
Healthcare
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TMCL MK 168.33 165.81 1.29 | 0.75 1193.26 0.15 Net Cash 1499.76 1.87 0.24
INVESTMENT MERITS
The leading fertility services provider in Malaysia In expansion mode locally and overseas New Tropicana Medical Center expected to contribute to exponential earnings from downstream and new services Stemcell business to be another engine of growth Historical 3 year revenue CAGR of more than 30% and over 50% EBITDA margins

Dr. Colin Lee Lee Soon Ai Kho Poh Eng 49.3 5.0 4.6
COMPANY PROFILE
TMC Life Sciences (TMC) commenced operations since January 1994 as a fertility clinic in Damansara. Since then, founder Dr. Colin Lee transformed the company into a leading fertility center in Malaysia. The group is poised to reach another new chapter in its history in early 2008 with the completion of a 120-bed hospital known as Tropicana Medical Center. Apart from specialising in fertility treatment such as Assisted Reproductive Technology (ART) procedures and Ultra-Uterine Insemination (IUI), TMC provides services in other areas of womens health, including advanced laparoscopic surgery and general Obstetrician and Gynaecologist (O&G) services. TMC also owns an in-house research centre, which has enabled various medical achievements and securing world-class pregnancy success rates for fertility treatment in Malaysia. The group was listed on the MESDAQ in October 2005.

Month 1m 3m 6m 12m Absolute (6.54) 19.05 19.76 10.48 Relative (11.67) 3.10 (8.46) (19.97)

KEY HIGHLIGHTS
Two more centers on board. Another two fertility centres with full laboratory and operating theatre facilities are expected to be operational this year. TMC has strategically identied Kuantan (the only fertility center in east-coast Malaysia) and Penang (favourite destination of choice for foreign patients seeking treatment in Malaysia) as the location of the two new centers. The group currently has four fertility centres at Damansara Utama, Kepong, Johor Bahru and Sibu. New fertility treatment breakthrough. TMC reafrmed its position as the market leader in fertility services with the introduction of new techniques in the Pre-implantation Genetic Diagnosis (PGD) procedures. The service will complement existing fertility procedures while providing higher yield earnings. The group is the only centre in Malaysia and second in the region to offer such services.
25
Making inroads into Indonesia. TCM is undergoing major expansion efforts to capture additional markets in Indonesia with the opening of six representatives ofces in Indonesia from three currently. Indonesia clients, as with all foreign clients, have higher revenue per visit and contributed 34% of foreign revenue in FY06. Soaring to greater heights. Upon completion of the Tropicana Medical Center, forty doctors are expected to be employed under the group. The hospital will be offering a whole new suite of medical services. These include paediatrics, cardiology, interventional radiology and aesthetics cosmetics etc. TCM already has in a place the key management team to run the hospital. With 52 clinics in the hospital and strategically located in an afuent area, TMC is poised to become the most advanced and comprehensive fertility center in the region. Tapping into stem cell business. It was only a natural progression for TMC to venture into stem cell banking and therapy amid the synergistic benets that can be reap from this new business. With only three local players, there is more than enough room for another player to enter the scene. Strategic Shareholder The emergence of Tan Sri Quek Leng Chan as a majority stakeholder with a 14.53% stake has sparked massive interest in the group. We believe this positive development shows condence in the company, raising its visibility among investors.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 16.6 21.5 37.7 29.6 8.4 11.6 7.9 11.0 5.7 7.8 3.4 4.6 80.1 38.0 - 0.24 0.0 1.0 0.0 1.0 31.0 22.4 4.3 0.1 FY06 FY07f 25.1 32.5 17.0 29.3 13.2 15.9 12.6 16.2 8.9 11.7 5.3 6.9 14.0 31.5 0.29 0.35 1.0 1.0 1.0 1.0 19.7 15.0 3.6 3.0 0.1 (0.2)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 26.5 44.8 20.6 15.7 (2.8) (8.4) 0.0 0.0 44.3 52.1 16.8 16.8 24.2 31.9 41.0 48.7 3.3 3.4 0.0 0.0 44.3 52.1 0.0 0.0 17.2 11.8
COMPANY REPORT CARD

ROE. Even after achieving high ROEs of 18-19%, we expect ROE to escalate with all the upbeat growth catalysts. Management. Dr Colin Lee, who has 25 years of medical practice, is instrumental in establishing TMC as a leading fertility center in Malaysia. Backed by a team of 6 doctors, 7 resident embryologists, 2 urologists, TMC has achieved many rsts in the fertility industry. Dividend. TMC has a informal policy of declaring dividend every FY. As a high growth company with high capex due to the construction of the Tropicana Medical Center, TMC has declared a gross dividend of only 1 sen since listing. Dividend yields can only improve in the coming years.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - 15.4 5.9 - (19.6) (16.2) - (1.2) 27.5 - (5.5) 17.2 - 17.2 0.0 0.0 0.0 - 11.8 17.2
RECOMMENDATION
TMC is now trading at 15.0x PE FY07, well below the average MESDAQ forward PE of 27.3x and regional healthcare PE of 20.0x. TMC continues to amaze us with historical 3 year revenue CAGR of more than 30% and over 50% EBITDA margins. Pegging TMC to a PE of 20.0x, we arrived at a fair value of RM1.39, an upside of 33.5%. The forecast has yet to take into account exponential earnings from the Tropicana Medical Center.
OSK
26
Tong Herr Resources

Riding on Escalating Nickel Price
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) THR MK 84.96 372.10 4.54 | 2.62 106.39 0.28 (0.44) 5.02 1.80 1.06 2.21
INVESTMENT MERITS
Leading global stainless steel fastener producer Nickel price uptrend >US$40,000/MT to improve prot margin and buying sentiment Thailand plant progressing well and performed stronger than expected in FY06 Expansion of its Thailand operation and the installing of new machineries in Penang to improve delivery and penetration to new markets Prot track record intact since inception in 1990 with attractive dividend yields

All Star Int. Holdings Ltd 51.6

Month 1m 3m 6m 12m Absolute 9.50 6.83 30.36 71.98 Relative 2.28 (6.08) 1.38 15.43
COMPANY PROFILE
Tong Herr Resources is principally involved in the manufacturing of stainless steel fasteners including nuts, bolts and screws. In 1988, the Tsai brothers set up Tong Herr Fasteners Co SB in Penang to produce stainless steel nuts. The Penang operation was commissioned in 1990 from its plant in the Prai Industrial Estate, Penang. The company thereafter expanded into stainless steel bolts and screws in 1994 and was listed on the Main Board of Bursa Malaysia in 1999. Tong Herr recorded another milestone by setting up a 50.1% owned stainless steel fastener plant at Thailand in early FY06.

KEY HIGHLIGHTS
With more than 30 years in the stainless steel fasteners industry, Tong Herr is set to experience further growth via; Rising nickel prices. Given the stronger than expected nickel prices with new global mining capacity to come on stream by end FY08, we remain condent that nickel prices will hover around US$40,000/MT level for CY07. Prevalent high nickel prices my help expand prot margin following a mismatch between higher selling price vis--vis lower inventory costs. Though there remains a possibility of a nickel price correction that may dampen Tong Herrs overall prot margin, we believe the company has enough buffer to absorb any sharp decline and outlast the others with cash ow difculties. Thailand venture. Tong Herr has set up a new stainless steel fastener plant in Thailand via a strategic partnership with major shareholder, All Star International. The plant which is installed with a capacity of 5,400 MT, is set to penetrate into the US market as Thailand is exempted from the 8.6% import duty. Apart from that, the investment is expected to generate better prot margins from its 7 years tax exempt status and cheaper production
27
costs in Thailand. With less than a year in operation, the new plant is already running close to optimum capacity and recorded a prot of RM6.4m for FY06, stronger than our projection. Expansion mode Tong Herr is expanding its Thailand operation and installing new machineries in its Penang plant over next 2 years to handle potential new customers. With the existing plant already running at optimum capacity based on 1 shift operation, the new capacity is a much need addition to boost production going forward. Management has indicated that the production capacity can be easily double merely by adding 1 more shift but not more in order to maintain higher product quality. Penetrating new market. Stainless steel fasteners are widely used by public transportation, ship building, industry machineries, construction and infrastructure. Japan and Europe have been the companys main market hence the proportion of untapped markets remains vast. As Malaysia has been excluded from the imposition of anti dumping duties by the European Commission, we expect exports to Europe to increase going forward.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 217.7 200.5 303.3 437.7 64.5 (7.9) 51.3 44.3 60.6 37.6 80.4 106.7 57.4 35.4 77.1 102.7 44.0 29.7 55.7 69.4 53.1 35.0 65.6 81.7 118.4 (34.1) 87.3 24.6 2.06 2.68 3.19 3.75 33.1 21.1 27.1 45.4 7.6 4.8 6.2 10.4 8.3 12.5 6.7 5.4 2.1 1.6 1.4 1.2 0.80 1.03 0.21 0.83
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 30.6 154.5 (39.0) 0.0 146.1 81.8 60.5 142.3 3.8 0.0 146.1 33.9 41.7 FY04 29.6 203.7 (59.5) 0.0 173.8 82.8 87.9 170.7 3.1 0.0 173.8 49.3 66.3 FY05 35.0 178.9 (14.1) 0.0 199.8 84.9 103.1 187.9 2.7 9.1 199.8 3.6 87.5 FY06 52.6 277.9 (86.8) 0.0 243.7 85.0 142.8 227.7 3.0 13.0 243.7 73.4 18.0
COMPANY REPORT CARD

ROE. Tong Herr registered an impressive ROE of 26.8% in FY06 as compared to 16.6% in the preceding year. Given the strong nickel price and positive catalysts ahead, we expect the companys ROE to exceed 20% going forward. Management. The Tsai brothers have been actively involved in the day-to-day running of the business since inception. With more than 30 years experience in the industry, we are condent the company is in good hands. Dividend. Tong Herr has consistently paid generous dividends. With the higher projected earning going forward, we estimate a decent gross dividend yield of 10.3% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 41.5 31.6 (41.6) (1.5) (7.2) (11.9) (0.1) (48.8) 54.5 1.0 39.9 (24.4) 75.7 115.6 91.2 0.0 0.0 0.0 115.6 91.2 92.2
RECOMMENDATION
Given the encouraging outlook, strong nickel prices together with solid fundamentals, we reiterate our BUY recommendation on Tong Herr. We tagged our 12-month target price at RM7.02 or 60.4% upside derived from a composition of peer PER, peer P/BV and Gordon Growth Model on FY07 valuation. Coupled with the dividend yield of 10.3% for FY07, the stock may potentially deliver a 12-month total return 70.7%.
OSK
28
United Malayan Land

Property
Solid Shareholders, Solid Earnings Growth

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) UML MK 234.92 498.02 2.25 | 0.97 172.21 0.95 0.34 1.78 0.56 1.31 3.33
INVESTMENT MERITS
FY07 growth spurred by RM135.5m unbilled sales from Suasana Sentral Loft Double digit growth at least until 2010, underpinned by 3 upcoming high-end condos/service apartments in the Klang Valley worth a total GDV of RM963m Growth further supported by 3 maiden township developments. 74% of its outstanding GDV of RM5.8bn are within the IDR 5-year (FY03-FY08) net prot CAGR of 30.8% Greatly undervalued, trading at 52.6% and 36.2% discount to RNAV of RM4.47 and NTA/share of RM3.32 respectively

Wawasan Perangsang CapitaLand Tradewinds Corp 24.6 21.6 7.7
COMPANY PROFILE
United Malayan Land (UM Land) started life on Bursa Malaysias Main Board as United Malayan Flour Mills in 1961. Its core operation was transformed to property development in 1995 following the RTO and subsequent backdoor listing of Seri Alam Properties S/B, which was acquired from Chee Tat Holdings, DBS Land Ltd and Tradewinds Corporation Bhd. Shareholders of UM Land are unrivalled: CapitaLand Ltd of Singapore holds a 21.6% stake while Tradewinds Corp and Chee Tat Holdings have 7.7% each. Recently, former chairman Mohamed Ali Rashed Alabbar (Alabbar) became UM Lands largest shareholder with 24.6% stake through Wawasan Perangsang. Alabbar sits on the board of EMAAR Properties, which is listed on Dubai Financial Market with market cap of >US$28.0bn. UM Land currently has 4 on-going development projects where 2 are in the Klang Valley Suasana Sentral Loft, KL Sentral and Bandar Seri Putra, Bangi and 2 in the Iskandar Development Region (IDR) Seri Austin and Bandar Seri Alam. All of its current outstanding landbank of 2,326 acres are freehold.


KEY HIGHLIGHTS
Suasana Sentral Loft (GDV, RM340m). With close proximity to the KL Sentral transportation hub and MSC Cybercentre, the develpment has now achieved 100% take-up rate since its launch in Jan 2005. With current completion rate of 60.2%, unbilled sales for the development stand at RM135.3m of the total RM162.0m. Over 20% of the take-ups are made up of foreign buyers. This 70:30 JV project with MRCB is due for completion by early 2008. Mayang Land. UM Land holds a 35% stake in this JV development with Bolton and CapitaLand. Sited on a 4.3 acres freehold land in the vicinity of KLCC along Jln Mayang and Jln Yap Kwan Seng, the proposed 686 units of high-end condominiums with an estimated GDV of RM744m, is due to be launched in 2008. In addition to its prime location, competitive pricing of RM650psf vs >RM750psf within the KLCC enclave should ensure decent take-ups.
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Bangsar Land. 100%-owned, the 191 proposed units of high-end condominiums will have an estimated GDV of RM99m (or an average selling price of RM400psf). Sitting on a 0.93 acre of freehold land, the proposed project is located in Bangsar, along Jln Kaloi. The development is earmarked for launching in 2H07 or early year 2008. Raja Chulan. Located on a 1.5 acre of freehold land along Persiaran Raja Chulan, UM Land has proposed to develop 310 units of 4-star service residences due for launching in 2008. The development has an estimated GDV of RM120m (or an average selling price of RM360psf) is a 50:50 JV between a 71%-owned investment vehicle by UM Land and MMC. UM Land will have an effective interest of 35.5% in the development. Bandar Seri Alam, South Johor. With outstanding landbank of 1,667 acres and GDV of RM3.3bn, the township is due for completion by year 2014. A fully integrated and matured township of its own, the development has achieved a strong take-up of 82%. Seri Austin, Tebrau, South Johor. Has an outstanding landbank of 435 acres and GDV of RM1.1bn, the township is due for completion by year 2012. Located in the Tebrau Corridor, Seri Austin has managed to achieve a take-up of 62%. Bandar Seri Putra, Bangi, KL. A 70:30 JV with CapitaLand, the township still has outstanding landbank of 217 acres and GDV of RM531m. The township is due for completion in year 2010. Enjoying strong spillover demand from Putrajaya, the township is enjoying a strong take-up rate of 91%.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 214.8 416.6 386.6 522.6 30.3 93.9 (7.2) 35.2 38.2 75.7 81.5 122.8 36.9 67.5 71.7 110.1 29.2 40.1 48.4 58.0 12.6 17.3 20.8 25.0 42.0 37.4 20.6 19.7 3.21 3.32 3.49 3.67 7.5 9.0 9.0 9.0 3.5 4.2 4.2 4.2 16.9 12.3 10.2 8.5 0.7 0.6 0.6 0.6 (0.9) (1.3) (1.4) (1.5)
Balance Sheet (RMm)

FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 415.6 572.3 549.5 540.6 Current Assets 560.7 571.2 642.4 812.6 Current Liabilities (169.9) (229.1) (240.6) (360.9) Others 0.0 0.0 0.0 0.0 Total 806.4 914.5 951.3 992.3 Share capital 232.3 232.3 232.3 232.3 Reserves 487.2 501.6 514.1 540.1 Shareholder Fund 719.6 734.0 746.4 772.4 LT Liabilities 39.1 126.1 145.5 145.2 Others 47.8 54.4 59.4 74.7 Total 806.4 914.5 951.3 992.3 Gross Debt 89.5 228.7 262.6 344.4 Net Cash/ (Debt) (71.4) (210.6) (215.0) (281.6)
COMPANY REPORT CARD

ROE. Due to the Groups relatively large landbank, FY06 ROE was low at 5.3% (FY05: 3.9%) but will improve to 5.9% in FY07 and 6.6% in FY08 as UM Land slowly unlocks the value of its landbank as the development projects progress. Management. UM Lands management is one of its key attractions, having board representation for its largest shareholders who are property powerhouses. Dividend. The Group has been paying out 7.5sen annual dividend except for the 9sen (2.5sen tax-exempt and 6.5sen less tax) in FY06 and will continue to at least maintain that dividend level going forward.

FYE 31 Dec FY04 (133.1) Cash Flow from Ops Cash Flow from Investing 0.7 Cash Flow from Financing 124.4 (8.0) Net Increase in Cash Cash at Beginning of Year 18.0 Other Changes Cash at End of Year 10.0 FY05 FY06 11.5 (62.4) (1.9) (1.6) 12.0 49.9 21.6 (14.1) 10.0 31.7 0.0 0.0 31.7 17.6
RECOMMENDATION
Denite BUY. Despite its unblemished track record and strong growth catalysts ahead, UM Land has been trading at a signicant 52.6% and 36.2% discount to its RNAV of RM4.47 and NTA/share of RM3.32 respectively. UM Land is rated a BUY with 12-month target price of RM3.57, based on 20% discount to its RNAV.
OSK
30
Acoustech
For All Things Acoustic
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) ATEC MK 176.33 167.51 1.21 | 0.72 610.42 0.04 (0.24) 4.64 0.95 0.99 0.83
INVESTMENT MERITS
Uninterrupted prot record for the past 5 years Future earnings growth is well diversied Attractive dividend yield of more than 10% Share price has potential upside of more than 30%
COMPANY PROFILE
Acoustech was incorporated in on 18 October 1999 and listed on the second board of Bursa Malaysia in November 2001. The company transferred to the main board on January 2005. Acoustech operates in three segments: audio division, chemical division and electrical equipment division. Subsidiaries include Formosa Prosonic Technics S/B (FPT), which manufactures and assembles speaker units, multimedia speaker systems and molded plastic parts; Formosa Prosonic Chemicals S/B (FPC), which manufactures specialized chemical paints; Formosa Prosonic Equipment S/B (FPEQ), which manufactures electrical equipment, and Aerotronic S/B (Aerotronic), which manufactures voice coils and related products for use in speaker units and multimedia speaker systems.

Formosa Prosonic Manufacturing SB Huang Huai-Son 22.85 6.20

Month 1m 3m 6m 12m Absolute (3.85) 3.63 21.66 39.95 Relative (12.10) (13.20) (15.99) (7.42)

KEY HIGHLIGHTS
Chemical paint division a major earnings driver. Acoustechs specialised chemical paint division produces high quality paint using a patented technology from Musashi, Japan. The products are solvent and water based paints and thinners with gasoline chemical mixture used mainly in the plastic, electrical and electronics, automobile, metal and wood-based industries. Specialised chemical paints are also produced for products which require a durable nish on the surface. This division is the major earnings driver for Acoustech, contributing 60% to the groups operating prot. It also has a high operating margin of over 25%. Currently, the company only utilises about 60% of the production capacity of this division.
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Rebound in audio division. In producing high-end OEM multimedia speaker systems, FPT employs sophisticated sound technology capable of mapping detailed audio images for different ranges of speaker systems. However, the audio division was doing badly in the past 2 years. This was due to major customers in the US who were distracted by restructuring exercises leading to lower business volume and inefciencies in production. Nevertheless, management has highlighted that new orders begia to ow in recently and expect better performance from FY07. Moreover the stabilised crude oil price will lead to a more stable cost of production as major materials are made up of petroleum products. Potential in electrical equipment division. This division produces high quality water lters. Water coolers and water lters produced are gaining preference by consumers in EU, US and Asia Pacic region due to its reliable quality. Acoustech plans to expand the product range such as multi-beverage machines to boost its revenue. We expect revenue from this division to grow by 20% to 30% for the next 2 years.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 227.7 301.9 305.3 329.3 3.5 32.6 1.1 7.9 24.1 21.5 27.2 29.1 26.5 25.1 0.0 0.0 18.0 16.6 19.1 20.4 10.3 9.5 10.9 11.7 6.8 60.2 (7.6) 14.8 0.75 0.80 0.83 0.86 7.0 10.1 11.0 12.0 7.3 10.6 11.5 12.6 9.3 10.0 8.7 8.2 1.3 1.2 1.2 1.1 0.1 0.2 0.1 0.1
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 62.5 121.9 (52.2) 0.0 132.2 78.0 43.3 121.3 5.4 5.4 132.2 31.4 3.9 FY04 62.5 118.4 (50.1) 0.0 130.9 78.0 42.9 120.9 3.3 6.7 130.9 18.2 1.4 FY05 65.2 127.5 (53.2) 0.0 139.5 81.3 50.2 131.5 3.3 4.7 139.5 8.6 16.5 FY06 61.8 138.2 (53.1) 0.0 147.0 83.9 55.4 139.2 3.8 3.9 147.0 6.9 34.2
COMPANY REPORT CARD

ROE. For the past 2 years ROE ranged between 12% and 14%. We expect ROE to remain stable at this level for the next 2 years. Meanwhile balance sheet is strong with net cash per share of 20 sen. Management. The managing director has more than 31 years of experience in the manufacturing industry. Dividend. For FY06, Acoustech paid 10.5 sen dividend per share, which translates into a gross yield of 10.3%. We expect the company to pay 11 sen in FY07 translating into gross yield of 11.5%.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 7.7 24.6 23.3 (2.0) (3.4) 4.8 (21.8) (15.4) (12.0) (16.1) 5.8 16.1 35.3 19.2 25.0 0.0 0.0 0.0 19.2 25.0 41.0
RECOMMENDATION
The share price is currently trading at 10x PER on FY06 earnings. We expect Acoustech to trade between 8x and 9x for FY07 and FY08. We peg a 12 month target price of RM1.28 based on the average of 11x PER over FY08 EPS of 11.7 sen, 1.5x P/BV and the Gordon Growth model.
OSK
32
ACP Industries
ACP INDUSTRIES BERHAD
Cementing Its Prospect

Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) ACP MK 221.48 387.60 2.08 | 0.75 942.97 0.49 0.74 0.64 (1.25) 1.86 1.71
INVESTMENT MERITS
A market leader in pre-cast concrete with Segmental Box Girders (SBG) as its main product, commanding a strong 70% market share Acquisition of MTD Construction will be a kicker to earnings as orderbook could potentially rise to RM4.7b Strong prospect to land supply jobs for the construction of the Penang 2nd Bridge and the North-South Railway Double Tracking project We expect the company to break even this year with stronger prot post- FY08 Maintain BUY with a target price at RM2.55/share

MTD Capital Metacorp Bhd EPF 39.8 29.0 15.4

Month 1m 3m 6m 12m Absolute 2.29 42.06 93.11 65.65 Relative (4.04) 22.11 45.24 27.55
COMPANY PROFILE
ACPIs core businesses are manufacturing of pre-cast concrete products for infrastructure and buildings, and property development. A new addition is construction, after the completion of its acquisition of MTD Construction Sdn Bhd late last year. Among the high prole jobs the company has participated were (i) North South Expressway, (ii) Johor Second Link, (iii) MRR2, and (iv) railway double tracking from Rawang to Ipoh.

KEY HIGHLIGHTS
Completed the acquisition of MTD Construction. The acquisition of MTD Construction was completed in October 2006. At the moment, impact from the acquisition has yet to show positive result but things are set to look rosier as the consolidation sector gathers momentum. The 3QFY07 result was undermined by severe margins pressure from the rising material prices but we expect things to improve with more works in the pipeline to provide the economies of scale. On the ip side, the most notable upside is from the expanding order book post acquisition. Order book is looking good. Order book has expanded from RM750m to RM3.0bn, and could rise to RM4.7bn should MTD Capital awards the construction works at SLEX and Cikarang Toll to ACPI. To benet from 9MP. ACPI should benet from these 9MP projects: (i) 2nd Penang Bridge (RM2.6b), (ii) Penang Outer Ring Road (RM1.1b), and (iii) Interstate Raw Water Transfer works (RM4.0b). In general, the costs of precast concrete for infra works are approximately 10% of the costs and based on that, we are looking at a potential RM770m worth of pre-cast concrete jobs for the taking. With ACPI being the market leader (70% market share) in pre-cast concrete, the prospect certainly looks very exciting indeed.
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Sleepers for the tracks. ACPI provided railway sleepers for the Phase 1 Rawang-Ipoh rail project. The possible revival of the Northern Double Tracking Project (Ipoh Padang Besar) job reportedly worth RM10b certainly spelt great news to the company as railway sleepers could count as much as 20% of the cost. The company has a factory each in Ipoh and Gurun, Kedah ready for action. Conrmation on this would surely unlock further upside to its valuation. Earnings recovery on the cards. The company is still feeling the effect from the rising costs of material i.e. steel, cement and aggregates (sands etc.) which resulted in severe margins compression where the company posted ve consecutive quarterly losses. We expect the company to reverse the trend in FY07 after a full streamlining of MTD Construction books. The company may post prots in FY08 as the works on the construction projects gather pace and from economies of scale from more pre-cast concrete jobs.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 341.1 320.3 429.8 983.1 11 (7.4) 34.2 128.7 13.5 (67.7) 17.6 42.0 (30.3) (102.9) 9.8 34.9 (32.8) (104.4) 5 20.4 (14.8) (47.1) 2.5 9.2 2.60 2.00 1.40 1.41 4.0 1.0 2.0 2.0 0.67 0.1 0.88 0.1 0.00 19.03 1.25 1.25 0.3 0.3
Balance Sheet (RMm)
COMPANY REPORT CARD

ROE. ROE is not the companys strong point at the moment. Nevertheless, with the projected earnings recovery, we expect a reversal in ROE. Management. Dato Dr. Nik Hussain bin Abdul Rahman is the Executive Chairman of the company as well as for MTD Capital Bhd. Dividend. Consistently paying dividends despite making losses. A 2.0 sen gross dividend is expected for FY07.
RECOMMENDATION
Despite the current weakness in its earnings, we are optimistic on the prospect of the company from 9MP. We maintain our BUY call on ACPI with a target price at RM2.55 based on 12x (our average small cap PER) FY09 earnings with catalysts include (i) the prospect of 9MP projects, (ii) revival of Northern Double Tracking project and (iii) easing pressure on margins for pre-cast concrete.
FYE 31 Mar FY03 FY04 FY05 FY06 Fixed Assets 232.7 244.9 233.1 203.4 Current Assets 398.0 440.4 443.7 424.5 Current Liabilities (161.9) (180.8) (225.5) (250.4) Others Total 468.8 504.5 451.3 377.4 Share capital 132.5 133.5 133.5 133.5 Reserves 277.8 239.1 199.7 114.3 Shareholder Fund 410.1 372.6 333.2 247.8 LT Liabilities 58.5 123.2 110.6 113.8 Others 8.6 7.5 15.8 Total 468.8 504.5 451.3 377.4 Gross Debt 220.4 181.7 184.9 189.7 Net Cash/ (Debt) - (178.0) (173.1) (176.3)

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (27.1) (13.7) 0.3 (36.9) 0.2 61.8 (4.0) 4.8 (2.2) (17.7) 5.0 22.3 20.1 2.4 20.1 2.4 7.4
OSK
34
Ajiya
Two Pronged Growth Strategy
Building Material
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) AJY MK 69.22 81.68 1.30 | 0.98 72.89 (0.02) (0.04) 3.47 0.80 1.16 1.86
INVESTMENT MERITS
Manufactures a wide range of high grade metal forming and specialised glass Metal forming plants are strategically located in the Northern, Southern, East Coast and Centre of Peninsular Malaysia, to improve competitiveness Premium grade glass products successfully penetrating into the Japan market 9MP the most anticipated boost to earnings prospects Solid balance sheet with good prot track records

Chan Wah Kiang Yeo Ann Seck Avia Kapital SB 16.0 13.1 10.2
COMPANY PROFILE
Ajiya is a Segamat based building material manufacturer with history dating back to 1989. Starting-off as a metal roong manufacturer, the company has since diversied to manufacture different types of metal based building material such as door & window frames, metal ceilings, sunshade panels and others that are mainly for domestic consumption. In 1996, Ajiya via 60% owned subsidiary, Ajiya Safety Glass SB, had ventured into safety glass products manufacturing. The company was initially listed on the Second Board of Bursa Malaysia and subsequently transferred to the main board in 2003. Today, the company has recorded a new milestone by successfully penetrating into the Japan safety glass market reecting the high quality of its glass products. Having endured a prolonged lethargic construction sector, the impending roll out of projects under the 9MP should provide with much excitement for the companys prospects. We are upbeat on the upcoming catalysts that set to drive the company to a higher level.

Month 1m 3m 6m 12m Absolute 5.36 (1.67) 18.00 18.74 Relative (1.59) (13.55) (8.23) (17.27)

1.40 1.30 1.20 1.10 1.00 0.90 0.80 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
9th Malaysia Plan just a matter of time. After a sluggish few years for the construction sector, things are denitely looking up on the implementation of the 9MP with a 31% increase in development expenditure to RM46.5bn under Budget 2007 involving construction of schools, universities, hospital, housing and others. We are condent that execution of 9MP may continue to push the demand of both metal forming and safety glass products as more buildings will be constructed in the next few years. Apart from that, recent trend favouring energy efcient safety glass in replacing conventional material is good news for its glass division. Overseas expansion on the cards. Leveraging on AFTA, Ajiya has established its overseas presence particularly within the SEA region. The company is conducting a feasibility study to set up a new plant abroad which
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we believe would begin with a metal forming plant that requires lower CAPEX by FY07. Pegging on Ajiyas superior track record against its peers in term of prot margins and return on equity, we are upbeat on the success of its foray into overseas. New metal forming plants in strategic area. Ajiya is presently operating its metal forming plants strategically located in Puchong (Central), Kota Bahru (East), Sungai Petani (North) and Segamat (Southern) within the Peninsular Malaysia. After years of experience, the company is now ready to set up new plants in other locations in a bid to strengthen its market share and to ensure timely delivery to its customers. By having plants closer to demand may reduce delivery costs thus improving overall competitiveness. Also, by setting up plants in previously neglected areas may enable the company to encroach to untapped markets especially the 9MPs allocations are mostly focus on rural areas. On top of that, the company has recently commenced a metal forming plan and is installing the safety glass machinery in a newly acquired plant at Johor Bahru to capture upcoming South Johor Economic Region development and booming construction activities across the causeway. Continuous improvement. The company has so far managed to maintain its protability level even during the sluggish period amid the hike of steel prices. Despite the possibility of further squeeze in margin due to stiff competition, we think this should be compensated by higher volume and continuous production improvement. Ajiya is always targeting for (i) higher productivity, (ii) lower cost and (iii) better quality across its value chain.

FYE 30 Nov Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 172.2 195.8 282.3 305.9 10.2 13.7 44.2 8.3 25.1 25.2 36.1 38.3 18.7 18.5 29.3 31.3 11.8 12.0 16.8 18.1 17.0 17.3 24.3 26.1 3.0 1.4 40.4 7.5 1.7 1.9 2.0 2.3 6.0 6.0 8.4 9.1 5.1 5.1 7.1 7.7 6.9 6.8 4.9 4.5 0.7 0.6 0.6 0.5 0.25 0.09 0.10 0.34
Balance Sheet (RMm)

FYE 30 Nov Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 62.9 86.7 (28.0) 0.0 121.6 69.2 30.4 99.7 10.1 11.8 121.6 15.2 (1.2) FY04 66.2 100.1 (31.9) 0.0 134.4 69.2 41.9 111.1 8.5 14.8 134.4 12.0 0.3 FY05 66.9 106.4 (29.3) 0.0 144.0 69.2 51.2 120.4 5.7 17.9 144.0 7.0 17.0 FY06 72.9 114.9 (32.8) 0.0 155.0 69.2 59.6 128.8 5.1 21.1 155.0 6.6 6.1
COMPANY REPORT CARD

ROE. Despite the challenging years for building material players, Ajiya still manages to maintain ROE exceeding 10% since year 2001. Given the brighter outlook ahead, Ajiya looks set to repeat a double digit ROE. Management. Under the leadership of its MD, Mr. Chan Wah Kiang together with a team of dynamic and hands-on young professionals, we can be assured of continuous improvement going forward. Dividend. Ajiya has been paying reasonable dividends since its promotion to the Main Board and is set to continue to do so, moving forward. Realising the importance in rewarding shareholders, we believe Ajiya may opt to pay 25% of its prot translating into a decent dividend yield of 7.1% for FY07.

FYE 30 Nov Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 12.1 (9.8) (4.0) (1.7) 14.0 0.0 12.3 FY05 FY06 26.0 5.3 (6.9) (13.1) (7.5) (3.4) 11.6 (11.2) 12.3 23.9 0.0 0.0 23.9 12.7
RECOMMENDATION
Ajiya is currently trading at RM1.18 or 4.9x FY07 PER which is at a deep discount against its peers. Apart from that, the share is trading 41.9% lower than the FY07 forward book value of RM2.03. Ajiya is a bargain BUY with a 12-month target price tagged at RM1.57 derived from a composition of peer PER, peer P/B, PER band and Gordon Growth Model.
OSK
36
BCT Technology
44% FY07 EPS Growth
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) BCTT MK 121.96 103.67 1.10 | 0.60 460.84 0.07 (0.43) n.a n.a n.a 0.18
INVESTMENT MERITS
On track for fourth consecutive annual growth Gross prot margin has been ranging from 43% to 65% since FY04 New products have captured tier-1 customer High recurring revenue because of 3-5 years of product life cycle To grow through M&A

Thomrose Holdings (BVI) Ltd Lee Wai Kuen Chong Yew Peng 19.3 15.5 13.1
COMPANY PROFILE
BCT is a fables analog- and mixed-signal chip product company founded in 1995. Like any other fables companies, BCT does not own or operate semiconductor wafer facilities. The fables model enables the company to avoid investing in high cost semiconductor equipment and concentrate purely on chip designs. The company has about 30 employees and the staff force is expected to increase to 40-50 by the end of FY07, mainly for R&D and marketing. Management intends to allocate about 30% of FY07 revenue for R&D. Besides designing chips, BCT also sells Electronic Design Automation (EDA) software for other chip design companies. However, revenue contribution from EDA has been insignicant since FY05 as chip designs business starts to grow very strong at the same time. EDA is expected to contribute only about 10% of FY06 revenue. Chip designs will be the focus for the company going forward. BCTs key products can be categorized into two broad categories, namely Application Specic Standard Product (ASSP) and Application Specic Integrated Circuit (ASIC). ASSP are standard products, which are supplied to customer through its distribution partners to HK/China, Taiwan, Korea and ASEAN. ASIC are customized chips, which are supplied to other key partners such as Computime (contract manufacturer) and Westpac (distributor of Fuji Electric and business partner of NEC, semiconductor division). The top 5 customers contributed about 70% of BCTs annual revenue up to Q3 in FY06. City Chance was the largest customer in FY05 and contributed around 40% of up to Q3 FY06 revenue.

Month 1m 3m 6m 12m Absolute (7.10) 8.97 25.00 n.a Relative (10.86) (4.19) (3.00) n.a

KEY HIGHLIGHTS
Recurring revenue from existing customers. Current business of BCT will form a strong base for recurring businesses as most of its existing products have 3-5 years of product life cycle. BCT normally generates about RM7mRM10m per product from the tier-2 or tier-3 customers and has 25 different product types at the end of 2006. Recurring revenue is expected to contribute 40%-50% of its FY07 revenue.
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Sales of EDA software. Although BCT started off by selling EDA software, revenue contribution from this segment is on a downward trend since FY05 as chip business is growing strongly at the same time. Nevertheless, the EDA software business remains a cash cow for the company. Improved business model. BCTs current business model is based on selling single functional chip which commands lower unit cost. Limitations of this business model is that it requires much longer design-in cycle and competition will eventually lead to BCT facing cost reduction pressure. For the past 1.5 years, BCT has started developing more advance chips for the high efciency power supply products that has a much higher ASP as compared to older products. The average selling price per product has increased from the average of US$0.20 to as much as US$0.80 per product. SPMS has captured new customers. BCTs latest product, the high efciency power supply chip, is used in application such as Switching-Mode Power Supply (SMPS). The advantage of an application such as SMPS is that it dissipates very little power in either of these two states and power conversion can be accomplished with minimal power loss. SMPS are embedded in most of the consumer and industrial products. BCT is able to use its latest chip technology and solution selling strategy to capture the tier-1 customers. BCT has already signed contract with a Korea partner, which will enable the company to supply chips for a major Korean LCD/plasma maker for guaranteed business of 6m chips with ASP of about RM1.00/chip. In addition, BCT has also signed a contract with a Hong Kong company, Westpac, to supply 2m units of Power chips for the induction cooker for 18 months.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 10.4 20.3 46.3 75.0 215.5 95.9 128.0 61.9 1.8 6.5 11.2 17.0 1.2 6.0 10.5 15.5 1.2 6.0 10.5 15.0 8.3 12.3 7.5 10.7 111.0 47.5 (38.9) 42.4 - 0.17 0.21 0.30 0.0 0.0 0.0 1.5 0.0 0.0 0.0 1.8 10.2 6.9 11.3 7.9 4.9 4.1 2.8 - (0.0) 0.0 0.1
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 3.9 12.2 18.9 68.5 (8.9) (43.3) 0.0 0.0 13.9 37.4 0.4 12.2 12.9 19.1 13.3 31.3 0.6 1.3 0.0 4.8 13.9 37.4 1.9 1.4 (0.9) 7.7
COMPANY REPORT CARD

ROE. BCTs ROE is expected to reach 36% in FY07 Management. Lee Wai Kuen (CEO), Chong Yew Peng (Executive Director) and Chia Cher Khiang (Non-Executive Director) are the co-founders of BCT. Each of them has at least 18 years of experience in the semiconductor industry. Dividend. The management perceives BCT as a strong earnings growth company, thus dividend payout for FY07 is expected to be minimal. We forecast the company to pay gross dividend per share of 1.5 sen or FY07, which translates to a payout ratio of 12%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 FY04* FY05 5.3 - (1.8) - (3.3) (8.9) 4.9 13.1 - (0.2) 21.8 0.0 (0.3) 0.0 0.0 9.1 - (0.3)
RECOMMENDATION
Although BCTs net prot is expected to increase by 44% in FY07, the company is trading at a discount compared to FY07 MESDAQs average PER of 12x. Our earnings forecast for FY07 has not incorporated any potential contributions from M&A. Considering that BCTs earnings will only be more certain in the 2H07, we peg a discounted FY07 PER of 10x to arrive at a fair value of RM1.07, which represents a potential upside of 26% from the current level. We have a BUY recommendation on BCT.
OSK
38
BP Plastics Holdings
Third Ones the Charm
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) BPP MK 120.08 128.49 1.49 | 1.00 155.80 (8.0) Net Cash 3.82 1.93 1.09 0.70
INVESTMENT MERITS
Third largest exporter and manufacturer of plastic packaging products in Malaysia Able to attain the best margins amongst listed peers due to keen focus on product customization Increase in utilization rates of current machinery and growing world demand for packaging products will drive growth going forward Clean balance sheet with net cash position and commendable yearly ROE of >20% Low forward PE of 6.2x should see re-rating to packaging sector PE of 8.2x hence rendering a fair value of RM1.40

LG Capital Lim Chun Yow Tan See Khim 45.0 5.8 5.8

Month 1m 3m 6m 12m Absolute (0.9) (7.0) (6.1) (10.2) Relative (7.5) (18.2) (27.0) (33.7)
COMPANY PROFILE
BP Plastics is a home grown plastic packaging manufacturer from Batu Pahat which started back in the 80s under the name of Lam Guan Plastics. Today, the company is the third largest plastic packaging manufacturer in Malaysia with a production capacity of 43,200 MT p.a for stretch lm and 16,800 MT p.a for blown lms. BP Plastics produces cast stretch lm used for bulk packaging and shipping, as well as blown lm (plastic bags) for garments, furniture, construction, agriculture and etc. In total, 70% of the Groups output is stretch lm while the remainder is blown lms. BP Plastics is also the third largest exporter of plastic packaging products in Malaysia. 60% of revenue is derived from exports to Japan, Singapore, Australia and other Asian countries.

1.30 1.25 1.20 1.15 1.10 1.05 1.00 Oct-06 Nov-06 Dec-06 Jan-07 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Increasing utilization. While BP Plastics blown lm production lines operate close to full capacity at roughly 85-90%, the stretch lm lines still have room for more production. FY06 full year utilization stood at 70% as the group added a major machinery producing 2,200 MT per month in late 2005. Machinery of such scale usually takes time to achieve an ideal level of utilisation. We see the 80% mark to be achievable in FYE07, which should increase production and revenue. Increasing world demand for packaging products. Demand for packaging products is largely tied to the economic performance. World demand for stretch lm is pegged roughly at 2.5bn MT per annum and sources indicate
39
that the industry has seen growth of 10-15% yearly. This bodes well for BP Plastics, which exports 60% of its production. Malaysia is also the largest plastic packaging exporter in South East Asia. All local players are cost effective and achieve economies of scale hence have held this dominant position for >5 years. Addressing uctuating resin prices. The price of resin uctuates in tandem to oil prices and is currently trading at the US$1,200 per MT level (low linear density polyethylene). FY06 proved to be a tough year for the industry when oil prices fell from the US$70 level to the current US$60 level. Many companies were holding resin stock at the peak of prices but could not pass through costs to customers. Hence, BP Plastics intends to reduce its likelihood of being caught in the same situation by lowering its inventory level to roughly 1 month from 2 previously.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 122.1 160.5 200.2 226.7 88.1 31.5 24.7 13.3 21.4 27.5 28.8 33.2 17.9 23.4 21.1 25.4 14.7 20.5 19.2 20.8 12.2 17.0 16.0 17.3 8.3 38.2 39.4 (6.1) 0.52 0.70 0.86 1.03 3.0 5.0 5.0 5.0 2.8 4.7 4.7 4.7 8.8 6.3 6.7 6.2 2.1 1.5 1.2 1.0 0.1 0.1 0.0 0.1
COMPANY REPORT CARD

ROE. ROE has been well managed above the 20% level since listing. This is at a premium to listed peers which are at the 15-18% level and should be sustainable going forward judging from expected growth of 8-10% going forward. Management. BP Plastics is led by its MD and co-founder, Mr. Lim Chun Yow, who has more than 15 years of experience in the plastic packaging industry. Dividend. Management intents to maintain a payout ranging from 20-40% going forward. Assuming a 30% payout for FY07, prospective gross yield amounts to a commendable 4.7x. We see this to be achievable for the Group as there are no major capex needs in the next two years.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 37.5 64.2 67.6 - 57.3 65.3 72.5 - (17.7) (30.6) (25.4) 0.0 0.0 0.0 - 77.2 98.9 114.7 - 56.0 60.0 60.0 6.0 23.9 43.0 - 62.0 83.9 103.0 - 15.2 15.0 11.6 0.0 0.0 0.0 - 77.2 98.9 114.7 9.7 6.6 5.1 8.1 14.8 4.7

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - 37.1 0.4 - (29.7) (8.3) - (3.8) (3.9) 3.7 (11.7) - 17.8 21.5 0.0 0.0 - 21.5 9.7
RECOMMENDATION
We believe that BP Plastics should be ranked superior to its peers because of its stronger earnings margins and high ROE. The Groups margins are at the 9-11% at net level yearly compared to competitors at the 4-6% level. The rst reason to that is the customization of its blown products allows them premium pricing. Secondly, the Group has always maintained a net cash position thus there is no need for interest expenses. Our fair value of RM1.40 is based on BP Plastics FY07 EPS against the packaging sector average PE of 8.2x. Recommend BUY.
OSK
40
Cheetah Holdings
Consumer
The Most Dominant Homegrown Sportswear

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CTH MK 84.82 97.54 1.17 | 0.37 520.85 0.38 (0.05) 3.95 1.25 1.03 0.76
INVESTMENT MERITS
The leading local sports attire company with a long track record of 30 years Net prot is expected to grow by 17.5% CAGR for the next 3 years Attractive dividend payout of at least 30% from net prot to shareholders Current share price has potential upside of about 20%

Chia Yoon Yuen Holdings SB Felda Chia Kee Foo 42.81 10.73 6.09
COMPANY PROFILE
Cheetah was founded in 1977 under the name of Syarikat Yoon Yuen, trading in sports apparel and the Cheetah brand was launched in 1979. Cheetah Holdings Berhad (CHB) was listed on the Second Board of Bursa Malaysia in January 2005. Currently, the company through its wholly owned subsidiary, Cheetah Corporation (M) Sdn Bhd (CCM), is principally involved in design, development, marketing and retailing sports and casual apparels and accessories under its own brand Cheetah and is now the most dominant homegrown brand for sports & casual wear and accessories.


KEY HIGHLIGHTS
Growing from strength to strength, CHB group is identifying areas to excel whereby its projected path will be one that will involve foraying into international labels, while further strengthening its foothold in the local sports and casual wear. The group is also seeking overseas expansion opportunities as well as looking at mergers and/or acquisitions of companies in the retail/consumer industry. Wide distribution channel. Cheetah currently has over 600 point of sales throughout Malaysia. These include 15 retail boutiques, 100 sports shops and 485 consignment outlets located in reputable departmental stores and hypermarkets such as Jusco, Sogo, Parkson, The Store, Giant , Carrefour, Tesco etc. Distribution of Ladybird brand in Malaysia & Singapore. CHBs subsidiary Cheetah Marketing Sdn Bhd (CMSB) had entered into a Trade Mark Licence Agreement in October 2006 with Woolworths PLC, a company incorporated in UK, for the exclusive rights of Ladybird collection in Malaysia and Singapore. Ladybird is an international fashion label for infant and kids clothing and accessories that is established and well known for its prestige and quality. CMSB targets to open 30 outlets by 2008 and 200 outlets by 2012. The Ladybird collection will enable CMSB to gain a stronger foothold in the children
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and infant apparel market. We expect this product segment has huge potential and is expected to grow strongly given its well known brand name. Brand building. CCM has grown over the years and added new labels to include ladies, children and life-style casual wears such as Cheetah Ladies, Cheetah Junior, Cheetah Unlimited, C2 and C. Union. Currently, CCM commands approximately 40% market share in the local homegrown sports apparel industry with more than 1,000 designs annually and 6 different brand concepts to tap the mass market. Outsourcing manufacturing. CCM has been outsourcing its manufacturing from the beginning and will have little or no concern with the high cost in manufacturing. Moreover, the company do not need to invest in plant and machinery which cost substantially. CCM also outsources to manufacturers in low cost producing countries such as China, India and Vietnam. This business model of being a brand owner/manager has accorded Cheetah with higher efciency as shown in the prot margins.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 62.7 81.7 90.0 110.0 3.0 30.4 10.2 22.2 10.8 15.3 16.9 20.0 10.2 14.4 15.9 18.9 7.7 10.2 11.3 13.6 9.7 12.8 14.1 17.0 45.0 32.1 10.6 20.3 0.65 0.76 0.87 1.01 2.5 2.5 4.2 5.1 2.2 2.2 3.6 4.4 12.0 9.1 8.2 6.8 1.8 1.5 1.3 1.2 0.1 0.1 0.1 0.1
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 16.0 13.9 - 49.3 63.5 - (12.5) (16.0) 0.0 0.0 - 52.8 61.4 - 40.0 40.0 - 12.2 21.0 - 52.2 61.0 0.5 0.4 0.0 0.0 - 52.8 61.4 0.0 0.0 6.5 11.1
COMPANY REPORT CARD

ROE. For the past 2 years, ROE ranged from 15% to 18%. Going forward, we expect CHB to register ROE in the range of 18%. On top of that, balance sheet is strong with net cash per share of 14 sen. Management. The Managing Director, who is also the co-founder of the Company, has been in the business for more than 28 years. In addition, the Company is reinforcing its management team to instill a professional working environment. Dividend. Going forward, CHB has declared a 30% dividend policy payout from its annual net prot. For FY07, we expect the company to pay dividend of 4.2 sen per share translating into gross yield of 3.6%.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 2.1 4.2 2.1 (3.2) (0.7) (1.4) 3.5 (0.5) 0.0 3.5 0.0 0.0 3.5 3.0
RECOMMENDATION
CHB has proposed a 1-for-2 bonus issue and transfer its listing into the mainboard and we expect this will generate more interest into the stock following the transfer. Moreover, share price has outperform the KLCI by more than 110% in the past 12 months. We have a BUY call on CHB with target price of RM1.39 by applying the composite of 8x PER and 1.4x P/BV over FY08 EPS of 17 sen and P/BV of RM1.01/share.
OSK
42
Choo Bee Metal Ind.

Moving Up The Value Chain
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CBEE MK 109.90 236.29 2.50 | 1.47 183.47 0.14 0.18 3.85 1.06 1.07 2.85
INVESTMENT MERITS
A veteran in the steel industry with 60% of revenue derived from trading and the rest from manufacturing division 9MP set to benet steel demand hence Choo Bee Penetrating into export markets by leveraging on its niche products, namely mid and big diameters SHS Value added products offer better margin but full potential yet to ow through API certication and massive water pipe replacement a big bonus to the company

Choo Bee Holdings SB Soon Lian Huat Holdings SB Skim Amanah Saham Bumiputera 41.8 10.9 7.8
COMPANY PROFILE
Choo Bee Metal Industries was initially a scrap metal trader in the 1950s under the Soon family in Ipoh that subsequently ventured into trading of various types of steel products before specializing in at steel products in the 1970s. The company was then established as a private limited company in 1971 as Choo Bee Metal Industries SB. Since then, Choo Bee has expanded tremendously and this paved the way for the listing of the companys shares on the Main Board of Bursa Malaysia on 12 October 1994. Currently, more than 95% of Choo Bees products are sold mainly to local stockists with exports gaining ground.

Month 1m 3m 6m 12m Absolute 0.00 6.97 39.61 41.31 Relative (6.59) (5.96) 8.57 0.49

KEY HIGHLIGHTS
9MP to lift domestic steel demand from 2HFY07 onward. Already we are seeing positive impact on the domestic steel industry especially after recent up-tick in steel prices following the stocking up exercise in anticipation for the execution of the 9MP. The 31% increase in development expenditure under Budget 2007 to RM46.5bn for the development of schools, universities and housing may push demand for steel products hence improve Choo Bees sales gures. More exports ahead? With the commencement of the new plant in December 05, Choo Bee is now able to offer a wider range of products hence kick-starting its exports to Singapore since early 06. At the moment, contributions from exports remain negligible. Choo Bees 2nd phase expansion is 1-2 years earlier than originally planned and will increase the maximum diameter of its pipes from 16 to 18 inches, boosting its production yield and enhance its competitiveness overseas supported by solid global steel consumption that registered a 6.4% compounded growth rate since 1999.
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Big diameter mill more to come? Choo Bees new big diameter mill with a rated capacity of 160,000 tpy, is currently running at approximately 20% utilization rate while the existing plant is at 75%. Given the low utilization rate, especially on the new plant, there is ample room to bump up production. Furthermore, overall prot margin is set to escalate from better margins by value adding manufacturing activities and products. At present, 40% of revenue is derived from the manufacturing division but this is set to increase gradually. API certication in the pipeline. Choo Bee is in the midst of submitting its application to the American Petroleum Institute (API) in order to certify its new big diameter pipes for oil & gas usages. The 2nd phase expansion is also expected to strengthen its application as a few additional parts will be installed. These pipes will then help to boost sales volume and improve margins given the premium pricing. Nonetheless, the certication may take a while. Massive water pipes replacement a bonus. Recently, Energy, Water and Communications Minister stated that RM2bn has been allocated specically to replace old pipes under the 9MP. Given certain unresolved issues, we reckon the allocation will increase gradually over the years. Meanwhile, we have projected approximately 80% of the RM600m capital spending by Syabas in the Klang Valley over the next 3 years as water pipes replacements in order to reduce non revenue water (NRW). Given the improve spending on water pipe replacements, Choo Bees big diameter pipes should experience good demand.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 336.5 20.9 69.6 63.7 44.3 41.9 70.4 2.58 9.0 4.2 5.1 0.8 (0.36) FY05 FY06 FY07f 329.0 356.8 405.6 (2.2) 8.4 13.7 26.1 45.6 54.9 23.9 41.6 47.1 16.6 32.4 38.1 15.5 29.5 34.7 (63.1) 90.8 17.5 2.63 2.85 3.05 6.0 8.0 9.6 2.8 3.7 4.5 13.9 7.3 6.2 0.8 0.8 0.7 (0.23) (0.52) (0.20)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 54.0 248.5 (59.7) 0.0 242.8 103.6 127.1 230.7 5.6 6.4 242.8 36.2 (33.0) FY04 50.0 302.4 (66.3) 0.0 286.0 105.6 167.3 272.9 4.6 8.5 286.0 41.0 (37.6) FY05 93.0 247.5 (35.0) 1.4 307.0 107.5 176.1 283.6 23.3 0.0 307.0 32.3 (25.0) FY06 104.8 304.9 (82.1) 1.4 329.0 109.9 204.4 314.3 14.6 0.0 329.0 61.8 (56.9)
COMPANY REPORT CARD

ROE. Having suffered an inventory loss in FY05, Choo Bee made a comeback in FY06 and recorded a ROE of 10.8%. Now that steel prices have stabilised, we think the company will continue to impress via double digit ROE, going forward. Management. With a prudent and forward looking management, Choo Bee managed to ride through various economy cycles unscathed. We believe the company is now on the right track to move up its value chain via its extensive experience in steel industry. Dividend. For the past 5 years, the company has paid a dividend between 5 to 9 sen per share annually translating into average payout ratio of 20.5%. We expect a decent dividend yield of 4.5% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (0.4) 76.6 (14.9) (1.0) (56.4) (15.1) 2.3 (15.2) 26.0 0.9 5.0 (4.0) 1.4 2.3 7.3 0.0 0.0 0.0 2.3 7.3 3.3
RECOMMENDATION
Underpin by the much improved market sentiments together with a few major catalysts in the pipeline, we reiterate our 12-month target price of RM2.80 which offer attractive upside potential. The fair value is derive from a composition valuation of peer PER, peer P/B and historical PER band.
OSK
44
Coastal Contracts
Brave Little Shipbuilder
Others
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) COCO MK 342.82 658.22 1.96 | 0.39 2,043.37 108.0 0.47 2.43 0.52 1.55 0.34
INVESTMENT MERITS
Production of oil & gas support vessels to drive earnings going forward due to the high demand worldwide Build and sell strategy has improved sales due to quick deliveries to customers Very healthy margins of >25% at EBIT level derived from demand driven vessel price increases Well managed balance sheet with a 0.47x net gearing level and RM28.1m cash balance Fair value of RM2.80 represents 46% upside from current prices

Ivory Asia Sdn Bhd Pang Fong Thau Rickoh Corporation Sdn Bhd 33.2 22.8 7.6
COMPANY PROFILE
Coastal Contracts (COCO) is involved in the manufacturing of vessels, particularly tugboats and barges, provision of repairing, maintenance and cleaning services for boats, ships and other small and medium-sized vessels, and also tugboat and barge chartering. The Group operates from its shipyard in Sungai Seguntor, Sandakan, carrying out vessel manufacturing and repair works. The ship yard has a capacity of up to 8 vessels measuring up to 59 meters each and has an 8 meter deep water frontage. Coastals clientele comprise of local as well as international customers such as Alam Maritim, Ajang Shipping, and ship owners from Indonesia and recently, Egypt. Over the past 6 years, Coastal Contracts has produced 146 ships comprising of 5 AHT/Supply vessels, 55 tug boats, 9 oil barges, 7 landing crafts and 70 dumb barges.


KEY HIGHLIGHTS
Riding on oil & gas support vessel demand. COCO is currently capitalizing on the high demand for AHTS (anchor handling tug and supply) and supply vessels in the oil and gas industry both locally and abroad by focusing its production on these types of vessels. Major contracts on hand are RM243m for 7 supply vessels from an Egyptian and Indonesian customer, RM76.5m contract for 2 AHTS from Apecs Engineering and RM54.9m contract for 4 supply vessels from Alam Maritim. These contracts will be key revenue drivers for FY07 and FY08. Besides that, the Group is fabricating two 70,000 break horse power (bhp) AHTS vessels to be sold in 2008 or 2009, which could fetch some RM70m per vessel. To note, most of the Group vessels currently are in the 5,000 bhp and below size and command prices that range from RM20-40m each.
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Taking the risk to build and sell. Due to the robust demand for vessels, COCO took a chance at the build and sell strategy. Currently, the Group will order engines and other parts in advance and build at least 50% of the vessels before pitching the vessels to brokers who will then source for buyers. The strategy has worked wonders so far because the Group is able to deliver vessels to customers within 6-10 months. Usually, ship owners will have to wait 14-16 months for ships to be delivered. At the rate of growth in the oil & gas industry now, we see that the faster deliveries will be favoured and COC would be able to command a pricing advantage. Other businesses generate steady recurring incomes. Besides ship building, COCO also has a vessel chartering division that operates in East Malaysia and Indonesia. The Group has 44 vessels on charter consisting of 13 tugs, 12 oil barges, and 19 dumb barges. These barges are contracted by way of time charter, trip charter and bareboat charter and have pulled in annual revenues of RM17-20m. Unlike ship building, this business segment is expected to add RM2-3m to EBIT yearly. In addition, the Group is active on ship repair activities where its clientele comprise of the Royal Navy, Marine Police, customs and coastal guard. Revenue from this segment is a steady RM4-5m annually.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 103.2 159.4 214.4 306.5 48.3 54.5 34.5 43.0 24.3 49.1 65.2 88.7 16.6 39.4 54.5 77.0 16.0 34.3 46.4 65.5 4.7 10.0 13.5 19.1 16.0 113.8 35.2 41.3 0.59 0.85 1.01 1.24 1.2 1.2 1.2 1.2 0.6 0.6 0.6 0.6 41.1 19.2 14.2 10.1 0.8 1.0 1.2 0.2 0.1 0.1 0.2 (0.1)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 80.3 52.6 (18.7) 0.0 114.2 66.8 26.6 93.4 20.7 0.1 114.2 21.7 (13.1) FY04 72.0 94.6 (42.1) 0.0 124.5 66.8 36.5 103.3 21.2 0.0 124.5 35.5 (23.2) FY05 FY06 85.7 75.8 119.1 220.6 (71.7) (131.8) 0.0 0.0 133.1 164.5 66.8 67.0 49.6 82.5 116.4 149.6 16.7 14.9 0.0 0.0 133.1 164.5 57.4 31.6 (50.0) (3.5)
COMPANY REPORT CARD

ROE. Healthy ROEs of >25% to be sustainable going forward considering the Groups healthy margins from its ship sales. Management. COCO is managed by the Ng family, who have been in the shipbuilding business for >20 years. Dividend. We expect a 1.2sen gross dividend, which translates to a payout of 9% based on FY07 earnings. We do not expect much increase dividends as the Groups working capital requirements are high.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (4.9) (5.1) 35.4 (1.1) (15.9) 16.5 9.2 17.1 (30.9) 3.2 (3.9) 21.0 8.2 11.4 7.5 0.0 (0.0) (0.4) 11.4 7.5 28.1
RECOMMENDATION
We are positive on COCOs prospects over the next two years due to the shortage of oil & gas support vessels in areas like Malaysia, the Middle East and the Gulf of Mexico. Going forward, the Groups strategy to move into manufacturing of bigger capacity vessels will bode well considering that these are needed for major deepwater oil eld developments. We value COCO at RM2.80 hence recommending a BUY on the stock. Our fair value is based on FY08 EPS against a PE of 14.7x. We have derived this from averaging the PEs of shipbuilders worldwide who have market capitalization of <RM1bn.
OSK
46
Cocoaland Holdings
A Snack Food Producer
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) COLA MK 120.00 114.00 1.00 | 0.53 694.21 0.19 (0.01) 4.00 1.13 1.10 0.58
INVESTMENT MERITS
One of the leading snack food producers in Malaysia Production capacity expected to increase by end of FY07 Expanding export market to increase future earnings 3 years earnings going forward expected to grow by 10% Balance sheet is strong with net cash of RM9.2m
COMPANY PROFILE
Cocoaland business began as a sole proprietorship operated by 2 brothers distributing deep fried food from a van to roadside hawkers. They were later joined by other brothers to form a manufacturing and distributing company. In the mid-80s they purchased their own factory where the successful product Koko Jelly was produced. Cocoaland Holdings Berhad was later listed on the second board of Bursa Malaysia in January 2005 and transferred into the main board in July 2006. Today, Cocoaland is the leading producer of snack food in Malaysia.

Leverage Success SB Imbang Angsana SB 54.40 10.39


KEY HIGHLIGHTS
Cocoalands production facilities are located at Rawang with 3 plants and another plant is located at Kampar, Perak. These plants are capable of producing over 18,000 tonnes of snacks, chocolate, sugar confectionery and soft drinks per annum. Among its better known products include Koko Jelly chocolate, Lot 100 fruit gummy, Koko Tube chocolate and Mums Bake cookies. Increased production capacity. Cocoaland has set up its new factory in Rawang costing RM12m inclusive of land, building and machinery. The new plant will be able to produce over 7000 tonnes of cookies and is expected to commence operations by the end of FY07.
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Expanding export market. Export made up 33% of the groups total turnover with Saudi Arabia and Hong Kong taking more than 50% of total export. Cocoaland plans to expand its export market from 33% to 40% within 2 years and slowly increase this to 60% within three to ve years. Management highlighted that Japan, USA and Europe as potential new markets. New product development. Moving forward, Cocoaland will strengthen its R&D of healthy snacks as customers are becoming more health conscious. The company will therefore position itself at a higher level to develop healthier food as these products usually generate higher prot margins and premiums. Moreover, management expect demand for healthy snacks will increase in the near future.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 89.9 100.3 119.3 135.4 1.9 11.5 19.0 13.5 14.2 16.2 19.6 22.6 9.1 10.2 13.9 15.5 7.6 8.4 11.6 13.0 6.3 7.0 9.7 10.8 22.4 10.7 39.2 11.7 0.49 0.58 0.62 0.68 0.0 3.0 5.0 5.0 0.0 3.2 5.3 5.3 6.3 7.0 9.7 10.8 1.9 1.6 1.5 1.4 (0.0) 0.0 0.1 0.1
COMPANY REPORT CARD

ROE. For the past 3 years, ROE ranged between 13% and 16%. Going forward, we expect Cocoaland to register ROE above 16% for the next 3 years. Management. The company is led by a management team with more than 20 years of experience in the manufacturing and marketing of confectionery products. Dividend. Cocoaland paid an interim dividend of 4 sen per share. We expect a nal dividend of 1 sen per share totalling 5 sen per share in FY06 translating into a yield of 5.3%. With the expansion on hand, we expect Cocoaland to maintain this dividend payout in FY07 as the company will require funds for its expansion plans.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 42.0 42.3 45.6 - 37.6 40.6 50.6 - (13.7) (15.6) (20.6) 0.0 5.4 5.7 - 66.0 72.6 81.3 - 40.0 45.0 60.0 - 19.0 24.2 17.2 - 59.0 69.2 77.2 7.0 3.5 4.2 0.0 0.0 0.0 - 66.0 72.6 81.3 5.5 1.3 4.0 - (2.2) 5.5 9.2
RECOMMENDATION
By using the composite of 10x PER and P/BV of 1.5x over FY07 EPS of 10.8 sen and BV of RM0.70/share, we arrived at a fair value of RM1.07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 3.9 13.6 13.1 (0.8) (11.2) (9.2) (0.5) 0.7 3.1 2.5 3.1 6.9 0.3 2.8 5.9 0.0 0.0 0.0 2.8 5.9 12.8
OSK
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Crescendo Corp.
Industrial Strength
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CCDO MK 143.80 241.59 1.75 | 0.89 135.19 0.76 0.14 2.11 0.57 0.83 2.18
INVESTMENT MERITS
Projecting double digit y-o-y growth from FY08 onwards, driven by its developments for industrial properties especially in Nusajaya, differentiating itself from other developers in Johor Undeveloped landbank of 3,330 acres of which 59.4% of it are located within the Iskandar Development Region (IDR) with GDV balance of over RM5.1bn. Integrated developer with substantial control over its construction and raw materials arms, translating into better earnings margins 5-year (FY04-FY09) net prot CAGR of 17.9% Trading at 45.6% discount to its RNAV of RM3.09

Sharikat Kim Loong Bhd Permodalan Nasional Bhd Lembaga Tabung Haji 63.9 5.4 2.8

COMPANY PROFILE
Listed on the Main Board on 8 April 1997, Crescendo is a property developer based solely in Johor. The company rst ventured into property development in 1989 and has carved a niche for itself in the industrial sub-sector with its flagship project Taman Perindustrian Cemerlang. As an integrated developer, the Group has its own construction, civil engineering and concrete manufacturing arms. The Group currently has an undeveloped landbank of 3,330 acres of land located in Johor with an estimated GDV balance of over RM5.1bn. In addition to developing residential properties, Crescendo differentiates itself from most other players in the state by venturing into the development of industrial properties located within the IDR. One of the prime earnings drivers in the near term will come from its Nusa Cemerlang Industrial Park located within Bandar Nusajaya.

KEY HIGHLIGHTS
Although residential properties are still uninspiring at this juncture due to the overhang situation for low-to-mid end residential properties in Johor, Crescendo is differentiating itself by developing industrial properties which are still in strong demand and offer better returns. Near term prospects to be driven by strong unbilled sales, its continuous development in Desa Cemerlang (DC) and industrial developments in Nusa Cemerlang Industrial Park (NCIP): Unbilled sales of RM78m as of 31st Jan07. The strong unbilled sales accumulated from the developments in DC and NCIP is equivalent to 0.92x of the sales achieved in FY06 and 1.02x of the forecasted turnover in FYE07. Taman Perindustrian Cemerlang (TPC). Located 15km from Johor Bahru, 30km from Senai Airport and 16km from Singapore, TPC is one of the
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largest industrial parks in Johor. 773 industrial units worth RM682m have been completed to-date with a GDV balance of RM324.8m and undeveloped landbank of 200 acres. Desa Cemerlang. A self-contained township located next to TPC, the development is earmarked to comprise 6,800 units of mixed developments worth a GDV of RM943.7m. To-date, 4,337 units worth RM464.4m have been completed with a remaining GDV of RM479.3m and undeveloped landbank of 145 acres. Take-up is 55% for residential. Nusa Cemerlang Industrial Park. Crescendo has a 64-acre site in the NCIP which measures 527 acres of industrial land forming part of Bandar Nusajaya for development of approximately 353 units of factories. In addition, Crescendo has the call option to purchase any or all of the remaining NCIP land over a 8-year period from 1st Dec05. This enables the Group to enlarge its landbank while requiring low initial cash outlay vs. outright purchase. Located in close proximity to main infrastructures such as rail, port and major highways, the GDV of NCIP is estimated at RM1.3bn (64 acres circa GDV of RM122.3m). So far, 46 units of detached and semi-detached factories with GDV of RM74.7m have been launched. The NCIP is poised to be one of the strongest growth drivers over the next 15-20 years. More to come. Crescendo has a further 1,390 acres of land near Ulu Tiram (GDV RM114m) and another 37.6 acres opposite TPC and DC (GDV120m) of which both are earmarked for launchings in 2-3 years time. Crescendo has a further 221.5-acre of land near pasir Gudang in the IDR with water frontage towards Singapore. This particular development will have an estimated GDV of RM409m earmarked for mixed developments.

FYE 31Jan Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07 FY08f 83.9 84.5 74.1 134.1 34.4 0.7 (12.3) 81.0 24.3 26.0 28.6 34.4 23.1 25.5 25.1 30.1 16.1 18.7 18.4 21.7 11.2 13.0 12.0 14.2 1.7 16.6 (7.6) 18.0 2.07 2.15 2.09 2.18 7.0 7.0 7.0 7.0 4.2 4.2 4.2 4.2 15.0 12.9 14.0 11.8 0.8 0.8 0.8 0.8 (0.2) (0.2) (0.4) (0.4)
Balance Sheet (RMm)

FYE 31 Jan Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY04 54.2 74.4 (18.2) 213.2 323.5 118.0 129.3 247.3 73.8 2.4 323.5 35.0 (18.5) FY05 64.7 96.5 (35.2) 216.4 342.4 143.7 153.2 296.9 42.4 3.1 342.4 35.1 (22.1) FY06 65.3 96.4 (41.5) 224.3 344.5 143.8 164.8 308.6 32.2 3.8 344.5 40.5 (34.4) FY07 64.7 106.0 (83.1) 267.5 355.1 143.8 175.0 318.7 32.2 4.2 355.1 61.7 (60.2)
COMPANY REPORT CARD

ROE. Due to the Groups relatively large undeveloped landbank, FY06 ROE was low at 6.2% (FY05: 5.9%). Going forward, we expect ROE to improve further as the Group slowly unlocks the value of its landbank as development projects progresses. Management. The key driver to Crescendos success over the years has been its Managing Director, Mr. Gooi Seong Lim. Top management has over 30 years experience in the industry. Dividend. Crescendo has been paying a gross dividend of 7sen for the two past nancial years (FY04: 6sen) and will at least maintain so going forward.

FYE 31 Jan Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY05 2.4 2.7 (8.9) (3.9) 16.5 0.0 12.6 FY06 (4.5) (0.3) (1.9) (6.8) 12.6 0.0 5.8 FY07 (27.3) 9.2 (0.2) (18.3) 5.8 0.0 (12.5)
RECOMMENDATION
Despite its unblemished track record and strong growth catalysts ahead, Crescendo is still trading at a signicant 45.6% and 23.6% discount to its RNAV of RM3.09 and NTA/share of RM2.20 respectively. We rate Crescendo a BUY with 12-month target price of RM2.47, based on 20% discount its RNAV.
OSK
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Crest Builder Holdings

Strong Contractor-cum-Niche Developer
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CBH MK 123.75 126.23 1.22 | 0.83 447.02 0.00 0.68 1.64 0.67 1.36 0.16
INVESTMENT MERITS
A contractor-cum-developer that has managed to establish itself as a strong and niche developer in the industry Strong outstanding order book of over RM700m, equivalent to about 2 years of its turnover Great prospects in property development with many valuable projects worth a GDV of RM400m to be launched in Mont Kiara and Kelana Jaya 3-year (FY05-FY08) net prot CAGR of 37.7% Undemanding forward PER of 5.3x and 4.6x in FY07 and FY08 respectively

Yong Soon Chow Yong Tiok Chin Pertiwi Positif S/B 34.3 6.2 4.0
COMPANY PROFILE
Crest Builder (CB) was listed on the Main Board via the RTO of MGR Group in 2003. The group specialises in infrastructure and building construction, which covers commercial, residential buildings, roads, bridges, universities as well as hospitals. Its track record includes the (i) Beach Nourishment and Island Formation at Pantai Kok, Langkawi; (ii) Water Circulation at Telaga Tujuh, Langkawi; (iii) Kuala Lumpur International Airport Apron Control Tower; (iv) the Damansara Specialist Hospital and (v) the Ampang Puteri Specialist Hospital. More recently, CB has shifted its focus from being a pure construction player to that of a contractor-cum-property developer. Its current property development project is the 3 Two Square in Petaling Jaya.

Month 1m 3m 6m 12m Absolute 0.00 0.00 7.37 6.23 Relative (1.27) (12.08) (17.37) (22.65)

KEY HIGHLIGHTS
Strong outstanding orderbook. CBs RM560m outstanding order book on the back of RM956.9m (including the recent RM147m en-bloc sale of Batu Tiga development, refer below) is equivalent to about 2 years of its average annual turnover comprising of government and semi-government projects (44%), private (43%) and in-house projects (13%). CB is also very condent that its order book will be replenished by RM200m-300m per annum, predominantly by small to medium size projects (contract worth between RM50-200m). So far, it has managed to maintain its order book in the region of RM500-700m per annum since its listing in year 2003. FY06 EBIT margin, however, was trimmed to 6.8% vs 11.1% in FY05 but still decent vs industrys average of 8.0% Orderbook replenishment rate? The 9MP will serve as the prime catalyst for the Groups growth catalyst ahead in two ways: (i) directly securing packages of infrastructure projects from the 9MP; (ii) the wealth spillover effect from the 9MP will spur more private infrastructure developments, hence creating
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another pool of construction works for CB to secure of which the Group has a niche for. Property development the next growth catalyst. CBs rst venture into property development has been proven to be a success through its 3 Two Square development in PJ (GDV RM180m). Currently with an unbilled sales of about RM12.6m (70% take-up), the project is due for completion by 1H07. The developments 13-storey ofce tower costing RM76m will be rented out with an expected gross yield of 8.0%. Other property development projects that will underpin CBs earnings growth forward: (i) Batu Tiga, Shah Alam. Recently sold off its Phase 1 comprising 1,081 units of condominiums en-bloc to SPN for RM147m (to be completed by year 2009), CB still has a further 566 units of service apartments, retail and future commercial complexes worth a GDV of about RM144m to be launched soon. Its cheap land cost (RM13.72psf over total land size of 36.8 acres) vs. average GDV of RM182psf, the Group will poise to earn a attering margin from this development. (ii) Mont Kiara. CB is planning to launch 200 units of high-end condominiums with expected GDV of RM95m by end of year 2007. A 2.94 acres freehold land purchased at RM6.2m (or RM48.6 psf) and with average GDV of RM742psf, this project will bring about another great potential return for the Group since demand and prices for properties in Mont Kiara vicinity have appreciated substantially over the years. (iii) Kelana Jaya. This piece of 1.83 acres freehold land was just acquired recently in January 2006 for RM7.2m. Although still at its early planning stage, CB has plans to develop two blocks of premium ofce towers with about 20 storeys each in Kelana Jaya with expected GDV of RM100m.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 266.3 249.6 313.2 400.2 29.7 (6.3) 25.5 27.8 35.6 33.5 42.1 52.6 25.3 21.4 32.8 43.6 16.3 12.2 20.7 27.5 14.3 10.7 16.7 22.2 (7.0) (25.0) 55.8 32.9 0.51 0.58 0.77 0.93 4.0 4.0 5.0 7.6 3.9 3.9 4.9 7.5 7.1 9.5 6.1 4.6 2.0 1.8 1.3 1.1 (0.3) (0.6) (0.6) (0.4)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 24.2 99.3 (51.6) 73.1 145.0 113.6 17.9 131.5 13.4 0.0 145.0 5.7 10.7 FY04 FY05 FY06 69.2 81.2 85.0 144.6 206.2 247.3 (65.0) (125.7) (150.9) 70.1 67.1 67.1 218.8 228.7 248.5 113.7 113.7 123.7 31.6 38.9 57.2 145.4 152.7 181.0 73.5 76.0 67.6 0.0 0.0 0.0 218.8 228.7 248.5 73.0 97.6 96.0 (44.9) (83.3) (87.6)
COMPANY REPORT CARD

ROE. Registering a 20.7% and 15.2% ROE in FY06 and FY05 respectively, we are expecting CB to record an ROE of 21.9% and 21.5% in FY07 and FY08 respectively. Management. The driving force of CB, Mr. Yong Soon Chow and other key management of CB have almost 30 years of experience in the construction and property development industries. Dividend. The Group recently declared a gross dividend of 5sen for FY06 (FY05: 4sen). It is apparent that rather than keeping a dividend policy of at least 25% payout ratio as indicated earlier, CB is opting to pay a dividend amount that will have an approximate gross yield of 5.0%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (0.5) 9.1 17.2 (47.7) (35.1) (12.1) 60.8 5.8 (4.5) 12.6 (20.3) 0.6 9.3 21.9 1.6 0.0 0.0 0.0 22.0 1.6 2.2
RECOMMENDATION
A Trading Buy. We value CRESBLD at RM1.52 using average PE and RNAV of comparable peers. Based on current share price, the stock remains attractive at 5.3x and 4.6x forward PER in FY07 and FY08 respectively.
OSK
52
Dominant Enterprise
Creating A Dominant Presence
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) DOME MK 121.75 79.14 0.80 | 0.38 140.19 0.07 0.39 2.80 0.82 1.25 0.59
INVESTMENT MERITS
FY07 net prot almost double New plant came on stream ahead of schedule Venturing into Vietnam soon Valuations supported by earnings and yield
COMPANY PROFILE
Dominant Enterprise was incorporated in July 1991 as a private company. It was subsequently listed on Aug 2002 and later transferred to the Main Board in Oct 2005. Currently the company has nine subsidiaries, engaging in manufacturing of environmental friendly engineered wood mouldings and laminated wood panel products. The company also involves in trading and distribution of a wide range of wood products worldwide. Dominant has set up its representative ofces in Ho Chi Minh (Vietnam), Melbourne (Australia) as well as Sabah. Export sales account for about 25% of total revenue and Australia is the largest exporting market for the company.

NS Pacic Sdn Bhd 51.0

Month 1m 3m 6m 12m Absolute (4.41) 12.07 58.17 65.84 Relative (13.26) (1.47) 17.56 7.35

KEY HIGHTLIGHTS
Record prot for FY07. Dominant is likely to post strong results for FY07, with net earnings of about RM13m. This is almost double from last years net prot. The better performance is due to higher contribution from plywood trading, which accounts for >75% of total turnover. Both the wide distribution network and the new plant in Muar which came on stream in Jun 2006 have helped the company to achieve better performance. However, we expect earnings growth to moderate in FY08. Prices of medium density breboard (MDF), the raw material for moulded products, have recently increased by 10-20%. New plant came on stream earlier than expected. The new plant in Muar has commenced operation in mid-2006, ahead of the original schedule in 4Q06. The plant has been installed with two production lines for laminated wood panel manufacturing, with a production capacity of 800 foot per run per month These production lines are estimated to contribute RM9m in FY08. The management is also targeting to penetrate more international markets leveraging on its award of the Forest Stewardship Council Chain of Custody (FSC COC) last year. The certication would enable an easier access to foreign markets with stringent wood quality requirement.
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Venturing into Vietnam. Dominant is also planning to venture into Vietnam Ho Chi Minh city in order to increase its presence in the region as well as generating more export sales for its laminated wood panel products. The company has recently acquired a piece of 13,000 sqm land with a purchase consideration of RM1.3m. The management expects a factory to be set up in two years time.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 167.5 223.5 257.2 279.1 17.4 33.4 15.1 8.5 28.6 32.4 44.3 47.8 11.6 9.0 16.8 18.0 9.4 6.6 12.9 13.5 7.7 5.4 10.6 11.1 8.4 (30.2) 95.4 4.8 0.57 0.59 0.67 0.75 2.5 3.0 4.0 4.0 3.8 4.6 6.2 6.2 8.4 12.0 6.1 5.9 1.1 1.1 1.0 0.9 (0.1) (0.2) (0.3) (0.4)
COMPANY REPORT CARD

ROE. ROE of the company has remained fairly stable at between 14% to 17%, with an exception in FY06 due to the one-off start up cost of various new operations as well as the strengthening of Ringgit. We expect net earnings to grow by about 5% in FY08. Management. Dominant is currently under the management of Cha Aku Wai, who is the MD and one of the founders of the company. Mr. Cha started his wood products trading business about 20 years ago. He is the key driving force for the company and actively involved in overall operations and corporate planning with the assistance of other Executive Directors. Dividend. Dominant has progressively increased its DPS over the years. We expect a 4sen DPS for FY07, of which 2sen was already declared in 2QFY07. This represents a yield of about 6%.
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 27.9 31.4 33.3 36.5 52.6 66.6 70.9 95.5 (28.0) (33.7) (31.9) (55.9) 0.0 0.0 0.0 0.0 52.5 64.3 72.2 76.0 38.7 43.0 43.1 60.3 12.5 19.5 27.0 12.2 51.2 62.5 70.4 73.0 1.3 1.8 1.9 3.0 0.0 0.0 0.0 0.0 52.5 64.3 72.2 76.0 29.3 35.5 33.8 58.9 (10.8) (15.8) (12.3) (28.7)
RECOMMENDATION
We have a Buy recommendation on Dominant with a fair value of RM0.77 based on our CY07 EPS estimate. We value the stock using a PE of 7x, which is at the low end of the average PE of the small cap peers in the sector. We believe the share price will be supported by earnings as well as a decent yield of about 6%.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 (1.9) (4.7) 3.9 (2.7) 7.7 0.0 5.0 FY05 FY06 9.2 (7.4) (2.9) (4.7) (6.2) 14.0 0.1 1.9 5.0 5.1 0.0 0.0 5.1 7.0
OSK
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DPS Resources
Small But Dynamic
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) DPS MK 132.00 91.08 0.91 | 0.60 166.81 0.01 0.26 2.63 1.29 1.09 0.63
INVESTMENT MERITS
Touted as the largest rubberwood kitchen furniture manufacturer in Malaysia with more than 10% market share Manufacturer of rubberwood kitchen furniture, furniture components, rooftruss and provision of kiln-drying services Anticipating new income stream with the completion of new production facility and warehouse Diversied export markets that include Europe, America, Asia Pacic, Middle East and Africa Estimated fair value at RM1.03 based on a mix of 9.0x PER and P/NTA of 0.7x

Datuk Dr Sow Chin Chuan Yayasan Melaka Instant Proceeds 47.8 7.6 5.7
COMPANY PROFILE
DPS Resources (DPS) was listed on the Second Board on 12 August 2004. It was successfully transferred to the Main Board on 9 November 2005. The Group is involved in the manufacture of rubberwood furniture, furniture components and rooftruss, and the provision of kiln-drying services. DPS has also ventured into property management and more recently into agro-based business although the contributions from these segments are negligible. Besides being an OEM, DPS also manufactures rubberwood under its subsidiarys Shantawood Three-leaves green trademark, which was registered with the Intellectual Property Corporation in 2003. Although DPS niche lies in the kitchen furniture segment, its production versatility enables it to produce other home furnishings and commercial furniture using various types and grades of wood.


KEY HIGHLIGHTS
Diversied customer base with long-term relationships. The Group has gained wide international acceptance with its high quality products and reasonable prices. As at Dec 2006, DPS exports about 60% of its furniture, with Europe (23%) and America (21%) being its key markets. Its well-established customer base includes Wal-Mart (USA), Omnisport (Central America), Mohd Azim Furniture (UAE)and Motani (South Africa). Leading British catalogue store operator, Argos PLC is also among its Top 5 customers and has been with the Group for over 4 years. Plant expansion to fuel growth. The proceeds form the private placement exercise in Apr06 was utilised to construct a third production facility cum warehouse on a 5-acre owned land adjacent to its current premise. The new facility is to cater for future growth as well as its new business line i.e. Mixed Container, which targets non-bulk buyers. With this Mixed Container operation,
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customers can now enjoy a product mix of DPSs top 10 designs in a single container. Previously under the Direct Container operation, a maximum of 2 types of furniture sets are allowed in one container. Although the furniture industry is labour intensive, DPS is gradually moving toward contemporary technologies from Germany, Italy and UK, employed in the cutting, moulding and laminating processes. It also utilises the AutoCAD software for block drawings and specications. R&D to maintain competitive edge. Due to the fast-moving furniture fashion trends, particularly in Western countries, DPS has always recognised the signicance of R&D and has established its own in-house R&D unit of 20 personnel. Headed by Datuk Dr. Sow, the team actively studies the feasibility of adopting new technologies and production processes. With the aid of AutoCAD software and CNC (Computer Numerical Control) machines, they have successfully produced approximately 150 products for the 2007 brochure. Rubberwood supply not an issue. DPS currently sources all its rubberwood supply locally. Rubberwood is a major component (60%) of raw material cost. Management has highlighted its strategy to source from different States to diversify the risk of supply constraints in one particular area. Over 60% of the suppliers are from Kedah, Perak, Kelantan and Pahang. Since the execution of agreements in 2000 with suppliers (giving the rst right of refusal for DPS to purchase rubberwood at prevailing market prices) DPS has been able to receive a consistent and sustainable supply of rubberwood.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 98.1 115.9 133.5 171.1 14.7 18.2 15.2 28.1 18.3 21.7 26.5 33.6 13.4 15.7 18.8 24.4 11.8 14.5 17.5 22.8 9.8 11.0 13.3 17.3 60.0 11.7 21.4 29.8 0.67 0.72 0.85 1.00 4.2 0.0 0.0 2.4 6.0 0.0 0.0 3.5 7.0 6.3 5.2 4.0 1.0 1.0 0.8 0.7 (0.1) (0.2) (0.6) (0.4)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 67.5 89.6 107.3 - 26.1 28.3 28.0 - (15.7) (26.2) (25.8) 0.0 0.0 0.0 - 77.9 91.8 109.5 - 60.0 60.0 66.0 7.8 15.9 28.4 - 67.8 75.9 94.4 - 10.1 15.8 15.1 0.0 0.0 0.0 - 77.9 91.8 109.5 - 10.6 20.6 28.4 - (8.5) (19.4) (27.8)
COMPANY REPORT CARD

ROE. ROE for FY05 and FY06 was 16.4% and 17.0% respectively. Going forward, we expect ROE to narrow to 12% in FY07 due to the capex spent on the plant expansion, which may be nanced via the issue of new shares. Management. Back in the early 1980s, Datuk Dr Sow Chin Chuan, together with his spouse, Datin Chu Kim Guek, ventured into the wood-based industry by setting up Shing Huat Sawmill S/B, which later acquired DPS Industries and Shantawood. A hands-on person, Datuk Dr Sows insights, stewardship and perseverance are instrumental to the steady growth and expansion of the DPS group. Dividend. Management has paid a 6% i.e. 3 sen dividend for FY05. However, no dividend was declared in FY06 given expansion plans.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (3.5) 15.1 6.7 (8.6) (16.2) (18.7) 12.7 0.7 11.5 0.6 (0.4) (0.5) 0.0 0.6 0.2 0.0 0.0 0.0 0.6 0.2 (0.3)
RECOMMENDATION
We like DPS given its healthy balance sheet and its prole as the largest kitchen furniture manufacturer in Malaysia catering to the export market. The group has managed to maintain its reasonably low net gearing at 30% for the past 2 years. Also, the completion of its new production facility and warehouse will further improve capacity and earnings. Fair value of RM1.07 is derived from the average of (i) 11.0x average industry PE and (ii) 0.8x average industry P/NTA on FY07 earnings.
OSK
56
Dutch Lady Milk Ind.

A Solid Dividend Play
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) DLM MK 64.00 755.20 14.00 | 7.45 62.67 (0.20) (0.22) 8.54 3.47 0.77 1.89
INVESTMENT MERITS
Malaysias leading dairy company Strong fundamentals, 7% yield and continuous growth provide supports for high valuation Another solid F&B play with relatively undemanding valuations
COMPANY PROFILE
Netherlands based Royal Friesland Foods is the parent company of Dutch Lady Milk Industries (DLM). DLM was rst established as a manufacturer of sweetened condensed milk (SCM) in Malaysia. Currently, it also manufactures and sells a variety of dairy products, such as infant formula, growing-up milk, sterilised milk, UHT (ultra heat temperature) milk, powdered milk and yoghurt. DLMs dairy products have a strong brand name domestically and are represented by well-known household brands such as Dutch Lady, Frisian Flag, Frisolac, Completa and Calcimex. DLMs agship products are Dutch Lady UHT milk and Dutch Lady 123. Its fruit juices are marketed under the Joy brand. Almost 90% of the products are for domestic consumption with exports accounting for the remaining 10% mainly to Singapore, Vietnam and Hong Kong.

Frint Beheer IV BV PNB 50.1 25.0

Month 1m 3m 6m 12m Absolute 7.27 (1.67) 20.00 64.06 Relative (0.21) (13.90) (8.61) 16.45

KEY HIGHLIGHTS
Malaysias leading dairy company. Aside from Nestle and F&N, DLM is another key player in the local F&B industry An internal survey carried out by DLM showed that it has a sizeable market share of about 55% in the UHT milk segment, 32% in the growing-up milk segment and 65% in the sterilised milk segment. Riding on its dominant market share in various dairy product segments, DLM recorded a CAGR of 41% for its FY03-06 net prots. Meanwhile, other F&B players are more dominant in segments other than dairy products. For instance, Nestle has a leading position in the general F&B products segment (i.e. Milo, Nescafe, Maggi) while F&N dominates the soft-drink segment. Rising milk powder costs the primary concern. According to the management, milk powder prices YTD 2007 have generally surged by 3040% y-o-y and are expected to increase further given shortages in supply. However, passing on the entire incremental costs is difcult given the intense competition. We believe the surge in milk powder prices should similarly have a negative impact on other big F&B players such as Nestle and F&N. As a result, we have seen Nestle raising selling prices of its Milo and Nespray as well as other infant formula products. We believe other F&B players, including DLM will follow suit.
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Solid fundamentals, 7% yield and continuous growth provide supports for high valuation. DLMs defensiveness, strong brand equity and attractive yield should provide supports for valuation. As at 2006, DLM remained debt free and had a cash balance of RM26.6m or equivalent to 41.6sen per share. Capex is limited as the company is unlikely to embark on any major expansion in the near future. The management has also alluded to a dividend policy of returning excess cash to shareholders. Therefore, we have projected a DPS of 77.7sen (inclusive of 30sen special dividends) for FY07. This translates into a payout ratio of about 75% and a yield of near to 7%. DLM has paid out almost 100% of net prots as dividends in the past three years. Although we believe DLM is unlikely to have similar generous payouts in the future, we should not overlook DLMs ability to generate free cash ows going forward.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 420.5 459.1 513.7 565.7 9.2 11.9 10.1 36.5 47.3 59.8 73.8 26.8 37.7 50.3 64.0 19.7 27.1 43.1 46.4 30.8 42.4 67.3 72.5 37.5 58.8 7.7 2.06 1.85 1.89 2.04 77.7 87.7 87.7 77.7 6.6 7.4 7.4 6.6 38.3 27.8 17.5 16.3 5.7 6.4 6.2 5.8 0.4 0.3 0.4 0.5
COMPANY REPORT CARD

ROE. DLMs ROE has been increasing remarkably to 36% last year from about 11% ve years ago. Management. The company is currently under the management of a Taiwanese, Mr. Chen Shou-Ren, who is the Executive Chairman, and his spouse Mdm. Lau Mei Yong, the MD of the company. They are hands on to day-today operations. Dividend. DLM is also another dividend play in the consumer sector. The company has been paying out good dividend, offering investors of about 7% yield.
Balance Sheet (RMm)

RECOMMENDATION
We peg our 12-month target price to a forward PE of 18x, which is about the average for the local F&B sector. Based on our FY07 EPS forecast of 72.5sen, this translates into a target price of RM13.05, near to our fair value of RM12.95 derived from DCF methodology with WACC of 8.7%. In our opinion, the key concern for investors is the low free oat of just about 25% for DLM shares. DLMs Netherlands-based holding company, Frint Beheer IV BV, and Permodalan Nasional Berhad already have a shareholding of about 50% and 25% respectively.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 23.8 39.1 54.1 (4.3) (5.5) (5.8) (36.5) (40.7) (40.5) (17.1) (7.1) 7.8 42.9 25.9 18.8 0.0 0.0 0.0 25.9 18.8 26.6
OSK
58
Eastern Pacic Ind. Corp.

Monopoly Advantage
Oil & Gas
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) EPIC MK 165.26 280.93 1.80 | 2.12 274.97 37.0 Net Cash 3.48 0.45 0.94 1.46
INVESTMENT MERITS
Oil & Gas supply base monopoly in Peninsular Malaysia through ownership of the Kemaman Supply Base Main customers of base are Petronas and Exxon Mobil, which combined have exploration and production budgets exceeding RM5bn this year Kemaman port East Wharf and Liquid Chemical berth to contribute to bottom line FY08 onwards Dividend payout of at least 40% going forward is supported by the Groups net cash position of RM0.37 per share 29.4% upside to target price of RM2.20

Perbadanan Memajukan Iktisad Negeri Terengganu Lembaga Tabung Haji 39.2 20.9
COMPANY PROFILE
Eastern Pacic Industrial Corp (EPIC) is an oil and gas related company owned by the Terengganu State Government. The Groups core business is the ownership and management of the Kemaman Supply Base (KSB), which is catered to the oil and gas industry. The supply base offers cargo, berthing and ofce/warehouse space rental services to oil majors and service providers working offshore Terengganu. Besides that, EPIC also has a pipe threading arm, Tubex, and now owns 51% of the Liquid Chemical Berth and East Wharf of Kemaman Port.

Month 1m 3m 6m 12m Absolute 19.7 27.8 34.3 8.3 Relative 11.8 12.4 2.5 (21.5)

KEY HIGHLIGHTS
Increasing oil & gas developments in Malaysia. KSB have enjoyed a steady recurring income, which has grown 20%, and contributed to >85% of group earnings from only 80% previously. This is attributable to the increasing oil & gas offshore development in Malaysia. By being the only O&G supply base in Peninsular Malaysia, KSB has captured the needs of oil majors and service suppliers through its rental, cargo and berthing areas. Major customers amongst the 208 tenants that contribute to 40% of revenue are Petronas and Exxon Mobil, which together have an exploration and production budget exceeding RM5bn for Malaysia. Kemaman Port Consortium to add to earnings. The Kemaman Port was nally privatised last year with EPIC taking a 51% stake in the East Wharf and the Liquid Chemical Berth (LCB). The East Wharf caters to storage of dry bulk like steel and other general cargo, while the LCB is able to accommodate barges of up to 60,000 DWT carrying LPG for export. At the moment, minimal earnings are seen from these areas as the LCB is undergoing an upgrade exercise. A boost of 10-15% to bottom line can be expected in FY08. Besides that, Road Builder (which has a 39% stake) may give up its stake to EPIC
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following the takeover by IJM, strengthening EPICs hold on the port. Potential expansion and increase in rates. KSB underwent expansion in FY06 and this has added to the >20% y-o-y earnings growth. Besides that, some 5-10% increase in rental, cargo and berthing rates were put into place in early 2006 given the increasing operational costs. Going forward, given the rising demand for the supply base services, EPIC may undertake another expansion as well as another hike in rates. However, nancial impact from these exercise would only be seen in FY08 and is likely to be signicant to the Groups earnings.

COMPANY REPORT CARD

ROE. ROEs of the Group have been at low single digits due to provisions made over the past two nancial years but we expect ROEs to recover in FY07 as there are no more provisions to be made. Management. There have been some changes in management over the past year but the Group continues to be backed by the Terengganu State Development, which is its largest shareholder. Dividend. We expect a payout of at least 40% going forward translating to a gross yield of 4.2% at current prices. This is similar to FY06 payout and reasonable considering the Groups healthy net cash position of 37sen per share.
Balance Sheet (RMm)

RECOMMENDATION
The past two years have not been rosy for EPIC due to RM30m worth of provisions made relating to its failed investment in a Canadian company. Nevertheless, excluding the provisions, KSB continues to prosper. Earnings is expected to normalize in FY07. Once this happens, investors interest should return to EPIC. We cite the company as an undervalued oil & gas play at this juncture judging from its single digit forward PE, strong dividend yield, net cash position and steady earnings growth. We recommend a BUY on EPIC with a fair value of RM2.20, derived on FY08 EPS against the industry PE of 15x and 3.5 P/Book. We have however, imputed a 30% discount these valuations to reect the Groups inferior ROEs compared to the industry.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 22.2 26.7 32.3 (41.6) (31.8) (4.3) (6.4) (23.3) (4.9) (25.8) (28.5) 23.0 95.0 69.2 40.7 0.0 0.0 0.0 69.2 40.7 63.8
OSK
60
Efcient E-Solutions
Others
Aiming 5th Successive Strong Earnings Growth

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) EES MK 300.05 138.02 0.61 |0.24 495.85 (0.05) (0.14) 7.42 1.20 1.39 0.12
INVESTMENT MERITS
Second largest player in the local DDP industry Clear earnings visibility as revenue derives from long-term contracts Earnings increased by 51% in FY04, 63% in FY05 and FY06 respectively Negotiating potential M&A with an Indonesian company Revenue has been growing every year since FY99

Cheah Swee Sin SB Kumpulan Sentiasa Cemerlang Cheah Chee Kong SB 20.2 11.9 9.1
COMPANY PROFILE
Efficient is mainly involved in the provision of integrated outsourcing solutions in data and document processing (DDP), ranging from data extraction, to conversion, formatting of documents, to data printing, as well as the preparation of printed documents for distribution via post, to banks, stockbroking companies, insurance companies and telecommunications operators. The company also provides electronic bill presentment (EBP) services. In term of market share, Efcient is the second biggest player in the local data and document processing (DDP) industry, dominating the banking, stockbroking and life insurance industries. Its main banking customers are Public Bank, Afn Bank, Alliance Bank, UOB, Citibank and HSBC. Major clients from the insurance industry are Prudential, ING and Great Eastern.

Month 1m 3m 6m 12m Absolute (10.48) (6.93) 18.44 83.62 Relative (15.92) (19.92) (10.76) 32.55

1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Strong customer base. Efcient has a strong customer base and its revenue growth will be driven by processing greater volume of documents. In addition, sales of the companys software solutions are also expected to improve as its clients aim for computerization to deliver better and more efcient services. Growth through acquisitions. The recently completed acquisition of the remaining 80% interest in Printegrate SB is expected to allow Efcient to move upstream into the production of computer forms for digital and specialized printing, as well as enabling the company to explore possibilities of increased revenue through the supply of these specialized forms to its existing customers. Efcient is also now in advance stage of negotiating a M&A move with an Indonesian company. Our earnings forecast has not incorporated potential contribution from the ongoing M&A in Indonesia. Rolling out SOA services. Service-oriented Architecture (SOA) methodology will soon be rolled out for an existing customer in the banking sector. SOA is a new methodology for delivering IT application software using design approach which provides for better, more seamless integration of IT systems. With the
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SOA approach, Efcients software will be created as a shareable software services, which can be integrated with software services of other systems, regardless of underlying technology. Scan and archive. This service scans and covert forms or documents in hard copy into an electronic format that can be used for intelligent data capture. Besides the SOA service, scan and archive is another type of service which could be leveraged on its existing customer base. Clear earnings visibility. Efcients revenue is derived from long-term contracts. Due to high switching costs and long migration process, all existing customers are expected to renew the contracts with Efcient. Population and afuence. As Efcients key customers are the major players in the respective industries, the growth in population and increasing afuence among Malaysians will have a straight positive impact on the companys business. As population grows, the demand for DDP services will increase as more DDP generated documents are required such as utility bill, bank statements, promotional materials and etc. Constructing a new building. Efcients new facility in Shah Alam is on target for completion by end of 2007. The completion of the new facility will enable the company to optimize its workow and communication process. Upon completion of the new facility, the company will relocate its existing operations from Petaling Jaya to this new building. The current ofce in Petaling Jaya will then be used as a dedicated disaster recovery site in the future.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 22.8 31.1 25.1 36.7 7.9 11.0 6.0 9.3 4.5 7.4 2.0 2.5 51.3 22.5 0.14 0.19 0.2 0.4 0.5 0.9 22.8 18.6 3.2 2.5 (0.0) 0.0 FY06 FY07f 43.0 54.5 38.2 26.7 15.4 19.8 14.0 18.3 12.1 16.3 3.7 4.9 48.3 34.4 0.20 0.25 0.6 0.6 1.3 1.3 12.5 9.3 2.3 1.9 0.0 0.0
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 - 19.8 - 26.3 - (10.5) 0.0 - 35.6 - 12.0 - 20.7 - 32.7 2.9 0.0 - 35.6 1.8 - (1.0) FY05 FY06 21.6 29.9 24.7 31.6 (6.4) (8.4) 0.0 0.0 39.9 53.1 12.0 30.0 25.2 18.3 37.2 48.3 2.8 4.8 0.0 0.0 39.9 53.1 1.0 1.8 6.9 4.9
COMPANY REPORT CARD

ROE. Efcients ROE is expected to reach 22% in FY07, from 14% in FY04. Management. Management will normally share a conservative earnings guidance. For instance, Efcients 9M performance was way above the managements earlier earnings growth guidance of 20% for FY06. Efcients 9MFY06 net prot had already achieved our forecast for the year. Although management guides FY07 earnings to increase by at least 25%, we have projected FY07 earnings growth of 34% as the management guidance could be on the conservative side again. Dividend. Efcient does not have a dividend policy. A rst interim taxexempted dividend of 3.5% has been declared for FY07. As at 31 Dec 2006, the company has net cash of RM4.9m.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 FY04 FY05 8.4 (6.1) 8.0 (5.7) (3.8) (6.3) 16.7 (1.8) (3.6) 19.3 (11.7) (1.8) 0.0 19.3 7.6 0.0 0.0 0.0 19.3 7.6 5.8
RECOMMENDATION
Efcients share price has increased by 50% since our initiation in July 2006. We maintain our Buy call with price target of RM0.64 based on FY07 PER of 13x. The company now has 10 institutional shareholders with a combined stake of approximately 33% as of Dec 2006.
OSK
62
Eng Kah Corp.

Doing The Business Right
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) EKC MK 61.23 232.69 4.00 | 3.18 18.85 (0.16) (0.30) 10.72 2.33 0.53 1.33
INVESTMENT MERITS
2nd Penang plant in the pipeline Tapping on more MNCs 2008 a blossom year after successful transition Clean fundamentals and stable cash ows A healthy company with defensive nature
COMPANY PROFILE
Eng Kah is currently the only personal care products manufacturing company listed in Malaysian stock market. The company was founded in 1970 and was incorporated in Jun 1997. It was listed on the Second Board in 2002 and subsequently transferred to the Main Board in July 2005. One of the companys subsidiaries, Eng Kah Enterprise Sdn Bhd was awarded the MS ISO 9002 certication for the manufacture of perfume, toiletries, skin care products and colour cosmetics in 1996. The certication was later upgraded to MS ISO 9001 in 2003. Eng Kahs Penang plant has also obtained the Good Manufacturing Practice certication for the production of shampoo, lotion, bath gel, cream, hair oil and etc. Currently the company manufactures >1000 items for >50 companies, with some renowned brands such as Johnson & Johnson, Avon, Kimberley Clark and etc.

Ewe Eng Kah Pam (L) Equities Asian Growth Allianz Life Insurance (M) Bhd 43.1 8.9 7.5

Month 1m 3m 6m 12m Absolute 0.00 (4.04) 13.16 9.45 Relative (7.08) (15.63) (13.08) (23.67)

KEY HIGHLIGHTS
2nd Penang plant in the pipeline. Eng Kahs 2nd plant in Penang has come on stream this year. The 2nd plant has an area of 77k sq ft, slightly bigger than the 1st plant of 62k sq ft. The new plant is currently operating at a small scale, but the capacity is likely to be ramped up in 2H07 when it secures more MNC customers. Therefore, as soon as the new plant is operating at high capacity, we are likely to see substantial growth in earnings going forward. Tapping on more MNCs. The company currently focuses on securing more MNC customers. This strategic move is aimed at mitigating the expected competition in the region as AFTA comes into play in 2010. According to the management, some neighbouring countries currently impose import duties of as high as 40%. Hence after 2010, competition is expected to increase signicantly and big multinational players are likely to be the winners. Given this scenario, Eng Kah is hence dedicated to get more contract manufacturing businesses from the MNCs. Based on our discussion, the management has indicated that a big retailer in Australia is likely to become Eng Kahs clientele in 2H07.
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2008 a blossom year after successful transition in 2007. In anticipation of more liberalised trade going forward, Eng Kah is currently streamlining its customer prole by reducing some smaller volume orders from smaller customers while targeting bigger MNCs. Hence we believe 2007 will be a transition year for Eng Kah, and we are likely to see more healthy earnings start materialising next year, achieving >20% growth. Clean fundamentals and stable cash ows. Overall we like the company for its clean fundamentals. Eng Kah is currently in a net cash position. Both ROEs and operating cash ows have been stable and satisfactory. Going forward, we expect more free cash ows as soon as the company stabilises its expansion and achieves a more optimal customer portfolio.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY03 FY04 64.8 79.0 - 21.9 19.0 22.7 17.4 20.3 13.9 15.2 23.0 25.0 - 33.9 1.86 1.60 8.0 18.0 2.1 4.7 16.5 15.2 2.0 2.4 0.4 0.4 FY05 FY06f 81.7 93.4 3.4 14.4 20.8 24.8 18.8 22.7 15.2 16.9 25.0 27.8 8.8 0.1 1.42 1.53 28.0 23.0 7.4 6.1 15.2 13.7 2.7 2.5 0.5 0.5
COMPANY REPORT CARD

ROE. Eng Kahs ROE has been healthy, ranging from 18% to 20%. We expect the companys ROE to rise steadily, exceeding 20% going forward when the 2nd plant runs at full capacity. Management. Eng Kah is under the management of the founder, Ewe Eng Kah, and a team of professional managers. Mr. Ewe has >30 years of experience in the industry and he has been instrumental to the growth of the company. Dividend. Eng Kah has been progressively increasing its payout, from about 20% to 81% in FY06. A 5sen special DPS was declared last year, together with a full year 2006 DPS amounted to 28sen. We expect Eng Kah to continue with its generous dividend payout given its stable cash ows as well as cash balance. The management indicated that the company would at least maintain its 23sen DPS but any special DPS would depend on earnings performance. Our DPS forecast of 24sen for FY07 (excluding special DPS) translates into a decent yield of 6.1%.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06
24.2 31.0 34.9 36.8 49.1 57.6 59.7 64.8 (8.5) (11.4) (11.0) (12.1) 0.0 0.0 0.0 0.0 64.8 77.2 83.5 89.5 40.0 40.3 60.8 61.2 7.8 8.3 3.5 1.0 62.2 74.7 80.8 86.9 2.6 2.5 2.7 2.6 0.0 0.0 0.0 0.0 64.8 77.2 83.5 89.5 0.6 0.4 0.1 0.0 22.0 23.5 24.5 28.8

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 11.1 (8.3) (1.5) 1.3 22.6 0.0 24.0 FY05 FY06 15.4 16.3 (5.6) (3.5) (9.1) (8.0) 0.7 4.8 24.0 24.6 0.0 0.0 24.6 29.4
RECOMMENDATION
We have a fair value of RM4.25 for Eng Kah, based on DCF valuation method (WACC @ 7.4%). We like the company for its strategic business plan, clean fundamentals and stable cash ows. Our target price would translate into a PE of 15.3x for FY07 and 11.9x for FY08, which fall into its historical PE range.
OSK
64
Eonmetall
Machine Master
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) EONM MK 165.63 115.94 0.88 | 0.43 498.46 0.04 0.19 3.47 1.56 0.53
INVESTMENT MERITS
Leading MME in S.E.A Future growth to be driven by new plant and capacity expansion Expanding overseas presence via vertical integration with potential JV with Indonesia, UAE and Namibia partners Moving upstream by expanding CRC line and installing GI line will boost revenue and bottomline On-going product development and aggressive marketing to improve competitiveness

Eonmetall Corporation SB Dato Goh Cheng Huat 50.9 15.9
COMPANY PROFILE
Eonmetall history can be traced back since early 1990, with the establishment of Eonmetall Industries Sdn. Bhd. by Dato Goh Cheng Huat. The company involves in the manufacturing of steel products predominantly on secondary at steel products and steel storage system, machinery and equipment (MME) and provision of IT solutions. To-date, the company has successfully patented various manufacturing processes or products. The IT solutions division concentrates in developing front end and back end solution for most manufacturing companies and is synergistic to its MME division for factory automation projects. Eonmetall exports more than 70% of its product to countries namely the Middle East, Africa, Asia and Asia Pacic, Europe and North America. The company was listed on second board of Bursa Malaysia on 26 July 2005 and was recently promoted to the main board.

Month 1m 3m 6m 12m Absolute (7.29) 6.06 17.98 40.00 Relative (13.40) (6.75) (8.25) 3.35

KEY HIGHLIGHTS
Focus on niche products. Eonmetall produces a wide range of secondary at steel products such as slotted angle, conduit pipe, purlins, lter mesh, heavy duty racking system etc and forms a major revenue contributor to the company, contributing approximately 67% of total revenue in FY06. More than 90% of the companys machineries are designed internally via the MME division, hence cheaper CAPEX and also the exibility for making minor modications to meet clients requirements. New plant new boost. The company is currently commissioning a new factory within the vicinity of its existing plant in Penang. Eonmetall will move the secondary at steel production line to the new plant and expects to add new capacity from 36,400 tpy to 58,400 tpy. The removal of the existing line is expected to provide additional space for its MME division that is facing space constrain currently with capacity cap at 50 units per year (new capacity will improve it to 80 units per year). With commercial commissioning by 2QFY07,
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we are likely to see substantial growth in earnings going forward. On top of that, Eonmetall is set to further expand its capacity by building another plant with a build up area of 28,000 m2 scheduled for completion by FY08. Expansion via vertical integration. Eonmetall is conducting a feasibility study to set up a strategic alliance to produce secondary at steel in Indonesia. The JV is expected to benet Eonmetall to supply machinery as well as supplying raw materials to the new JV company. Eonmetall also planning to venture into UAE and Namibia to produce cold rolled coil (CRC), pipe and hollow section in order to increase its presence in the region as well as generating more export sales for its products. Moving upstream. The company is upgrading and installing new manufacturing facilities to move upstream. Currently, Eonmetall has capacity of 80,000 tpy for CRC and is installing a new line to up the capacity to 160,000 tpy by 2HFY07. Apart from internal usage, the additional capacity will be sold to its existing clients. Apart from that, Eonmetall is also installing a new galvanizing iron (GI) line for internal usage and for its export markets as well. Meanwhile, the company is planning to produce pre-painted galvanized iron (PPGI) by FY08. We believe this value added coil is expected to signicantly boots revenue of the company as well as improving bottomline and enhance competitiveness.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 78.4 58.9 20.1 16.1 13.4 8.1 14.5 0.33 0.0 0.0 8.6 2.10 0.00 FY05 FY06 70.0 93.9 (10.8) 34.1 19.6 22.7 15.0 16.5 14.7 14.3 8.9 8.7 9.6 (3.0) 0.53 0.62 10.0 0.0 1428.6 0.0 7.8 8.1 1.33 1.13 (0.05) (0.13) FY07f 141.4 50.6 28.2 19.8 17.8 10.8 24.2 0.70 4.5 640.5 6.5 1.00 (0.25)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 47.8 70.9 - 70.2 75.7 - (23.1) (31.1) 0.0 0.0 - 94.9 155.5 - 55.0 55.0 - 31.8 46.8 - 86.8 101.8 8.1 13.8 0.0 0.0 - 94.9 155.5 - 19.3 28.9 - (8.1) (21.6)
COMPANY REPORT CARD

ROE. Based on the impending catalysts ahead, we think the company is heading on a right path to record attractive double digit ROE going forward. Management. Eonmetall management is led by Dato Goh Cheng Huat that has extensive knowledge and experience in steel industry of more than 20 years. Under his strong leadership, the success of Eonmetall is assured. Dividend. The company did not declare any dividend for FY06, instead rewarded its shareholders with a 2:1 bonus issue. Given the positive news ow ahead, we believe Eonmetall will pay a decent gross dividend yielding 6.4% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (5.0) 16.7 (1.5) (27.3) 17.0 4.6 10.4 6.1 0.0 10.4 0.0 0.0 10.4 4.4
RECOMMENDATION
With the companys expansion now nearing to completion, we rate Eonmetall a BUY with a 12-month target price tagged at RM0.85 or 22.1% upside. The fair value is derived from a composition of peer PER and peer P/B on FY07 gures. Couple with a potential attractive dividend yield of 6.4% the stock may likely deliver a 12-month total return of 28.5%.
OSK
66
Euro Holdings
True Satisfaction At Work
Furnishings
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) EUHO MK 81.00 55.08 0.96 | 0.66 326.84 (0.04) (0.19) 3.80 1.32 0.79 0.71
INVESTMENT MERITS
Largest Player in Malaysias Ofce Furniture Industry with 15% market share Newly completed 3rd production facility to boost capacity by 50% Great emphasise on R&D with a minimum of 1.5% - 2% of revenue spent every year ODM and OEM contracts with Godrej and Itoki respectively will serve as a breakthrough into the lucrative contract manufacturing market Consistent dividend payout of about 30% yearly

Lew Fatt Sin Dato Mohd Haniff Bin Abd Aziz Law Sim Shee 18.0 12.5 10.8
COMPANY PROFILE
Euro Holding Bhd (EHB) was listed on the Second Board in January 2005. The Company was the brainchild of Mr Lew Fatt Sin, and has since evolved from a sofa and cushion manufacturer in 1976 to a Total Ofce Solutions provider who designs, manufactures, markets and trades their own brand (EURO and Euro Chairs) of chairs, system furniture and accessories. By December 2006, EHBs growing worldwide presence is further strengthened through the exports of 65% of its products to India (42%), Singapore (17%), Japan (7%), USA (6%), Europe (7%) and others. EHB now has 3 integrated manufacturing facilities all situated in Rawang. Plant 1 and 2 are running at least at 80% utilisation rate one for the manufacturing of wood-nished goods and the other for chairs and metal works. Its 110,000 sq ft. new plant, which was completed by January 2007, will be fully operational by the end of the year.

Month 1m 3m 6m 12m Absolute (9.27) (4.20) (20.35) (24.89) Relative (13.58) (16.38) (38.64) (46.22)

KEY HIGHLIGHTS
Going forward, Management will be targeting more on OEM and ODM type of contracts, aside from the existing sale of its Euro and Euro Chairs products. Venturing into OEM and ODM is also to utilise the additional production capacity readily available through its 3rd new plant. Management has also indicated that rising exports to India through its Godrej contract will also boost revenue for the next 12 months. Large production facility to be completed this year. With the completion of its 3rd production facility, also situated at Rawang Industrial Estate, this 110,000 sq. ft plant will boost existing production capacity by 50% or 190,000 chairs and 48,000 workstations. We believe the timing of completion is precise, in tandem with its expanding business to take on larger OEM and ODM contracts.
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Boosting revenue via OEM and ODM manufacturing. Aside from Itokis 3-year OEM contract secured at the end of 2005, EHB was also awarded a 3-year ODM contract during mid 2006 by Godrej & Boyce Mfg Co Ltd through Dellform Marketing S/B. Management believes that the ODM agreement would be a value-added revenue generator in years to come, with average income estimated to be around RM18m per annum. Having secured reputable clients such as Itoki and Godrej, EHB will be able to leverage on this to gain signicant exposure into the Japan and India markets. Strong R&D enhances branding. The EHB Group places strong emphasis in R&D to increase the quality of its designs, under the brands Euro and Euro Chairs. Established since 1995, the R&D team which consist mostly engineers, uses AutoCAD software to stimulate 3-dimensional models for their chair designs and system furniture. In addition, EHB spends about 1.5% to 2.0% of its sales revenue on branding efforts to increase recognition of its house brands. Diversied marketing and distribution network. The Group regularly participates in international and domestic furniture trade fairs in a continuous effort to build and promote the Euro or Euro Chairs brand of ofce furniture. Its major customers include Telekom Malaysia, Putrajaya Holdings, Tata Airlines (India), 1 Source Ofce Interiors (USA), Aico Co (Japan) and etc.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 68.7 88.0 94.5 123.0 n.m 28.1 7.3 30.3 9.2 12.3 11.8 15.6 8.1 8.8 6.9 9.7 6.3 7.2 5.6 7.8 10.4 8.9 6.9 9.7 0.0 (14.3) (22.6) 40.6 0.61 0.71 0.76 0.82 0.0 3.5 2.8 4.0 0.0 5.1 4.1 5.9 6.6 7.7 9.9 7.0 1.1 1.0 0.9 0.8 0.0 0.1 (0.0) 0.0
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 23.5 30.8 43.5 - 36.9 52.1 51.4 - (21.3) (19.1) (24.7) - 39.1 63.8 70.1 - 30.4 40.5 40.5 6.7 17.3 20.8 - 37.0 57.8 61.3 2.1 6.0 8.8 0.0 0.0 0.0 - 39.1 63.8 70.1 5.9 6.1 8.8 0.1 11.3 (1.0)
COMPANY REPORT CARD

ROE. ROE has decreased from 15.2% in FY05 to 9.4% in FY06, which was mainly due to the shrinking margins. However, we expect net prot to improve over the next 2 years, offering an ROE of 11.3% for FY07. Management. Led by Mr. Lew Fatt Sin, current Group Managing Director, and 3 other staff, EHB began operation in 1976 as Fatt Sin Cushion. Today, the Group prides itself as an Original Brand Manufacturer who provides Total Ofce Solutions services, which includes manufacturing ergonomic seating, system furniture and related ofce furniture products. Dividend. EHB announced a modest gross dividend of 3.5 sen or 5.1% yield for FY05. As for FY06, management had proposed a rst and nal gross dividend of 2.8 sen, a 29.7% payout, which is consistent with its 25% - 30% payout policy.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 (1.5) 0.6 6.5 5.7 0.0 0.0 5.7 FY05 FY06 4.9 5.4 (8.9) (14.5) 15.5 (0.9) 11.5 (9.9) 5.7 17.2 0.0 0.0 17.2 7.3
RECOMMENDATION
Given its successful penetration into the Indian and Japanese markets, we see potential growth for EHB for the next 2 3 years. Derived from an average of 9.0x PER and 0.8x Price to Book, we value the Group at RM0.77 for FY07. However, we believe strong revenue growth to kick in only in FY08 given the full operation of its new plant by end of 2007, leading to further potential upside.
OSK
68
Favelle Favco
FAVCO
Oil & Gas
The Global Cranemaker
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) FAVCO MK 168.00 201.60 1.31 | 0.55 671.22 40% 0.41 0.58
INVESTMENT MERITS
One of the worlds only niche manufacturers of customized heavy duty cranes Well padded with a growing order book of RM430m Large exposure to the oil & gas sector, which is experiencing rapid growth worldwide Expected 2 year net prot CAGR of 16.4% Fair value of RM1.60 represents 33% upside from current prices

Muhibbah Engineering 58.3
COMPANY PROFILE
Favelle Favco (Favco) was founded in Australia in 1962 and acquired by Muhibbah Engineering in 1995. Listed mid-last year, the Group has gained a reputation as a renowned manufacturer of heavy duty cranes. Favcos cranes are catered to three main industries, namely, offshore oil & gas (offshore pedestal cranes), building construction (tower and crawler cranes) and ship yard and port cranes. The Group markets its cranes under the Favelle Favco as well as Kroll brand names. Kroll, a company in Denmark, was acquired by the Group in 1997. Currently, 80% of Favcos revenue is derived from overseas from its main manufacturing base in Senawang. Besides that, the Group also has a smaller manufacturing base in Denmark, and sub-assembly bases in Australia and USA. Over the years, Favco has developed a very strong and diverse customer base. Some of its main customers in the oil & gas industry include Singapores Kepple FELS, Labroy, MMHE, Nippon Steel, Talisman Energy and Technip.

Month 1m 3m 6m 12m Absolute 11.1 50.0 93.5 Relative 3.8 31.9 50.5 -

KEY HIGHLIGHTS
Riding the oil & gas boom. On average, each oil & gas platform requires 1-3 cranes depending on its size. Within Malaysia, Petronas has plans for 65 platforms to be up in the next 5 years and that amounts to >120 offshore cranes needed on average. Favco is in prime position to capitalise on the oil & gas boom occurring in Malaysia as well as worldwide. Already, 80% of the Groups RM430m orderbook is for offshore pedestal cranes. High technology. Favcos cranes have been used to build most of the worlds high rise buildings including Taipei 101, Petronas Twin Towers, BurjAl-Arab and are currently being used for the completion of the Shanghai Financial Center and Burj-Dubai. While there may not be many contracts to participate in, these jobs have improved the Groups brand name and prole.
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Favcos cranes are now recognized worldwide for their speed and capacity, and are front runners for high rise construction. Niche in customised cranes. Favcos cranes are highly customised to suite the needs of its customers hence are able to be priced 10-30% above its competitors. Due to this, Favco has created its own niche market and does not need to compete in the market space of mass market crane manufacturers like National Oilwell, Seatrax Cranes and Leibherr Group. Capacity for more. Favco currently has the capacity to build roughly 150 cranes of various sized per year. In FY05 and FY06, the Group sold between 90 and 100 unit of cranes. Going forward, we believe the Group will be able to handle growing orders and hence, grow its earnings. Besides that, Favco could also consider expanding its current yard at Senawang to accommodate demand.

Balance Sheet (RMm)
COMPANY REPORT CARD

ROE. Favcos cranes have fairly thin margins at about 4-5% at EBIT level, bringing its ROE lower then the industry (which have a >18% average) at 10.6%. Nonetheless, going forward, through increasing utilization and better economies of scale, we see that ROE should rise to 12% in FY08. Management. Favco is run by the Mac family, who also owns Muhibbah. They have >30 years of experience in the oil & gas and construction industry and have developed a good track record for Favco over the years. Dividend. A tax-exempt payout of 1.7sen has been paid for FY06 and the Group hopes to maintain a 20-30% payout going forward.
FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt)
FY03 FY04 FY05 FY06 - 70.2 71.6 - 320.7 359.8 - (274.6) (287.1) 0.0 0.0 - 116.3 144.3 - 50.0 84.0 - 20.4 31.1 - 70.4 115.1 - 46.0 29.2 0.0 0.0 - 116.3 144.3 - 63.5 77.1 - (46.0) (49.9)
RECOMMENDATION
Overall, we are sanguine on Favcos prospects due to its exposure to the oil & gas industry and niche in the heavy duty high end crane market. Our fair value of RM1.60 is based on pegging the Groups FY08 EPS to a 15x oil & gas industry PE and blending with an industry 3.5x P/Book. To reect Favcos thin margins, we have applied a 30% discount based on its ROE to peers. Recommend BUY.
FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year
FY04 -
FY05 FY06 0.2 - (8.1) - 17.6 9.8 5.1 - (1.3) - 13.6
OSK
70
Fitters Holdings
Total Engineering Solutions Provider
Others
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) FIT MK 124.36 95.13 1.05 | 0.54 1064.04 0.02 0.37 2.84 0.76 1.35 0.46
INVESTMENT MERITS
#1 Total Fire Solutions Provider in Malaysia Doubling capacity in raised oor systems Additional earnings from engineering solutions for entertainment and theme parks EI of RM30m from sale of agriculture land in Cameron Highlands Transfer to Main Board

Dato Wong Swee Yee 38.58
COMPANY PROFILE
Established since the 1970s, Fitters Holdings was listed on the Second Board back in October 1994. The group through its subsidiaries manufactures and trades re safety products. Its re resistant door under the brand name Pyrodor commands a leading market share in Malaysia. Over the years, Fitters has progressively transformed itself from a one-stop re protection specialist to a total engineering solutions provider. Its engineering division is capable of providing turnkey solutions for re protection systems in pipe fabrication facilities and other intra-structural developments. More recently, the group ventured into providing entertainment and theme park solutions contracting and turnkey projects. Fitters also enjoy recurring income from a re equipment maintenance concession with Fire and Rescue Department of Malaysia (BOMBA). In addition, the group is always vigilantly looking out for selected high yield projects such as the investment in agriculture land at Cameron Highlands. Fitters has identied another such opportunity, developing a fully leased commercial land in Setapak.

Month 1m 3m 6m 12m Absolute (3.77) 2.00 7.75 N.A. Relative (7.66) (10.32) (16.39) (7.77)

KEY HIGHLIGHTS
Raised oor system expansion. Fitters is doubling the capacity for its raised oor system by adding another production line to meet increasing demand. The group has already secured a contract that will max out utilisation for 1HFY07. Under the brand name Titan, the raised oor system is mainly exported overseas and is the only encapsulated woodcore raised oor system in the world. Spot on. Fitters was spot on in venturing into engineering solutions for entertainment and theme parks. It already clinched a RM40m job from the spaceship-styled family theme park, called Stargate, being developed at the 52-hectare Zabeel Park in Dubai. As a result of other projects secured in the Middle East and Malaysia, this segment is set to be the new engine of growth for the group.
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Better times ahead. Fitters recently acquired a piece of land in Setapak for RM37m. The land will be developed into a 700,000 sq.ft. commercial center with 300,000 sq.ft. of parking with a GDV of approximately RM400m. Management has indicated that a 15+5 year leasing agreement has been signed with a leading retailer for the commercial center which should diversify and provide a constant stream of earnings. Exceptional gain. A sale of 482 acres of freehold agricultural land in Ulu Telom in Cameron Highlands that was acquired earlier resulted in an exceptional gain of RM30m. Contributions from the sale will be used to develop the land in Setapak, minimising reliance on bank borrowings and hence lowering its net gearing position. Main Board transfer. Having met the requirements, Fitters is expected to transfer to the Main Board this year, pending the approval of the SC. The transfer may result in a share price re-rating from additional recognition and prominence among investors.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 85.5 143.3 128.4 132.8 (25.9) 67.6 (10.4) 3.4 9.4 12.2 12.9 14.6 9.3 12.5 13.7 16.4 7.0 9.2 10.5 11.7 8.5 11.1 8.4 9.4 6.8 30.4 (23.8) 12.0 0.61 0.69 0.55 0.82 4.0 10.0 10.0 10.0 5.2 13.1 13.1 13.1 9.1 7.0 9.2 8.2 97.7 88.6 115.4 82.4 (0.4) (0.0) (0.2) (0.4)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 33.7 37.5 37.6 31.3 65.4 89.2 103.3 105.5 (36.0) (33.2) (40.4) (25.7) 0.0 0.0 0.0 0.0 63.2 93.6 100.5 111.1 41.5 41.5 41.5 62.2 18.4 24.3 31.0 21.3 59.9 65.7 72.5 83.5 1.8 26.3 26.3 25.9 1.5 1.6 1.7 1.7 63.2 93.6 100.5 111.1 16.3 38.8 36.2 31.2 (13.5) (35.2) (26.7) (20.1)
COMPANY REPORT CARD

ROE. ROE for the past 3 years was in the region of 11%-14%. ROE is projected to hover in that region in the future. Management. The team behind the success of Fitters today is spearheaded by Dato Wong Swee Yee. He recently led the Group into new phases of growth and business opportunities, morphing it into a total engineering solutions provider. Dividend. Fitters rewarded its shareholders by increasing gross dividend to 10 sen in FY05 from 4 sen in FY04. No dividend has been declared yet for FY06. However, we believe management will be able to maintain FY05 payout policy in the future.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 (16.0) (4.2) 22.4 2.2 (3.4) 0.0 (1.3) FY05 FY06 11.7 0.3 (0.4) 8.5 (2.4) (5.4) 8.9 3.4 (1.3) 7.6 0.0 0.0 7.6 11.0
RECOMMENDATION
Fitters currently trades at an attractive single-digit FY07 PE of 8.2x. We expect the stock to trade at a higher PE upon the transfer to the Main Board this year. At 10x PE, Fitters is valued at RM0.945, an upside of 21.9% from current level.
OSK
72
Freight Management Hldgs

Trading towards a Bright Future
Others
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) FMH MK 85.20 69.44 1.09 | 0.66 80.56 (0.16) 0.09 3.38 1.06 0.72 0.67
INVESTMENT MERITS
A leading integrated multi-modal logistics provider offering freight forwarding services via sea, air and rail transport Slow but steady bottomline growth at 15% per annum Beneting from 9MP due to new business transporting raw materials for cement manufacturing Potential future beneciary of Double Track Rail Project due to pioneer position in providing rail logistics solutions to Thailand Looking to gear up as part of regional expansion in logistics

Chew Chong Keat Freight Links Express Holdings Ltd Yang Heng Lam 29.1 20.0 19.0
COMPANY PROFILE
Freight Management Holdings (FMH) has an 18 year track record in providing logistics services. An asset light company, FMH provides complete multimodal freight services covering sea, rail and air freight services, customs brokerage and distribution services. Being one of the leading logistics providers in Malaysia, FMH has an extensive network of 58 agents covering 87 ports in 30 countries. Recently expanding into the tug and barge business ferrying gypsum and feldspar from south Thailand to Malaysia, FMH is a potential beneciary of the demand for cement arising from the 9MP. Its position as a pioneer rail logistics provider should see prots jump after the Double Track project is completed. The 3 founders remain rmly committed to this solid but undervalued company.

Month 1m 3m 6m 12m Absolute (9.19) (10.64) 20.83 25.93 Relative (6.76) (21.66) (8.61) (9.93)

KEY HIGHLIGHTS
Continued demand for sea freight. With Malaysias trade gures expected to grow by 9% and global container trade forecasted to grow by 10% in 2007, demand for FMHs services in sea freight will continue unabated. As the company continues to focus on expanding its Less Than Container Load (LCL) business where revenue per TEU and margins are higher, both box growth as well as yield growth will drive this business division forward. Sea Freight comprises 73% of FMHs gross prots. Air Freight targeting SMIs. FMHs air freight business has remained largely steady despite a drop in volume as its costs have been well controlled and the company has managed to extract higher yields. FMHs target is on providing services to small and medium industries where its smaller scale operations allow it to provide more personalised services. Rail facing short term pain but long term gain. The rail business is facing short term pain as there have been some issues with regards to Thai Railways providing suitable infrastructure in line with some of the issues plaguing the country. The launch of the Double Track Railway project may also disrupt services. However, once completed, FMH will be a strong beneciary of the Double Track project as it will be able to utilise stronger locomotives at a higher frequency to carry freight between Malaysia and Thailand.
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Economies of scale with new warehouse. FMH will immediately gain about 70,000 sq ft of additional space when it moves into its new warehouse/HQ in April 2007. In addition, it will achieve greater economies of scale leading to a higher per sq ft margin. New tug and barge business may benet from 9MP. With the purchase of a 51% stake in TCH Marine last March, the company is now involved in the ferrying of gypsum and feldspar from South Thailand to ports along Malaysias west coast. These materials are used in the manufacturing of cement. As such, with construction activities picking up inline with the 9MP, demand for cement and its raw materials will also increase. FMH is also looking to cross sell this service to provide container handling via barges between Malaysia and Thailand. This service, expected to start in 2H2007, will lead to greater utilisation of its barges and therefore its protability. The company currently owns 5 barges and is looking to buy another 2 or 3 more. More acquisitions in the cards. After the successful purchase of TCH Marine, FMH is actively on the lookout for more acquisitions of related logistic companies, particularly around the region. Of particular interest will be companies in Asean and also Australia where it already has a 55% owned protable JV.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 141.3 160.8 186.6 203.4 18.2 13.8 16.0 9.0 10.5 13.5 17.1 19.8 8.8 11.1 13.4 15.5 6.6 7.7 9.0 10.4 7.8 9.1 10.5 12.2 13.9 16.8 16.1 15.8 0.63 0.67 0.74 0.83 4.0 4.0 4.5 4.7 4.8 4.8 5.4 5.6 10.8 9.2 8.0 6.9 1.3 1.3 1.1 1.0 0.2 (0.0) (0.2) (0.2)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 16.7 52.8 - 60.9 45.1 - (21.8) (31.3) 0.0 0.0 - 55.8 66.6 - 42.6 42.6 - 10.9 16.2 - 53.5 58.8 2.4 4.3 0.0 3.5 - 55.8 66.6 6.5 12.3 - 17.0 (2.8)
COMPANY REPORT CARD

ROE. We expect ROE to trend up from 13.8% to 15% by FY6/09. Eager to expand, the company has geared up with net gearing now at 13.3% compared to its previous net cash position. Management. With founders Mr Yang Heng Lam and the husband and wife team of Mr Chew Chong Keat and Ms Gan Siew Yong, FMH has a solid management team with extensive experience in building its network globally. Management has been very prudent in expanding its business in protable ventures. Dividend. FMH has declared 4 sen dividend for FY6/06. We believe the company will maintain a dividend payout of around 30% going forward translating into a gross yield of 5.6%.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (6.3) 5.8 (0.8) (18.3) 22.2 (4.0) 15.1 (16.5) 0.0 15.1 - (0.0) 15.1 (1.4)
RECOMMENDATION
Despite being viewed as being in the relatively risky logistics sector, we have tracked FMH now for close to 2 years since its IPO. We believe its solid management team have managed to steer this company to deliver steadily growing prots with good long term prospects. Valuing FMH on a 9x PER basis against CY08 numbers, we derive a fair value of RM1.19. The company is currently trading at a historical PER of 9.2x and its undervaluation is due in part to it being on the Second Board. Nonetheless, as the company gains investor exposure, we believe that any discount will disappear particularly with its pending transfer to the Main Board next year.
OSK
74
Guan Chong
A Global Player
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) GUAN MK 240.00 190.80 0.91 | 0.54 417.26 0.15 0.85 3.60 2.21 0.74 0.33
INVESTMENT MERITS
Top Producer of cocoa ingredients in Malaysia Production capacity to increase by 25% New product range to boost revenue 3 years CAGR expected to be more than 8% Current share price has more than 20% potential upside
COMPANY PROFILE
Guan Chongs business began in the early 1980s, principally involved in the trading of cocoa beans. The company started processing cocoa beans by setting up a factory at Muar, Johor in 1983. After years of business, the company later made its listing on the main board of Bursa Malaysia in April 2005. Currently, Guan Chong Berhad (GCB) is a global player in the manufacture and sale of cocoa-derived food ingredients, namely cocoa liquor, cocoa butter, cocoa cake and cocoa powder.

Guan Chong Resources Misi Galakan SB LTAT 52.00 10.50 8.30

Month 1m 3m 6m 12m Absolute 0.63 23.85 40.87 36.24 Relative (4.38) 7.83 6.66 (5.92)
KEY HIGHLIGHTS
Higher production capacity. Currently, GCB is running its production capacity at peak level. To expand its business, the company, in November 2006, has proposed to acquire a cocoa processing plant and two pieces of land measuring over 5 hectares in Perak from Koko Malaysia SB for RM6.9m. The plant is capable of producing 15,000 tonnes of cocoa beans per annum. The acquisition will increase GCBs production capacity by 25% from 60,000 tonnes to 75,000 tonnes per annum and is expect to be completed by end March 2007. Some restoration work will be done to improve its efciency and we expect production to begin in 2HFY07 with utilisation rate expected to increase gradually.

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Expanding into consumer products. GCB is planning to expand its product range into industrial chocolates and chocolate beverages to serve its customers need. Industrial chocolate is widely used as an ingredient by the bakery and confectionary industries while chocolate beverages will be marketed under its own brand name Cocorich and OEM brands channelled to hypermarkets over Malaysia. Growing global consumption. About 95% of products are exported to more than 20 countries to international trading companies under the brand name FAVORICH. Currently there are over 80 agents and distributors worldwide. Global consumption is growing at about 3% per annum driven by increasing demand from developing countries. Participation in International Trade Exhibitions. GCB also promotes its products through trade missions and export exhibitions organised by Malaysia Cocoa Board (MCB) and MATRADE. The company has attended trade exhibitions in Germany, UK, France, UAE and others. Moreover GCB is planning to form strategic partnership with international players to enhance its global presence.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 336.4 412.7 379.8 426.7 (9.3) 22.7 (8.0) 12.3 25.4 29.3 31.3 33.9 16.9 20.1 21.1 23.1 13.6 17.0 17.7 19.3 5.7 7.1 7.4 8.0 (8.3) 25.2 3.6 9.3 0.14 0.33 0.39 0.44 0.0 3.3 2.3 2.3 0.0 4.2 2.9 2.9 14.0 11.2 10.8 9.9 5.5 2.4 2.1 1.8 (0.4) (0.3) (0.3) (0.3)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 53.8 62.0 - 122.3 131.1 - (118.3) (104.7) 1.9 1.6 - 59.7 90.0 - 31.1 60.0 3.4 20.3 - 34.5 80.3 - 24.4 8.7 0.8 1.0 - 59.7 90.0 - 92.9 78.0 - (85.5) (69.1)
COMPANY REPORT CARD

ROE. We expect net earnings to grow by more than 8% CAGR for the next 3 years. ROE should hover above 20%. Management. The company is led by a management team and professionals who are very hands on with day to day operation. Dividend. GCB proposed dividend of 2.3 sen per share for FY06 translating into gross yield of 2.9%. We expect the company to maintain this payout for FY07 as it has sufcient reserves to fund its expansionary plan going forward.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 1.0 2.4 (7.3) (24.9) 11.9 17.9 5.7 (4.7) 0.0 5.7 0.0 (0.2) 5.7 0.8
RECOMMENDATION
We value Guan Chong at RM0.96 by using the average of 12x PER and 2.2x P/BV over FY07 EPS of 8 sen and BV/share of RM0.43.
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Hexagon Holdings
Positive Signs
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HEXG MK 41.23 226.75 6.00 | 2.77 136.09 40.0 1.17 3.83 10.03 0.68 1.31
INVESTMENT MERITS
Strong orderbook of >RM700m and consistently bidding for contracts in excess of RM1bn Growth going forward will be supported by 6 global supply contracts with oil majors Shell and Exxon Mobil for supply of petrol retail signages and solutions Able to leverage on relationship with major shareholder, the Kuok Group for more EPCC contracts 28.5% CAGR is achievable to FY09 Fair value of RM5.96, pegged against the engineering segment, represents 8.3% upside

Giantique SB Tan Beng Wan Lee Kwee Beng 18.3 4.7 4.7
COMPANY PROFILE
Hexagon Holdings (Hexagon) is at core an engineering company. Its business can be segmented into several segments which are: Engineering and Construction specializing in EPCC (engineering, procurement, construction and commissioning) and maintenance repair and overhaul works for petrochemical, biodiesel, and manufacturing industries. Petrol retail solutions that encompasses the supply of shop systems as well as ttings such as lighting and customer service units. Manufacturing of bre reinforced products which include retail signages for petrol stations and other retail outlets like fast food and tobacco products. Trading of industrial products. The Group business has a very global appeal with manufacturing bases set up in China and India, as well as sales ofces and associates in countries like Pakistan, Thailand, New Zealand, Philippines, Singapore and Indonesia. Altogether, about 50% of revenue is derived overseas.

Month 1m 3m 6m 12m Absolute 12.2 7.8 65.7 54.5 Relative 4.8 (5.2) 2 8.8 15.5

KEY HIGHLIGHTS
Down stream exposure to the oil & gas boom. Hexagons petrol retail solution business has been ourishing of late and is set to be the key earnings driver going forward. To date, the Group has snagged itself 6 global supply contracts, 4 with Shell and 2 with Exxon Mobil, chalking up an order book
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exceeding RM600m. These exclusive contracts encompass the supply of signages, customer service units, LED lighting, and shop format elements for petrol stations. The geographical scope of some of the contracts has now extended to Central and South America, Europe and even Russia from just China and India previously. The Kuok Connection. In FY05, the Kuok Group acquired an 18.3% stake in Hexagon through subsidiary Giantique SB. Since then, the relationship has borne a couple of EPCC contracts for Hexagon amounting to some RM18.5m. Going forward, we expect to see more of Kuok-related contracts, especially for engineering projects for biodiesel or milling plants in Malaysia and overseas. Upcoming impetus for re-rating. Hexagon has plans to transfer to the Main Board and this will put the company in a new light, allowing it to command higher PEs. Besides that, the Group has expressed some intention to list Polymer Composite Asia (its signages arm) on the Alternative Exchange Markets in the UK. While there are no rm plans as yet, we believe that the move will be highly positive as the Group would be able to increase its visibility in the European market where the potential for petrol retail signage replacement could be huge.

FYE 31 Mac Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 180.0 219.9 297.8 349.7 32.4 22.2 35.4 17.4 8.3 13.2 23.3 28.5 8.5 15.9 19.9 27.3 8.0 12.8 16.3 21.1 19.4 31.0 39.5 51.2 144.3 59.4 27.5 29.6 0.77 1.18 1.57 2.07 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 26.2 16.5 12.9 10.0 6.7 4.3 3.2 2.5 (1.3) (1.8) (1.9) (1.7)
Balance Sheet (RMm)

FYE 31 Mac Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 36.9 35.8 35.5 95.4 66.9 90.6 101.9 133.8 (82.2) (103.6) (98.0) (150.1) 0.0 0.0 0.0 0.0 21.7 22.9 39.5 79.1 22.0 22.0 25.6 41.1 (6.7) (3.4) 5.9 15.0 15.3 18.5 31.5 56.1 6.4 4.3 7.9 22.9 0.0 0.0 0.0 0.0 21.7 22.9 39.5 79.1 57.2 68.7 64.0 84.4 (52.5) (59.6) (52.2) (74.6)
COMPANY REPORT CARD

ROE. Healthy ROE of >25% is expected to be sustainable considering the 20-30% growth to bottom line going forward. Management. Hexagon is helmed by Mr Tan Beng Wan, who has more than 20 years of experience in the engineering industry. Dividend. We expect most of Hexagons prots to be reinvested considering that the Group is in a very high growth stage. Nevertheless, a small payout of 5% can be anticipated in FY07 to enhance shareholder value.

FYE 31 Mac Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 4.8 (0.0) 1.0 5.8 (11.0) 0.0 (5.3) FY05 FY06 7.4 (0.8) 1.0 0.0 6.3 (5.9) 14.7 (6.7) (5.3) 9.4 0.0 0.0 9.4 2.7
RECOMMENDATION
We have always been positive on Hexagons prospects and this is the third year the company has made it into our list of 100 Small Cap Jewels. Hexagons exposure to the global petrol retail market puts it in a very opportune position considering the increase in number of stations planned for emerging markets like China and India. Besides that, the Group is a reputed EPCC player within the petrochemical market in Malaysia. We forecast net earnings growth at 26% in FY07 and 29% in FY08. We have placed a fair value of RM5.96 on the company, derived from pegging EPS08 to the engineering segment PE average of 11.7x.
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Hock Seng Lee

Construction
Cheapest Entry To 9MP Boom In East Malaysia

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HSL MK 118.70 394.09 3.48 | 2.76 71.40 0.42 Net Cash 3.79 1.35 0.89 1.73
INVESTMENT MERITS
Strong outstanding orderbook of approximately RM600.0m that will last the Group until year 2009/10 Strong and niche constructor and developer. HSL is also a market leader in land reclamation in Sarawak with over 30 years of experience in the eld Great management team that has maintained a low or zero net gearing Sitting on a huge net cash pile of RM49.8m (or 42.7sen/share) Currently trading at a forward PER of only 9.6x and 8.6x for FY07 and FY08 respectively (vs. industry average of 16.0x-18.0x), HSL still offers investors a very cheap entry for enhanced exposure to the 9MP boom in East Malaysia

HSL Enterprise S/B Skim Amanah Saham Bumiputera EPF Board 48.88 10.42 4.52

Month 1m 3m 6m 12m Absolute 0.61 14.48 14.09 9.27 Relative 3.37 0.65 (11.58) (22.90)
COMPANY PROFILE
Hock Seng Lee (HSL) started off as a partnership in the mid 1960s managed by 3 brothers from the Yii/Yu family. From a small one ship sand dredging operator, HSL has emerged as a leader in marine engineering, land reclamation, civil engineering and construction. HSL also engages in property development, mainly in residential projects. On 10 June 1996, HSL became the only Sarawakian company listed on the construction sector of the Main Board. Over its 30 years in the business, HSL has transformed about 6,000 acres of swampland in Sarawak into industrial parks, new townships, ports and airports. Sama Jaya Free Industrial Zone, Bandar Samariang Baru township, Tj. Manis Sea Port are some of the projects built on land reclaimed by HSL. HSL also completed some 550km of road works and some bridges throughout Sarawak including RM111m 3rd Mile Trafc Interchange and Oya bridge and Mukah bridge (Sarawaks rst steel arch bridge).

4.00 3.80 3.60 3.40 3.20 3.00 2.80 2.60 2.40 Oct-06 Nov-06 Dec-06 Jan-07 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
HSLs commitment to deliver excellent construction and development works and its specialisation in the land reclamation has earned HSL a reputation as a strong and niche market player in the market. HSLs key drivers of growth are: Growth in near-term underpinned by strong outstanding orderbook. Sitting comfortably on a strong outstanding orderbook of RM600m (on the back of RM900m orderbook) which will last the Group until year 2009/10, HSL is poised to register at least double-digit growth for the next 2 years. This comprises the Jln Kuching-Kota Samarahan-Asajaya Expressway (Phase 1) and the construction of Ensengai road, both in Samarahan Division
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project worth RM44.2m and RM65.7m respectively; the sandlling works to Bandar Semariang (Phase 2) project worth RM45m; the Semariang Riverine Loop Road in Kuching project worth approximately RM70.1m; and the construction of access road linking Technology Park to Kpg. Tanjong Bako worth approximately RM71.8m. The BEST are sizzling in. HSL is currently undergoing direct negotiations for infrastructure contracts worth RM1.2bn, as well as ood mitigation works in Kuching and Sibu worth about RM1.1bn (of which HSL is condent in securing about 65.0% and 27.0% of those projects respectively soon). We do expect some rather surprising news sizzling in for at least the next 12 months. Its strong balance sheet will continue to add some spice for it to secure some handsome PFI packages under the 9MP. As of 31st December 2006, HSL is sitting on a net cash pile of RM49.8m (or 42.7sen/share). Pending on those to be ofcially announced, we would rather maintain our conservative projections for now. Great prospects in property development. Going forward, the earnings contribution from property development, although with bright prospects ahead, will continue to remain rather insignicant contribution to the Groups earnings. Unbilled sales as of 31st Dec06 stands at RM100m (0.4x FY06 turnover) on the back of RM160m GDV launched which will be recognised over a period of 2 years. For its Samariang Aman development, HSL has already completed and handed over Phase 1 and 2. Phase 3 of single storey terrace houses with a GDV of RM22m is currently 30% completed while Phase 4 with a GDV of RM30m has 15% completion. Take-up rate on average is about 60%. HSL will be launching its Phase 2 of Highelds development worth a total GDV of RM20m in 3Q07. Going forward, the division is envisaged to contribute about 22.5% to the Groups total turnover in FY07.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 285.8 290.3 260.6 382.5 (0.6) 1.6 (10.3) 46.8 43.3 49.7 51.5 63.4 37.5 44.8 48.2 56.3 26.8 32.2 33.5 40.2 23.0 27.6 28.7 34.5 29.7 20.0 4.0 20.2 1.36 1.51 1.66 1.90 12.0 13.0 14.0 14.0 3.6 3.9 4.2 4.2 14.4 12.0 11.6 9.6 2.4 2.2 2.0 1.7 0.58 0.29 0.42 0.83
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 52.8 43.5 179.3 204.0 (99.8) (100.5) 24.3 20.8 156.7 167.7 72.8 116.5 73.1 42.2 145.9 158.8 10.8 8.9 0.0 0.0 156.7 167.7 0.0 0.0 64.6 68.8 FY05 36.9 210.5 (81.5) 17.6 183.6 116.5 59.8 176.3 7.3 0.0 183.6 0.0 33.9 FY06 34.1 198.0 (95.5) 62.9 199.6 116.5 76.6 193.2 6.4 0.0 199.6 0.0 49.8
COMPANY REPORT CARD

ROE. HSLs ROE is rather impressive, hovering at close to 20.0% for the past few years. Going forward, we expect HSL to register 19.4% and 18.9% in FY07 and FY08 respectively. Management. Sound nancial management has enabled the Group to maintain a low/zero gearing level. Dividend. HSL declared a gross dividend of 14sen in FY06 (FY05: 13sen) and has indicated that it would continue to at least maintain that sort of level. Given the track record, it seems that HSL has the tendency to pay an extra 1sen dividend YoY since year 2005.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06
15.6 (17.9) 37.0 2.6 (2.7) (4.3) (13.9) (14.7) (16.6) 4.2 (35.3) 16.1 64.3 68.5 33.2 0.0 0.0 0.0 68.5 33.2 49.4
RECOMMENDATION
A Buy. Currently trading at a forward PER of only 9.6x and 8.6x in FY07 and FY08 respectively (vs. industry average of 16.0x-18.0x), HSL still offers investors a very cheap entry for enhanced exposure to the 9MP boom in East Malaysia.
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Hovid
Pioneers in Medicine and Biodiesel
Healthcare
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HOV MK 762.08 320.07 0.56 | 0.30 4997.65 0.03 0.51 2.44 1.30 0.98 1.30
INVESTMENT MERITS
One of the largest GMP-certied pharmaceutical companies in Malaysia Biodiesel capacity expansion of 277% from 90MT to 340MT per day in June 2007 Introducing approximately 30 new pharmaceuticals, 3x higher than historical Auxilliary savings from manufacturing plant in India by end 2007 Well diversied customer base with a presence in more than 40 countries

David Ho Sue San Prudential Fund Management Ibrahim Bin Haji Ahmad 50.16 5.55 4.92
COMPANY PROFILE
Hovids history began in 1945, founded by Dr. Ho Kai Cheong, with a sole product, Ho Yan Hor herbal tea. The group evolved towards the manufacturing industry under the leadership of his son, David Ho. Armed with expertise in pharmacy and natural gift of entrepreneurship, David Ho ventured into mainstream medical approaches resulting in the birth of Hovid as one of Malaysias leading pharmaceutical companies. Today, as well as being a major pharmaceutical player, Hovid is involved in the extraction of tocotrienols, phytonutrients and biodiesel products from palm fruits via its 55%-owned Carotech Bhd. In a nutshell, Hovid engages primarily in the manufacture and trading of pharmaceuticals, phytonutrient and biodiesel products. Hovid and Carotech were listed in April 2005 on the Second Board and MESDAQ respectively.

Month 1m 3m 6m 12m Absolute (10.64) 7.94 29.52 40.60 Relative (14.25) (6.75) (1.24) 2.04

KEY HIGHLIGHTS
Pumping up with bio-diesel. Revenue for the phythonutrient segment is on track to jump 73% this FY and 126% next FY from RM15.2m in FY06. The huge boost is driven by a two-stage CPO processing capacity expansion undertaken by Carotech. In July 2006, capacity expanded 100% from 45MT to 90MT per day. Another bio-diesel plant is expected to commence operations in June 2007, further increasing CPO processing capacity to 340MT per day. More products in store. Hovid will be launching approximately 30 pharmaceutical drugs this year, 3x higher than its historical mean of 10 new products per year. The new products will provide resilient growth ahead for the pharmaceutical division. Hovids extensive R&D efforts, boasting a R&D staff strength of 40, has developed more than 50 products in the past 4 years and have roughly 60-80 WIP products currently.
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More to come from India. After successfully outsourcing more than 10% of its lower margin pharmaceutical drugs to half a dozen manufacturers in India, Hovid is set to have a manufacturing plant in India by the end of the year, pending approval from India authorities. Hovid stands to gain operational efciencies from Indias less stringent patent laws as well as cheaper labour cost. Additionally, management has been relentlessly focusing on improving the bottom line by going into higher value pharmaceutical products apart from outsourcing them. Global player. With exposure in over 40 different national markets, Hovid has minimal country specic risks. Unlike other local pharmaceutical players, Hovid is not dependent on a single customer such as the Malaysian Government. Another feather in the cap. Recently, Hovid signed a distributorship agreement with William & Friends Pharmaceuticals Co. Ltd. to market its pharmaceutical products in Thailand. The company targets to sell 30 products by the 2H07.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 117.8 146.6 194.3 328.2 3.7 21.2 32.5 69.0 23.1 36.7 53.0 91.5 27.1 27.5 36.9 67.1 23.2 17.0 23.2 40.5 2.6 2.2 3.0 5.3 0.1 (14.3) 36.1 74.8 0.17 0.12 0.14 0.19 0.0 0.0 3.5 3.5 0.0 0.0 8.3 8.3 16.1 18.8 13.8 7.9 2.0 2.8 2.3 1.8 (0.1) (0.1) (0.2) (0.3)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 112.1 185.8 - 80.1 90.7 - (48.1) (75.5) 0.0 0.0 - 144.1 201.0 - 47.6 76.2 - 50.7 39.2 - 98.4 115.5 - 14.6 52.0 - 31.2 33.6 - 144.1 201.0 - 32.6 77.5 - (25.9) (25.9)
COMPANY REPORT CARD

ROE. Hovid registered a ROE of 15.9% in FY06, down from 23.6% in FY05 due to an increase in shareholder equity. Moving forward, ROE is expected to record double-digit growth thanks to a surge of 36% in net prot for FY07. Management. Armed with more than 30 years in the pharmaceutical industry and a natural gift for entrepreneurship, Managing Director, David Ho has led home-grown Hovid since the 1980s into a leading pharmaceutical and biotechnology player in Malaysia. Dividend. Hovid declared a maiden dividend of 3.5 sen for FY07. This translates into an approximate dividend yield of 2%. We expect management to continually reward shareholders with a payout ratio of roughly 15% of earnings.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - 14.6 38.1 - (19.6) (77.3) - 15.1 40.0 - 10.1 0.8 - (5.1) 5.0 0.0 0.0 5.0 5.8
RECOMMENDATION
Hovid trades at PE of 13.8x FY07 EPS, which is expected to be further compressed to 7.9x in FY08 due to the high earnings growth. Using the sum-of parts methodology and incorporating a 15% holding company discount while pegging an pharmaceutical industry PE of 13x, we derived our fair value of Hovid at RM0.53.
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82
Hunza Properties
Going Upmarket
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) HPB MK 115.87 253.76 2.52 | 1.07 620.61 0.37 0.74 1.70 0.97 0.92 1.74
INVESTMENT MERITS
Double digit growth for at least the next 3 years Upcoming Gurney Drives shopping mall, service apartments and executive ofces will provide the Group with steady income stream by year 2009/10 Growth is further supported by its 2 maiden township developments in Bertam (Seberang Prai) and Sungai Petani 5-year (FY03-FY08) net prot CAGR of 35.4% Still trading at 32.6% discount to RNAV of RM3.24

Dato Dr. Khor Teng Tong Yayasan Bumiputera Koperasi Permodalan Felda 57.0 7.9 7.8
COMPANY PROFILE
Hunza Properties (Hunzpty) was founded in 1988 by Dato Khor Teng Tong, who has more than 40 years of experience in the property market. The Groups current on-going maiden development includes the township development of Bandar Putra Bertam in Seberang Prai in a 70:30 JV with Yayasan Bumiputra Pulau Pinang. Moving itself to cater for the higher-end market, its other current on-going projects include that of Alila (Penang) and Mutiara Seputeh (KL). Hunzpty currently has a total undeveloped landbank of 877 acres (44% in Sg. Petani and 55% in Bertam, Seberang Prai) with an outstanding GDV of RM2.2bn. In the pipeline, prime earnings drivers for the Group going forward will come from its Gurney Drive development (Penang Island) for service condominiums (GDV of RM344m) and the Innity developments of high-end condominiums in Tanjung Bungah, Penang (GDV of RM264m). The upcoming shopping complex, service apartments and executive ofce by year 2009/2010 in Gurney Drive will provide Hunzpty with a stable stream of recurring income going forward.


KEY HIGHLIGHTS
Alila, Penang (GDV RM205m). Built on a prime site on Penang Island, the Alila is enjoying an average take-up of 61% since its launching in Sept 05 with an unsold GDV of RM80m. The development consists 2 blocks of 19-storey condominiums and 3-storey garden villas and bungalows. Currently with unbilled sales of RM83m, the Alila is expected to be completed by end-2007. Mutiara Seputeh, KL (GDV RM200m). Built on 15 acres of prime land in close proximity to KL Sentral and Mid Valley, Mutiara Seputeh is targeting to capture the more afuent population in the area looking to upgrade from their old residences. Out of the 80 units of 3-storey Semi-Ds launched in Apr06 (worth a GDV of RM153m), the development has achieved a take-up of 50% plus to-date. 13 units of high-end bungalows worth a GDV of RM47m to be
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launched by 2Q07. Mutiara Seputeh is scheduled for full completion by end2008 with unbilled sales to-date of RM36m. Gurney Drive. Sitting on another prime address in Penang Island, the Gurney Drive development will be developed in 3 phases over the next 4 years. Phase 1, comprising 272 units of service condos will be launched by 2Q07 (GDV RM344m). To capitalise on the popular concentrated commercial area in Gurney Drive, Hunzpty will launch its Phase 2 development with 1.1m sq ft (net lettable area at about 750,000 sq ft) shopping mall together with a 2,000 parking bays car park for the mall, which are both expected to be operational by year 2009/10. The nal puzzle piece (Phase 3) for Gurney Drive will be completed with the development of 1 block of high-end service apartments and executive ofces of which will be kept as a recurring income base for the Group going forward. Still pending for development approval, Phase 3 will come into play by year 2009. Inniti high-end condos in Tanjung Bungah, Penang (GDV RM255m). A 90:10 JV with the landowner, Hunzpty will be managing the development of the 119 units of luxurious condominiums and penthouses with beachfront. Targeting high-end residential buyers and foreigners, the JV will enable Hunzpty to capitalise on the development prospect without any landholding cost which will be launched by 1Q07. Earnings supported by Bandar Putra Bertam, Seberang Prai. Undertaken in a 70:30 JV with Yayasan Bumiputra Pulau Pinang, Bandar Putra Bertam still has undeveloped landbank of 484 acres with a GDV of RM985m. Takeup is >90% for the rst 3 phases since its launch 2 years ago. Acquired at RM1.87psf (vs average GDV of RM46.7psf), the low landholding cost has yielded attering margins for the Group.

FYE 30 June Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 112.3 116.6 202.2 321.1 (4.3) 3.9 73.4 58.8 34.4 35.7 57.3 82.4 31.8 34.8 55.0 80.0 16.4 19.8 36.9 52.2 14.1 17.1 31.9 45.1 (7.3) 20.9 86.8 41.2 1.14 1.22 1.41 1.70 7.5 7.5 7.5 7.5 3.4 3.4 3.4 3.4 15.5 12.8 6.9 4.9 1.9 1.8 1.6 1.3 (0.8) (1.0) (1.0) (1.0)
Balance Sheet (RMm)

FYE 30 June Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 137.2 110.4 (67.4) 0.0 180.2 60.5 42.6 103.1 57.3 19.8 180.2 68.8 (61.4) FY04 FY05 FY06 173.0 180.0 145.0 133.5 196.4 270.5 (40.3) (84.0) (81.8) 5.5 4.9 0.0 271.7 297.3 333.8 104.5 115.8 115.8 46.5 64.1 76.1 151.0 179.9 191.9 105.9 98.8 120.7 14.8 18.6 21.2 271.7 297.3 333.8 108.5 133.7 158.8 (65.4) (127.0) (154.0)
COMPANY REPORT CARD

ROE. Due to the Groups relatively large landbank, FY06 ROE was low at 10.6% (FY05: 9.9%). ROE will improve to 17.5% in FY07 and 20.8% in FY08 as Hunzpty slowly unlocks the value of its landbank as the development projects progress. Management. Its success to-date has been spearheaded by Dato Khor Teng Tong, who has more than 40 years of experience in the property market Dividend. The Group has been paying a gross dividend of 7.5sen for the past 7 years and has indicated that it will continue to at least maintain at that level going forward.

FYE 30 June Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (9.3) (49.7) (2.1) (14.4) (9.4) (3.1) 61.1 5.8 3.0 37.5 (53.3) (2.1) 0.5 38.0 (15.4) 0.0 0.0 0.0 38.0 (15.4) (17.5)
RECOMMENDATION
Hunzptys share price has seen signicant upside momentum in recent months. Nonetheless, Hunzpty is still trading at a 32.6% discount to its RNAV of RM3.24. With strong growth catalysts ahead, we rate Hunzpty a BUY with 12-month target price of RM2.59, based on 20% discount to its RNAV.
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84
IJM Plantations
Time For Earnings Delivery
Plantations
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) IJMP MK 547.15 935.62 1.90 | 1.25 828.37 (0.06) 24.68 2.42 0.61 0.99 1.08
INVESTMENT MERITS
A well managed and laggard plantation stock with clear long-term growth path Ignored by investors due to previous disappointing earnings Quarterly earnings are starting to surpass our expectation and will likely continue as FFB production growth for the rst 2 months this year already topped our forecast Until its biodiesel plant comes on stream next year, IJMP remains one of the most leveraged play for upside in CPO prices. Its earnings will rise by 13.3% for a RM100/t rise in CPO prices

IJM Corp Desa Plus Sdn Bhd EPF 49.0 8.5 7.1
COMPANY PROFILE
IJM Plantations (IJMP) is the plantation arm of IJM Corporation. IJM Corp started venturing into the oil palm plantation 22 years ago. Their rst estate was Desa Talisai, Sandakan in 1986. The second phase of its plantation started in 1992 in Sijas, Minat Teguh and Meliau, all in Sandakan. In 1998, IJMP started its Phase 3 in Sugut, which is north of Sandakan. IJMP was only listed in 2003 via the reverse takeover of Rahman Hydraulics. To-date, IJMP has 29,755 ha spread over 11 oil palm estates. Of this, 10,174 ha are located in Sandakan and 19,581 ha are in Sugut. Mature area makes up 81% of its total hectarage, up from 69% last year. IJMP has three palm oil mills with total processing capacity of 165 tonnes of FFB per hour or 1m tonnes per annum. It also has a palm kernel crushing plant with capacity of 240 tonnes per day.


KEY HIGHLIGHTS
Double digit FFB growth from improving age prole. From 20012006, IJMPs trees average age rose at 8.6% per annum. In line with the improving age prole, IJMPs FFB production grew at an annual rate of 15.6%. Our forecast production for CY07 is 564,703 tonnes, representing a y-o-y growth of 15.4%. For the rst 2 months this year, production has risen by 17.2%. Yield not maxed out yet. With average age still low at 8.6 years in CY07, IJMPs FFB production will continue to grow over the next 34 years even without any additional planting. This is because an oil palm trees FFB production normally hits its peak at age 1215 years. Yield drag from Sugut continues to decrease. IJMPs FFB yield per ha was dragged to a low of 20.8 t/ha in 2003 (from a peak of 26.4 t/ha in 2001) with the inclusion of newly matured trees at Sugut from the 1998 planting. The
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7,686 ha planted between 19982000 are now in their prime age, helping to drive IJMPs FFB production. FFB yield should improve further to 24.6 t/ha this year from 22.8 t/ha in CY06. Expansion into Indonesia. IJMP has secured its rst 11,200 ha under its program to expand into Indonesia. These 11,200 ha will be planted up over the next 5 years. Nursery is being prepared, targeting eld planting 1Q or 2Q next year. IJMPs target is to increase its hectarage in Indonesia to 40,000 ha. Biodiesel venture. IJMP holds a 60% stake in the joint venture with CTI Biofuel of US, using microwave technology to expedite the transesterication process. Construction work of its 90,000 tonnes per annum biodiesel plant is underway. The company has also signed orders for equipment hence there is no turning back on the venture. Management expects completion latest by 1QCY07. We have not factored in any earnings contribution from this venture as IJMP has yet to lock in any supply contracts.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY03 FY05 FY06 FY07f 202.0 244.6 282.9 347.7 - 21.1 15.6 22.9 72.0 94.0 78.8 90.5 54.0 65.1 52.4 64.1 37.9 46.4 35.7 46.1 7.6 7.9 7.1 7.4 4.9 4.0 0.95 1.00 1.03 1.07 2.5 3.5 3.5 3.5 1.5 2.1 2.1 2.1 22.5 21.4 24.0 23.1 1.8 1.7 1.6 1.6 (0.2) (0.3) (0.3) (0.3)
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY02 FY03 FY05 FY06 - 679.1 720.0 734.0 - 152.1 88.4 89.3 - 95.4 56.9 46.6 - 735.8 751.5 776.6 - 250.2 251.0 254.9 - 224.9 250.3 288.5 - 475.1 501.3 543.3 - 260.7 250.2 233.3 - 735.8 751.5 776.6 - 225.5 196.2 177.4 - (116.0) (144.9) (134.8)
COMPANY REPORT CARD

ROE. IJMPs ROE has been at single-digits over the past 3 years. However, we estimate ROE to cross the 10% mark soon with a forecast 12.5% for FY08. Management. IJMP is led by industry veterans Mr Velayuthan and Mr Ling Ah Hong with IJM Corporation involved in strategic directions. IJMPs strong yields testify to the strength of its management. Dividend. IJMP has been paying annual dividends of 3.5 sen, translating into low yields of 2.1%. This is because IJMP is a growth stock with cash needs for both the biodiesel venture and upstream expansion into Indonesia. Moreover, IJMP has some RM143m of borrowings to repay up to 2009.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 59.4 (45.6) 93.6 105.4 4.0 109.4 FY05 FY06 78.3 48.8 (58.1) (31.0) (78.3) (26.4) (58.1) (8.6) 109.4 51.3 51.3 42.7
RECOMMENDATION
At current price, IJMP is trading at 12.0x CY07 earnings. We are recommending a BUY with 12-month target price of RM2.23, basing it on 15.4x CY07 EPS of 13.8 sen coupled with a 4 sen DCF value of its 11,200 ha in Kalimantan. We have imputed a CPO price assumption of RM2,150/t for CY07, which translates into an effective price of RM1,952/t for IJMP. Given IJMPs clear long-term growth path and strong corporate governance, we believe IJMP is a stock to own for the next 5 years. Key risks are potential margin squeeze on its biodiesel venture if CPO prices continue to trend up without a compensating increase in biodiesel selling prices. However, the risk of IJMP making losses due to its biodiesel venture is remote as IJMP should produce some 128k tonnes of CPO next year compared to its biodiesel plant capacity of 90k tonnes per annum, hence will be self-sufcient in terms of feedstock. Nevertheless, this will reduce IJMPs sensitivity to CPO. For CY07 however, IJMP remains a plantation pure play.
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Imaspro Corp
The Plant Doctor
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) IMAS MK 80.00 124.00 1.76 | 0.69 245.10 (0.02) (0.26) 8.11 1.51 N.A. 0.75
INVESTMENT MERITS
Established player with a market share of 12% based on sales value in year 2004 Imaspro has spent about RM9m for the acquisition of a new manufacturing facility. This expansion is on track to cater for increasing demand Customer base is diversied with ore than 320 clients, mainly locals, with overseas markets like Bulgaria, Russia and Australia Its latest R&D is the joint effort with MPOB for the development of bio-palm based insecticides The companys earnings record has been impressive with revenue and net prot posted 5-yr CAGR of 13% and 12% respectively

Tong Chin Hen Mohd Shafek Bin Isa 42.4 239

Month 1m 3m 6m 12m Absolute 1.33 (2.20) 13.39 117.33 Relative (1.50) (14.83) (12.84) 62.30
COMPANY PROFILE
Imaspro Corporation Berhad (ICB) was successfully listed on the Second Board of Bursa Malaysia on 20 January 2006. The ICB Group of companies consists of ICB as the investment holding company, 2 direct wholly-owned subsidiaries namely Imaspro Resources Sdn Bhd (IRSB) and Ideal Command Sdn Bhd (ICSB) and a sub-subsidiary Imaspro Biotech Sdn Bhd (IBSB). Manufacturing and distributing of pesticides and related agrochemicals are the Groups main activities. Subsequent to the otation exercise, IRSB incorporated a new wholly-owned subsidiary, IBSB for the purpose of undertaking the commercialization of Malaysias rst bio-palm based insecticide.

KEY HIGHLIGHTS
Established player. Imaspro is a key player in the domestic pesticide market with a market share of 12% based on sales value in year 2004. Imaspro is focusing in manufacturing and trading of herbicides, insecticides, fungicides, plant micronutrient and others. The major product is herbicide, accounting for about 66% to its revenue, followed by insecticide and fungicide, contributing 14% and 24% to revenue respectively. Capacity expansion. Imaspro has spent about RM9m for the acquisition of a new manufacturing facility. This expansion is on track to cater for increasing demand for its products as the current diverse range of products has cause signicant downtime. We foresee better prot margin after the increase in capacity as the company can reduce outsourcing costs incurred during the peak production cycle.
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New product to drive up earnings. The establishment of a 43-acre Agriculture Research and Development Centre in Jasin, Melaka marks a milestone in the company business especially in the product development. The centre is undertaking R&D on crop protection, public health protection on termite, cockroaches and ants, and biotechnology research on tissue culture. Amongst its latest products which will be released this year are gel-based cockroach bait and home gardens herbicides. In 2006 alone, the company has registered at least 16 new products bringing the total registered products to 218. Making inroad overseas. Customer base is diversied with ore than 320 clients, mainly locals. Its main oversea markets are Bulgaria, Russia and Australia. R&D for the future. Its latest R&D is the joint effort with MPOB for the development of bio-palm based insecticides. The product is expected to hit the market by end 2007 upon the receiving approval from the Pesticide Board. This new product would be cheaper to make and sell with savings estimated at RM4/liter. The size of insecticides market is estimated to be at RM70m. This bio-palm based insecticide would be the perfect substitute to petroleum based formula, which represents half of the total insecticide market. Main Board bound. The company is seeking to transfer to the Main Board of Bursa Malaysia in the near term most likely in CY08. Earnings track record. The companys earnings record has been impressive for the last 5 years with revenue and net prot posted CAGR of 13% and 12% respectively. The company is also in a net cash position.

FYE 30 Jun Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 63.1 81.3 85.4 107.2 18.3 28.9 5.1 25.5 10.7 13.0 15.1 19.7 10.6 22.8 15.1 20.7 7.6 16.9 10.9 15.0 9.4 21.1 13.7 18.8 14.6 123.8 (35.3) 37.2 0.63 0.75 0.81 0.92 3.5 6.0 6.0 0.0 2.3 3.9 3.9 16.4 7.3 11.3 8.3 2.48 2.08 1.92 1.68 8.3 15.3 12.3 5.1
Balance Sheet (RMm)

FYE 30Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 19.6 10.7 39.0 60.0 7.6 10.2 51.0 60.6 40.0 40.0 10.0 2.9 50.0 42.9 1.0 0.9 51.0 43.7 8.3 15.3
COMPANY REPORT CARD

ROE. The company posted an ROE of 30.7% in FY06. FY07 ROE is estimated at 35.0%. Management. The company is founded and managed by Mr. Tong Chin Hen, who has more than 20 years experience in pesticide business. Dividend. The company paid 2.5 sen net dividend in FY06 and an interim dividend for 1HFY07. We are estimating nal dividend of 2.5 sen for the full FY07.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - (0.7) 5.3 - 11.9 - 16.5 - 16.5
RECOMMENDATION
We have forecasted a 37% earnings growth for FY07 with a potential dividend payout of 6 sen/share. A stronger growth in FY08 is anticipated, when its bio-palm based insecticide hit the market. We value the stock at 12x FY08 PER, translating to a fair value of RM2.26/share. The premium in valuation is mainly due to its potential transfer to the Main Board and its outstanding nancials track record.
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Industrial Concrete Products

The Biggest Beneciary To The 9MP
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) ICP MK 115.87 253.76 2.52 | 1.07 620.61 0.37 0.74 1.70 0.97 0.92 0.88
INVESTMENT MERITS
The biggest beneciary to the 9MP. All plants located in strategic locations in the Peninsular Malaysia 79% owned China plant set to penetrate into the robust port expansion in China Bright potential to supplement traditional reinforced concrete piles that have pricing and quality disadvantages Leveraging into IJM existent in India to expand its ready mix concrete business following the acquisition of MRP 3-year (FY06-FY09) net prot CAGR of 36.4%

IJM Corporation Bhd General Technology S/B Denver Corporation S/B 66.29 2.80 2.26
COMPANY PROFILE
ICP began its business venture in 1977 after acquiring a Pretensioned Spun Concrete (PSC) pile machinery and technology from the JV between IJMs subsidiary and Mitsui Construction Co Ltd, Japan. Since then, the company has expanded tremendously from its single production line at Bukit Tengah, Seberang Prai to nine production lines strategically located throughout Peninsular Malaysia with 1.1m tonne annual capacity. The expansion has paved the way for ICP to list the companys shares on the Main Board of Bursa Malaysia in 1996. IJM Corp became major shareholders of ICP in May 2004 after acquiring Hume Industrial (M) Bhds stake and concurrently injected Malaysia Rock Products SB (MRP) into ICP for RM110m. Apart from that, ICP is the only producer in the world to pre-cast the longest concrete piles of 36 meters and had already broken its owned record in March 2006 by producing 1000mm diameter, 52 meters long piles in the newly commissioned China plant in Jiangmen, Guangdong.


3.80 3.30 2.80 2.30 1.80 1.30 0.80 Oct-06 Nov-06 Dec-06 Jan-07 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
9MP play. ICP is already operating at almost its top capacity (estimated to be in excess of 80%) even before the rolling out of more infrastructure projects from the 9MP. In the month of December 2006 alone, ICP received some RM60m worth of orders for its PSC piles (or 2.2 months worth of sales) which was primarily made up of the demand from some of the 880 infrastructure projects (worth about RM15.0bn) rolled out earlier under the 9MP. Already ourishing from these so-called no-name 9MP infrastructure projects, ICPs much larger catalysts actually lie ahead in FY08 and onwards as more mega 9MP projects to roll out. Current capacity of PSC piles stands at 1.28m tonnes p.a. with an additional 0.18m tonnes from Kapar production line by mid-2007. Plants at strategic locations. ICP currently has a total of 7 PSC piles plants located throughout the Peninsular Malaysia with a total of 11 production lines. Its plants, of which most of them are located either within or with close
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proximity to the high development hot spots in the Peninsular enables it to efciently transport its PSC piles of various sizes to different construction sites throughout the country, supported by developed road networks and its own jetty located in Lumut, Perak. Penang 2nd Bridge a sweetener. ICPs far superior quality of PSC piles as compared to the more traditional reinforced concrete piles and steel H-piles (steel H-piles are highly susceptible to corrosion from sea water) and coupled with its high domestic market share of about 75%, ICP is in a very good stead to be in the forefront for the demand for its PSC piles in the construction of the RM3.0bn Penang 2nd Bridge. Other 9MP mega projects pending for roll out include that of Penang Outer Ring Road (RM1.0bn), Penang Monorail (RM1.1bn), West Coast Expressway (RM2.0bn) and the Electried Double Tracking Railway (RM15.0bn). Enhanced exposure in India. To further tap on the fast growing construction industry in India, ICP has recently set up 2 more ready mixed concrete batching plants in Hyderabad and Bangalore (currently 2 plants in each of the cities) with another 2 more plants in Chennai and Mumbai later. China, potential room for further growth. The only one in the world to be able to design and produce up to 52 meters PSC piles with an average output capacity of 200,000 tonnes p.a., ICPs prime target market will be the maritimebased projects which are booming to support the robust exports volume in the country. Began operations less than a year ago and currently running at about 10% capacity, we see further room for growth from this division once its PSC piles gain larger acceptance in the country. Its location next to its own jetty near Jiangmen Port, Guangdong enables it to efciently transport its products to different construction sites by barges.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 259.4 445.6 608.1 780.5 12.4 71.8 36.5 28.4 45.1 70.6 99.0 127.9 31.3 43.6 73.2 101.9 25.4 32.1 51.8 69.3 7.2 9.1 14.7 19.7 (15.4) 30.6 56.3 33.8 0.95 0.79 0.85 0.93 6.5 9.2 12.1 16.3 2.1 3.0 4.0 5.4 41.9 33.1 20.5 15.3 3.2 3.8 3.5 3.2 (0.15) (0.10) (0.16) (0.20)
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 189.5 116.6 (96.2) 0.0 209.8 100.6 86.7 187.3 20.1 2.4 209.8 66.1 (64.0) FY04 FY05 FY06 179.7 198.0 258.6 137.0 210.2 227.6 (95.7) (119.8) (142.6) 0.0 72.0 8.4 221.0 360.4 352.0 106.5 146.5 175.9 96.9 187.1 103.0 203.4 333.6 278.9 15.0 22.2 67.4 2.6 4.6 5.8 221.0 360.4 352.1 48.5 59.6 55.2 (44.3) (51.1) (34.1)
COMPANY REPORT CARD

ROE. ICPs ROE has been in the region of 10.0% for the past few years. We expect ICP to register 17.9% and 22.1% ROE in FY07 and FY08 respectively. Management. Its determined, hands-on and experienced management team has been the key driving forces to the Group. Dividend. ICP has historically been paying a payout ratio of >60% of net earnings. Going forward, we expect a gross dividend of 12.1sen and 16.3sen in FY07 and FY08 based on payout ratio of 60.2%.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 22.9 (9.6) (11.3) 2.0 1.5 0.0 3.5 FY05 FY06 14.6 81.8 (9.1) (83.5) (3.3) 8.3 2.2 6.6 3.5 5.7 0.0 0.0 5.7 12.4
RECOMMENDATION
We value ICP based on average peers PER of 18.0x, its own 5-year average peak PER of 18.9x and Gordon Growth Model (assuming a terminal growth rate of 5.0%), hence arriving at a fair value of RM3.29. Despite a limited upside of 8.83%, we foresee a more likelihood for a re-rating for the company. Large catalysts ahead in tandem with the construction sector in light of the 9MP, we have a Trading Buy call on ICP.
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I-Power
IBMs Trusted Partner
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) IPOW MK 173.3 69.3 0.59 | 0.26 7595.50 (0.04) (0.21) 81.58 1.96 1.87 0.11
INVESTMENT MERITS
A very fast growing e-solutions provider The only Malaysians IBM Premier Business Partner with e-Business Adviser status Recently secured a multi-million contract Strong orderbook of about RM35m Potential M&A within the next 12 months
COMPANY PROFILE
I-Power was founded in 2003. The company is principally engaged in the provision of system integration services, e-solutions for various business transactions and software turnkey development services. All I-Powers esolutions are built and designed based on open standards Java technologies, 100% Pure Java and J2EE compliant which support multiple platforms and provide seamless integration with rapid deployment speed and customization exibility. I-Power e-solutions are all 100% Web-enabled both for the front-end and administration modules. The company has successfully implemented its wide range of e-Solutions for several notable clients. They include Amway Malaysia, Sony Malaysia, Cosway, Esthetics International Group, Genting, Ni Hsin Corp, Tele Dynamics, Fujitsu, etc. The company currently employs 50 employees, in which 8 of them are involved in R&D.

Chia Kok Chin Kamarudin bin Meranun Siti Munajat Binti MD Ghazali 27.7 2.5 1.6

Month 1m 3m 6m 12m Absolute 2.56 (13.04) 44.93 (23.08) Relative (5.05) (21.34) 10.26 (42.18)

0.60 0.55 0.50 0.45 0.40 0.35 0.30 0.25 0.20 Oct-06 Nov-06 Dec-06 Jan-07 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
IBMs trusted business partner. Major selling point of I-Power is its unique relationship with IBM. In Malaysia. There are 3 levels of membership in the PartnerWorld Program and only 4 business partners (including I-Power) attained the highest level of Premier Membership. I-Power is also the only Premier Business Partner which has the IBM e-Business Adviser status in Malaysia. On the other hand, the company is the rst and only IBM accredited On-demand Business Partner in Malaysia and one of two in Asia Pacic. Another top accolade awarded by IBM to I-Power is the award recognizes I-Power as Malaysias best eBusiness Solutions partner and implementer in 2005. I-Power is further recognized by IBM when the company was nominated as one of IBMs strategic business partners by its induction as an Independent Software Vendor (ISV) Advantage Partner. Employing one of the largest Java software teams in Malaysia with numerous IBM certications in different elds, ranging from Business Intelligence, DB2, Lotus, MQSeries, WebSphere to e-Business, I-Power is also IBMs Malaysian Business Partner with the most IBM certications. New partnerships to drive growth. I-Powers business over the past 3 years has been driven by its partnership with IBM (worlds largest IT company).
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To further grow its revenue, I-Power has recently formed new partnerships with SAP (worlds largest ERP company) and SAS (worlds largest business intelligence software company). I-Power is the only SAP NetWeaver (IT architecture platform) Partner to have four solutions certied in Malaysia. Secured a multi-million contract. I-Power was recently awarded a multimillion contract by an established market leader. It was indeed the biggest contract ever won by I-Power. It is a 1-year e-solutions project which involves system integration (SI). As with other typical SI projects, margin for the contract is expected to be thin with estimated net prot contribution of approximately RM6m-RM8m. A fast growing e-solutions provider. Founded in 2003, I-Powers net prot has increased from RM0.7m to RM7.7m in FY06, representing CAGR of 112%. FY07 net prot is also on track to increase by another 32% to RM10.2m based on current orderbook of about RM35m. Besides, there is RM50m worth of potential contracts in the pipeline The company recorded 1HFY07 net prot of RM3.6m. CMMI Level 3. I-Power has been awarded CCMI Level 3 certication by the Carnegie Mellon Institute from U.S in 10 June 2006. In Malaysia, as of 2006, there were 13 companies certied with CMMI Level 3 and 5 companies certied with CMMI Level 5. CMMI is considered as one of the most important certications in the software industry.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 15.2 18.3 25.0 35.0 70.6 20.2 36.6 40.0 5.9 8.2 11.0 13.5 5.6 7.7 10.2 12.5 5.6 7.7 10.2 12.5 3.5 4.9 4.9 6.0 90.9 38.7 (0.0) 22.5 0.05 0.10 0.12 0.18 5.6 0.0 0.0 0.0 13.9 0.0 0.0 0.0 11.3 8.2 8.2 6.7 7.4 4.2 3.3 2.2 0.0 0.0 0.0 0.0
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 5.1 7.1 8.1 13.5 (0.4) (0.5) 0.0 0.0 12.9 20.1 6.3 6.3 6.6 13.8 12.9 20.1 0.0 0.0 0.0 0.0 12.9 20.1 0.0 0.0 3.4 4.1
COMPANY REPORT CARD

ROE. As I-Power is not expected to pay any dividends going forward, ROE is expected to fall from 46% in FY06 to 34% in FY08 as net prot continues to grow. Management. A key person in the management team is Chia Kok Chin, whom is CEO and CTO of I-Power. He is also the largest shareholder of the company with 28% shareholding. He is instrumental in transforming I-Power to a company with RM7.7m net prot in less than 5 years since incorporated. Dividend. After paying a surprise 10 sen tax-exempted dividend or 100% of 10 sen par value for FY05, I-Power did not pay any dividends for FY06. Going forward, we do not expect the company to pay dividends.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 FY04 FY05 3.3 2.9 (0.8) (2.2) (0.1) 0.0 2.5 0.7 1.0 3.4 0.0 0.0 3.4 4.1
RECOMMENDATION
Our previous Buy call on I-Power was initiated in October 2006. Although the companys share price once reached our fair value of RM0.52 in November 2006, it has now retraced considerably from the peak, which provides another good opportunity to accumulate the stock. Our fair value of RM0.52 is maintained based on FY08 PER of about 8.5x. Besides earnings growth, another key catalyst for our Buy recommendation is the potential M&A that might materialize within the next 12 months.
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JobStreet Corporation
Finding Your Dream Career
Others
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) JOBS MK 203.07 371.61 2.07 | 1.52 86.47 0.06 Net Cash 19.90 4.18 0.65 0.28
INVESTMENT MERITS
Strong brand name in Asia and undisputed e-recruitment leader in Malaysia Hopping onto the O & G and BPO wagon in Singapore and Philippines respectively New tie-up with the leading publisher of recruitment advertising magazine in Hong Kong RM46m cash and net cash per share Strong partnership in the region ensuring success in each market

Mark Chang Mun Kee Wong Siew Hui Ng Kay Yip 12.66 11.00 9.34
COMPANY PROFILE
JobStreet Corporation (JobStreet), operator of the JobStreet.com online recruitment sites, is the undisputed market leader in online job advertising in Malaysia. Started in 1995 as an e-commerce company, JobStreet cruised into the online recruitment services after experimenting various other business models. Since then, the group has spread it wings to seven other countries in the Asia region. Primary earnings come from JobStreet Essential, the groups core online recruitment product. JobStreet offers a comprehensive suite of interactive recruitment services grouped apart from online recruitment which includes outsourced human capital services, training & education, ecommerce and e-business. Serving over 15,000 corporate customers and over 3.0m jobseekers, JobStreet was successfully listed on MESDAQ in November 2004.

Month 1m 3m 6m 12m Absolute (1.09) 2.83 (6.36) 15.48 Relative (4.57) (9.10) (27.55) (15.50)

KEY HIGHLIGHTS
Value adding Singapore services. Riding on the oil and gas (O & G) boom, JobStreet has partnered with Enerpro Pte. Ltd., a specialist oil & gas manpower sourcing agency to ll the multitude of positions available in the sector. Jobseekers in Singapore can now also enjoy lifestyle content services while pursuing greener pastures in their career with a partnership with Blurbme. We expect JobStreet to consolidate its position in Singapore while diversifying its earnings base. Singapore is the top revenue generator for JobStreet after Malaysia. Philippines catching up. Philippines remains the fastest growing market for JobStreet and is expected to continue repeating this achievement thanks to the hot Business Process Outsourcing (BPO) market there. The BPO market in Philippines is forecasted to earn US$11bn and employing 900,000 people by 2010 from a mere US$2.1bn and 200,000 personnel in 2006.
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Breezing into Hong Kong. JobStreet made its foray into Hong Kong recently via a stake in a subsidiary of Recruit Holdings Ltd., an established leader in the print recruitment advertising business listed on GEM (Growth Enterprise Market) of Hong Kong. Both parties are expected to leverage on each others expertise and strengths, achieving a slew of complementary benets via the tie up. Sitting on a hoard of cash. With zero gearing and strong cash ow, JobStreets net cash per share is twice its par value. Armed with RM46m, management is actively looking for acquisition targets in the region. Its business model also requires minimal capital maintenance once established. JVs. JVs. Jvs. JobStreet employs a strategy of securing a strong partner that can drive the business before venturing into a country. Just to name a few, JobStreet have successfully formed joint ventures with staunch parties in India, Bangladesh and Indonesia that provide synergistic advantages. We can only hear more of these good developments in the future.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 34.9 55.0 65.5 80.6 80.1 57.4 19.1 23.1 10.3 15.2 19.5 24.4 10.1 16.6 18.3 27.4 8.4 16.4 16.4 24.9 1.1 7.6 10.5 11.6 - 581.4 38.2 10.0 0.12 0.18 0.27 0.38 0.0 2.8 3.0 3.0 0.0 2.1 2.3 2.3 46.9 24.0 20.0 15.8 1360.9 926.8 654.2 462.7 0.1 (0.0) (0.2) (0.4)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 5.0 16.9 21.5 - 32.2 37.1 56.7 - (7.3) (10.0) (16.8) 0.0 0.0 0.0 - 29.9 44.0 61.4 - 20.1 20.1 20.3 8.9 22.3 40.0 - 29.0 42.4 60.3 0.0 0.0 0.0 0.8 1.6 1.1 - 29.9 44.0 61.4 0.0 0.0 0.0 - 24.4 26.6 46.4
COMPANY REPORT CARD

ROE. High-ying JobStreet displayed incredible ROEs of 46.0% and 31.9% for FY05 and FY06 respectively. 2003-2006 revenue CAGR also stood at an impressive 50.0%. We expect ROE to hover in the 30% region moving forward. Management. Founder Mark Chang Mun Kee continues to be the driving force behind JobStreet. In line with its strategy, the group works closely with selected partners outside Malaysia. Dividend. Jobstreet declared net dividend of 2.75 sen in FY05. This is equivalent to a net yield of 2%. Management has indicated a 30% payment ratio for subsequent FYs.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 3.6 16.6 25.7 12.7 (11.4) (12.7) 8.0 (3.1) (3.3) 24.3 2.1 9.7 0.0 24.4 26.6 0.1 0.1 0.1 24.4 26.6 36.4
RECOMMENDATION
JobStreet is now trading at 15.8x PE FY07, a discount of over 40% to the historical PE of 27.9x since listing and MESDAQ average forward PE of 27.3x. We arrived at a target price of RM2.32 based on 20.0x FY07 EPS, translating into a 26.5% upside. For comparison purposes, global peers Monster (USA) and Seek (AUS) are currently trading at PEs of 29.4x and 39.1x respectively.
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94
Johor Land
One Of The Largest Johor Landlords
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) JLB MK 122.00 230.58 1.94 | 0.72 784.38 0.95 0.99 0.81 0.25 1.43 2.93
INVESTMENT MERITS
Largest landowner/developer in Johor with 3,044 acres undeveloped landbank and outstanding GDV >RM6.6bn to last for the next 20 years Recent venture into Bandar Dato Onn with focus to develop highend properties and the development of JBs largest commercial centre spanning over 118 acres with >1.0m sq m commercial oor space will be one of the strongest growth drivers going forward Still trading at 27% discount to fully-diluted RNAV of RM2.59

Johor Corp. Johor Ventures S/B Johor Capital Holdings S/B 50.4 4.8 4.6
COMPANY PROFILE
Johor Land Bhd (JLand) is the listed property arm of state enterprise Johor Corporation (JCorp). Established in 1972, the Group has positioned itself as one of the key property developers in Johor, having built over 20,000 residential and commercial units to-date. The Group is MS ISO 9001:2000 certied for Design Management, Development of Residential and Commercial Properties. The Group currently has four major developments spread over a landbank of nearly 3,044 acres, predominantly in the Pasir Gudang, Ulu Tiram and Tebrau areas in Johor. The combined Gross Development Value (GDV) of these four developments is over RM6.6bn, and is sufcient to keep the group occupied for up to 20 years. Jland was listed on the Main Board of Bursa Malaysia in year 1996. Managing director Tuan Hj Shaqul Haz is also the Chief Executive of the Property Division of its parent company, JCorp.


KEY HIGHLIGHTS
Taman Bukit Dahlia. Located in close proximity to Pasir Gudang with size spanning over 417 acres, the development has been on-going since year 1999. Consisting of 6 phases of medium-cost mixed residential developments of double storey terraces, semi-detached houses, bungalows and double storey shop ofces, the entire development is envisaged to be completed in year 2009 with some over 4,000 residential units valued at RM700m. Undeveloped landbank stands at about 270 acres. Taman Bukit Tiram. Located in close proximity to Ulu Tiram town. Phase 1 of the development comprising some 1,150 residential units worth RM150m were completed in the 1990s. The development of Phase 2 and 3 comprising 1,610 residential units worth a GDV of RM198m sited on a 151-acre land are still on-going. Phase 2 was launched in year 2001 and Phase 3 was launched back in 3Q05. Project launches in year 2007 include 378 units of single storey terrace houses worth a GDV of RM53m.
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Bandar Tiram. To be launched in 4Q07 and sited on a 1,100-acre land adjacent to Taman Bukit Tiram, Bandar Tiram is a new RM2.4bn mixed township development comprising of some 12,300 residential houses and town-centre shop units to be developed over the next 10-15 years. This development may also involve the eventual relocation of the existing town centre of Ulu Tiram to Bandar Tiram. Bandar Dato Onn. Sited within the Tebrau Corridor, 14km away from Johor Bahru city and spanning some 1,474 acres of freehold land, the Bandar Dato Onn is a bold move by JLand to enter into the development of high-end property development. The development will span over a period of 10-15 years with a total GDV of RM3.58bn. The land for this development was acquired from parent JCorp in Dec04. The acquisition represented a signicant milestone for JLand as it doubled its total landbank and made it the largest landowner and developer in the state of Johor. Priced at RM353m or RM5.50psf, the acquisition was satised via the issuance of 22m new shares at an issue price of RM1.00/share and 330m CULS at a nominal value of RM1.00/CULS. The recently constructed and dedicated interchange that will link the township to the North-South Expressway is one of the prime catalysts that will boost up the sales and development value of Bandar Dato Onn. Currently RM40m worth of 2 storey terrace houses are being constructed (launched Feb07) with a further RM95m to be launched this year. Bandar Dato Onn will also have a dedicated 118 acres of commercial centre, making it the largest commercial centre in JB. The so-called Regional Commercial Centre will provide some 10.8m sq ft of commercial oor space in JB. Bandar Dato Onn will be one of the strongest growth drivers for the Group growing forward.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07F 108.4 88.8 74.7 82.3 49.7 (18.1) (15.9) 10.3 24.8 21.5 20.1 23.0 36.2 22.3 22.1 22.7 26.4 16.6 17.7 16.7 21.6 13.6 14.5 13.7 44.9 (37.1) 7.1 (5.9) 2.84 1.40 1.42 1.44 7.0 7.0 7.0 7.0 3.7 3.7 3.7 3.7 8.7 13.9 13.0 13.8 0.7 1.4 1.3 1.3 (0.2) (0.1) (0.1) (0.1)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. Due to the Groups relatively large landbank, FY06 ROE was low at 2.8% (FY05: 3.4%) but we expect JLands ROE to improve as it slowly unlocks the value of its landbank as the development projects progress. Management. The companys success is strongly driven by Tuan Hj Shaqul Haz who is also the Chief Executive of the Property Division of its parent company, JCorp. Dividend. JLand has been paying a gross dividend of 7sen since year 2004 (pre 2004: 5sen). Going forward, we expect JLand to at least maintain the dividend at that level.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 27.2 (5.8) (18.0) 1.8 12.5 13.7 (24.5) (13.3) (5.3) 4.4 (6.6) (9.6) (14.4) (9.9) (16.5) 0.0 0.0 0.0 (9.9) (16.5) (26.1)
RECOMMENDATION
BUY. We view JLands recent venture into the Tebrau Corridor to develop high-end residential properties and to develop the largest commercial centre in JB a very positive and a bold one as it will create a stronger value for the Group in the longer term. The conversion of CULS, however, will result in sharp dilution of JLands EPS and RNAV. Nonetheless, even taking into the full dilution impact, its fully-diluted RNAV will work out to be RM2.67, still a discount to its current share price. Applying a 20.0% discount to RNAV, we arrive at a 12-month target price of RM2.14.
OSK
96
Johore Tin
Half Full Or Half Empty?
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) JOHO MK 65.98 52.12 0.93 | 0.60 23.99 (0.01) 0.16 3.25 0.97 0.90 1.26
INVESTMENT MERITS
The third largest tin can manufacturer in Malaysia Riding on expected pick-up in consumer demand Potential venture into different product stream Valuations supported by >8% dividend yield
COMPANY PROFILE
Johore Tin was founded in 1973, principally involved in the manufacturing of various tins, cans and other containers, printing of tin plates and other related business. The company was subsequently listed on the Second Board of Bursa Malaysia in 2003. In Oct 2006, the company has successfully been transferred to the Main Board. Prior to listing, the company set up a subsidiary, namely PT Medan Johore Tin. This subsidiary is mainly catered for the increasing demand from PT Danone Biscuit Indonesia and the huge potential demand in the Indonesia market. Johore Tin. Currently the Indonesian operation contributes about 5% to the total revenue. The company has also diversied from its pure tin container business by venturing into jerry cans that are mainly used to store edible oil.

Johore Tin Holdings SB Angkawa Aman SB Genting Perwira SB 42.7 6.9 5.8

Month 1m 3m 6m 12m Absolute 1.28 (1.25) (4.24) 4.24 Relative (5.39) (13.18) (25.98) (26.61)

KEY HIGHLIGHTS
Reviving sales volume for jerry cans. We expect sales of jerry cans to improve moderately this year as foreign importers ran down their rened oil inventory which they have stocked up in anticipation of high CPO prices last year. Given the strong global demand for edible oils as well as the commercialisation of bio-diesel, we foresee foreign importers to increase their orders for edible oil this year. Consequently, we believe Johore Tin, one of the jerry cans manufacturers, beneting from this phenomenon. Remain cautious on cost pressure. In our opinion, although raw material prices have stabilised, it will still remain a concern as tin plate prices are staying high. To recall, Johore Tins earnings have been battled down by rising input prices as well as soft demand last year. Tin plate supplier, Perstima has increased tin plate prices by USD50 per mt in Jul 2006. Given the intense competition, Johore Tin did not raise product pricing but decided to absorb all the incremental costs. As such, the companys operating margin has declined to 7% in 2006 from 9.4% a year ago and net earnings dropped substantially by 34.5% y-o-y. Potential venture into different product stream. According to our recent discussion with the management, Johore Tin may venture into other potentially protable container product stream in the near term. While specic details
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have not been disclosed, the management indicated that RM4-5m of bank borrowing has been secured to fund the said diversication project. Riding on expected pick-up in consumer demand. The feedback from most of the F&B manufacturers indicated that consumer sentiment has improved since the beginning of this year. We see consumer spending improving further towards 2H given the positive wealth effect from the stock market as well as the lapse of adverse impact from interest rate hike and rising cost of living. Although Johore Tins management remained conservative, we believe business performance is likely to improve this year.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 97.4 122.1 121.5 127.7 5.1 25.4 (0.5) 13.2 13.7 11.2 11.9 11.1 11.4 7.7 8.4 7.6 8.2 5.4 6.0 17.3 18.7 8.2 9.0 8.1 (56.1) 10.3 1.75 1.89 1.31 1.43 6.9 6.9 6.9 6.9 8.8 8.8 8.8 8.8 4.6 4.2 9.6 8.7 0.5 0.4 0.6 0.6 0.2 (0.2) (0.2) (0.2)
COMPANY REPORT CARD

ROE. The companys ROE has ranged between 10 17% over the past ve years. However, ROE dipped to 6.4% last year due to poor earnings driven by weak demand and rising input prices. Going forward, we expect the companys ROE to recover moderately. Management. Johore Tin was founded by the Chairman, Mr Goh Mia Kwong, and currently the company is under the management of the MD, Mr Edward Goh, who is the son to the Chairman. Mr Edward Goh has more than 16 years of experience in the industry and he oversees Johore Tins planning, development and marketing. Dividend. Although it is yet to be announced, we expect the company to pay out 5sen tax exempt dividend for FY06, translating into an attractive gross yield of about 8.8%. Historically, Johore Tin has consistently paid out 5sen tax free DPS since 2004 and we think the company should at least maintain this level.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 16.0 16.9 30.6 36.1 62.7 73.4 85.0 79.0 (8.0) (11.9) (25.0) (18.6) 0.0 0.0 0.0 0.0 70.7 78.4 90.6 96.5 44.0 44.0 44.0 66.0 25.7 33.2 39.2 20.4 69.7 77.2 83.2 86.4 1.0 1.2 7.4 5.7 0.0 0.0 0.0 0.0 70.7 78.4 90.6 92.2 0.0 1.4 17.9 14.3 15.3 9.9 (10.7) (12.7)
RECOMMENDATION
We expect Johore Tins earnings to recover by 10% this year due to the more stable raw material prices and some improvement in general consumption. We value Johore Tin at RM0.80, applying a PE of 8x based on our FY08 EPS estimate. A potential gross dividend yield of 8.8% could also support the stocks valuations.
FY04 FY05 FY06 (1.2) (4.9) 11.9 (4.0) (14.4) (7.9) 1.3 12.1 (6.6) (3.9) (7.2) (2.5) 15.3 11.3 4.1 0.0 0.0 0.0 11.3 4.1 1.7
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Kawan Food
Leading Frozen Food Producer
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KFB MK 80.00 80.80 1.30 | 0.90 22.90 0.00 (0.11) 9.07 0.79 0.60
INVESTMENT MERITS
Leading frozen food producer in Malaysia with 50% market share Expanding export market to boost earnings Next 3 years earnings CAGR of 10% Balance sheet is strong with net cash of RM6.3m
COMPANY PROFILE
Kawan Food Bhd (KFB) began its business as a small business supplying homemade pastry products to groceries and supermarkets in Klang Valley in the late 1970s. The company was listed on the second board of Bursa Malaysia on July 2005 and today, KFB is the leading manufacturer of Ready-to-Serve (RTS) frozen foods in Malaysia.

Gan Thiam Chai Kilat Kaca SB Kwan Sok Kay 33.30 24.00 8.40

Month 1m 3m 6m 12m Absolute (4.76) (0.99) 0.00 (2.37) Relative (7.44) (11.83) (21.41) (28.29)
KEY HIGHLIGHTS
A dominant player. KFB is currently the leading frozen RTS food provider, capturing close to 50% of the domestic frozen food market share and leaving the remainder to be shared amongst 11 other players. We view the competition as manageable as the nearest local rivals like Kart Food Industries SB and Tee Yih Jia Manufacturing SB which carry the respective brand names of Karts and Springhome, are only a quarter of the size of KFB. Furthermore, all competitors are either private companies or small and medium-sized enterprises. Its extensive automated production processes has resulted in improved production efciencies and qualities which ensure KFBs competitiveness in the market place. Nonetheless, on the international front, it would be inevitable for KTB to face tougher competition from bigger boys with greater nancial and marketing resources. Renowned brand names. There are two product brands in KFBs stable, namely Kawan and KG. Both are registered trademarks in certain export countries, which have yet to be registered in Malaysia. Kawan is well known for traditional West Asian atbreads and pastries plus curries such as Roti Paratha and Naan, whilst KG is popular for Chinese pastries and delicacies like Spring Rolls and Oriental Buns. To complement its existing product range which consists of more than 70 frozen food products, KFB has launched new bakery and texturized soya protein products under the brand name of Passion Bake and VEAT respectively.

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Promoting healthier food. Through its R&D, KFB managed to produce the products that have the right blend of taste, texture and avour under the brand VEAT which is able to target consumers with health conscious. VEAT provides consumers with a real and healthy alternative to meat, a choice that are widely acceptable in Europe and North America. The product is halal and free from cholesterol. Since its introduction, the products have received encouraging response from local customers and vegetarian societies. Expanding export market. KFB will continue to expand its export market to regional countries as well as middle east region. Its products are halal certied by the Malaysian Islamic Development Department and will be able to tackle large Muslim populations. Moreover, the HACCP certication will ensure products can be sold in more developed countries such as the USA.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 #FY05 45.6 36.3 18.3 (20.4) 13.8 14.9 12.5 6.6 9.2 5.2 11.6 11.1 1.0 (3.7) - 0.60 0.7 0.7 8.8 9.2 1.7 - 10.5 FY06 FY07f 52.5 60.0 44.5 14.3 7.1 13.1 10.0 11.0 8.2 9.0 10.3 11.3 (7.5) 9.5 0.67 0.76 3.0 3.0 2.9 2.9 9.9 9.0 1.5 1.3 6.3 8.8
COMPANY REPORT CARD

ROE. For the past 2 years, ROE ranged between 10% and 16%. Going forward, we expect KFB to register ROE above 15% for the next 3 years. Management. The managing director, who is also the co-founder, has been in the food manufacturing industry for more than 30 years and with its wide distribution network, we believe that KFB will be able to maintain its leading position in the future with minimal threats from rivals. Dividend. KFB proposed dividend of 3 sen per share translating into a gross yield of 2.9%. We expect the company to maintain this payout going forward.
# 7months gure. EPS annualised
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 23.3 25.9 31.0 29.1 (4.8) (7.9) 0.2 12.1 49.8 59.0 40.0 40.0 8.1 13.7 48.1 53.7 1.6 5.4 0.0 0.0 49.8 59.0 0.0 4.3 10.5 6.3
RECOMMENDATION
By using the composite of 10x PER and P/BV of 1.5x over FY07 EPS of 11.3 sen and BV of RM0.76/share, we arrived at a fair value of RM1.13.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 0.6 14.3 5.9 (15.7) 3.0 2.6 9.5 1.2 0.0 9.5 0.0 (0.1) 9.5 10.6
OSK
100
Kencana Petroleum
The Yard With A Special Niche
Oil & Gas
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KEPB MK 891.50 1034.14 1.54 | 0.41 6629.43 (0.01) 0.34 0.18
INVESTMENT MERITS
One of the 7 Oil & Gas platform fabrication yards licensed in Malaysia Differentiates itself by having a large covered workshop, resident contractor and engineering division Targeting for 50:50 foreign and local business mix to allow it to tap into larger and higher margin foreign contracts Aiming to leverage on its engineering division to move into the process equipment business as well as secure niche fabrication contracts globally

Dato Mokhzani bin Mahathir Chong Hin Loon ABN Amro Bank N.V. 47.56 8.90 8.87
COMPANY PROFILE
Listed at the end of 2006, Kencana Petroleum is one of the 7 holders of Petronas fabricator licenses in Malaysia, allowing them to engineer and fabricate offshore production platforms. Kencana owns and operates a 53 acre fabrication yard located in Lumut Port Industrial Park, Perak, with the total fabrication capacity currently at 30,000 tonnes per annum. Its yard has a large covered workshop allowing work to continue 24 hours. The integrated nature of the company with engineering and design arm Kencana Bestwide means it can take on a wider range of jobs including process modules and skids. Actively pursuing local as well as overseas contracts, Kencanas orderbook is now split 50:50 between local and foreign contracts. With over RM1bn of outstanding orderbook and tendering for contracts worth RM3bn, the company is poised to benet from the promising outlook of the Oil & Gas sector.

Month 1m 3m 6m 12m Absolute (6.78) (6.78) Relative (4.83) (12.06) -

1.50 1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 Dec-06
KEY HIGHLIGHTS
Jan-07 Feb-07 Mar-07
Strong push for oil production globally. With oil prices continuing to hover around the US$60/barrel level, oil companies worldwide are seeking to bring their reserves onstream as quickly as possible. This has led to strong demand for production facilities worldwide. Kencana, with its global track record, will denitely benet from the anticipated 60 new platforms required in Malaysian waters over the next 5 years. Venturing into overseas waters. Overseas contracts generally offer higher margins for platform fabricators. These contracts are also likely to be awarded as a larger block in the form of Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) contracts. With Kencanas having successfully delivered contracts in Sudan, India and the Malaysia-Thai JDA, the company is keen on securing more overseas contracts even as the Malaysian O&G sector is booming. Going for niche contracts. Kencanas differentiation from other yards also
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stems from its Engineering arm, Kencana Bestwide. The existence of Kencana Bestwide has allowed it to carry out fabrication works for certain niche contracts including the rst Malaysian conversion of a jack-up rig into a MOPU. Going forward, Kencana will continue to package its engineering and its fabrication expertise together to target niche contracts. Venturing into Process Equipment manufacture. Aside from niche contracts, Kencana Petroleum is also looking at expanding its process equipment business. With engineering from Kencana Bestwide, the company is hoping to secure more contracts for this high margin business similar to what KNM Group has been doing. RM1bn outstanding orderbook. Out of this, Kencana is expected to book another RM600m of revenues this nancial year, for a total revenue of close to RM900m while RM400m of the outstanding orderbook will be carried over to FY08. With RM3bn of tendered contracts, the company is hopeful of securing RM600m worth of new contracts by June 2007. After spectacular growth in FY07 due to capacity expansion, we expect the company to still record more than 20% bottomline growth in FY08. Margin expansion. The companys EBITDA margin has been declining from 15% in FY04 to 9% in FY06 as the company outsourced part of its larger EPCIC contracts. Going forward, Kencana expects its margin to at least stabilise if not expand as it learns from its previous contracts how to better manage its outsourced contracts.

FYE 31 Jul Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 270.8 437.3 896.5 1115.0 49.9 61.5 105.0 24.4 34.0 38.3 76.2 94.8 28.4 29.1 64.3 81.2 21.3 26.7 51.4 64.9 2.4 3.0 5.8 7.3 19.1 25.6 90.1 26.2 - 0.23 0.29 0.36 0.0 0.0 0.0 0.0 0.0 0.0 45.9 36.6 19.2 15.2 4.8 3.9 3.1 0.1 0.1
Balance Sheet (RMm)

FYE 31 Jul Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 127.8 - 252.8 - (153.6) 0.0 - 227.0 - 88.0 - 116.5 - 204.5 - 22.5 0.0 - 227.0 - 65.3 - 41.5
COMPANY REPORT CARD

ROE. With the strong growth of 93% in bottomline anticipated for FY07, we expect Kencanas ROE to break the 20% mark in FY07, which we believe can be sustained for the next 2 years. Management. Founded by Deputy Executive Chairman, Chong Hin Loon, in 1982 as a contractor for fabrication yards, the company now counts Datuk Mokhzani Mahathir as its Executive Chairman. Chong Hin Loon continues to oversee yard operations while CEO, Zainal Rashid Mokhtar has extensive experience in the O&G sector via his years at Petronas. Dividend. Given the need to plough prots back as capex to further upgrade the yard, we are not expecting any dividends at this point of time.

FYE 31 Jul Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 -
RECOMMENDATION
Valuing the company against the sector at 15x CY08 PER and 3.5x CY08 P/BV, we arrive at a fair value of RM1.27. Risks are mainly in the form of execution risks and delays which would then lead to penalties for the company. Nonetheless, delay risk is minimised as Kencana has a resident contractor at their yard, which means dedicated manpower to nish projects on time. Although upside may appear limited at this point of time, we may re-rate on the stock if Kencana outperforms its target of securing 20% of its tenderbook or if it manages its further reduce its operating costs.
OSK
102
Kian Joo Can Factory

Back To The Good Old Days
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KJC MK 443.73 501.42 1.44 | 0.99 504.00 (0.09) 0.19 3.13 0.71 0.69 1.41
INVESTMENT MERITS
Riding on expected pick-up in demand but cautious on commodity costs Commencement of Vietnam operation in 2008 Manageable gearing at 26%
COMPANY PROFILE
Kian Joo (KJC) was founded by See Boon Tay in 1956 and is currently under his childrens management. The family tussle over control that started in early 90s was left in status quo. Business decisions since then have been made independently by the board, whose members have no relationship with the family. Kian Joo Holdings, the private holding company of the See Family owning a 37% stake of KJC, has been undergoing a liquidation process in the last 10 years. The liquidation is part of the resolution of the tussle. KJC is the largest packaging company in Malaysia. Key products are general cans, aluminium cans, corrugated cartons and PET. About 50-60% of the slim cans revenue comes from export sales to the Middle East, Australia, America and the Asia Pacic region. The company also manufactures corrugated cartons via its 55% owned local subsidiary, Box-Pak (M) Bhd. The company has ventured into Vietnam in 2002 for general cans and corrugated cartons production.

Kian Joo Holdings SB EPF Malaysian Assurance Alliance Bhd 36.0 12.0 2.5

Month 1m 3m 6m 12m Absolute (5.04) (7.38) 11.15 (6.68) Relative (16.23) (18.57) (13.56) (32.82)

KEY HIGHLIGHTS
Riding on expected pick-up in demand. Output of KJC should improve in tandem with the recovery in consumer demand growth. Local consumer spending, which has already shown signs of recovery, should gain momentum entering 2H given the positive wealth effect from the stock market as well as the lapse of adverse impact from interest rate hike and rising cost of living. In fact, KJC has already experienced improvement in domestic orders which were previously postponed. A one-year export order worth RM30m for 250ml aluminium cans from Iran that KJC has secured in end-2006 also added into the pipeline, generating a pre-tax margin of about 20%. As such, we expect KJCs turnover to recover slightly by 2-3%. Remain cautious on margins due to high raw material prices. KJC is very vulnerable to rising raw material costs, which account for about 60% of total operating costs. Although tin plate prices have stabilised by end-2006, prices of aluminium sheet have surged >15% last year and are expected to continue trending upwards. Consequently, KJCs gross prot margin in 2006 was hit
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and declined by 1.6%pts to 12.8%. Going forward, we remain cautious on margins as we think most commodity prices will stay high. The price of steel, which forms 99% of tin plate content, is likely to increase by another 7-10% in 2007. Expansion plan delayed. KJC announced its intention to expand into Vietnam, Bangkok and Indonesia two years ago. However, the plan has been postponed due to weak demand as well as heightening political risks in Thailand. Vietnam development plan will commence in early 2008. The original plan to expand production line and introduce new production line in Vietnam were delayed due mainly to lacklustre consumer demand last year. Nevertheless, the management indicated that the new operation in Vietnam is likely to commence next year as soon as the plant is constructed by end-2007. To recall, the development plan includes an extension of the existing corrugated production line and also a new can manufacturing production line installed with the Microex system. The USD 10m Microex system is a new technology created by KJC and US-based Omnitech International. The system has a capacity to produce 300m cans per year and an ability to switch between aluminium can and general can production. Although a conventional line has a capability to produce twice as many cans as the Microex line, the latter costs only one-third that of a conventional line.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 575.7 662.5 657.0 671.1 2.2 - 15.1 (0.8) 98.2 114.1 97.8 113.0 56.5 69.6 43.1 58.0 49.8 51.6 29.1 41.2 11.5 11.9 6.7 9.5 3.7 (43.6) 41.4 3.14 3.29 2.55 1.46 6.9 6.9 5.2 6.9 6.1 6.1 4.6 6.1 9.8 9.5 16.8 11.9 0.4 0.3 0.4 0.8 (0.6) (0.9) (0.5) (0.4)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. KJCs ROE never exceeded 10% since 2000, and even plunged to 4.8% in 2006 due to weak orders and rising input costs during the year. Going forward, we expect ROE to recover slightly on the back of demand recovery. Management. KJC is currently managed by the second generation of the Sees family. Despite the family tussle since early 1990s, business operation was not at all affected. Dividend. Dividend is never exciting for KJC. The company declared a 1-for-5 bonus issue and share split (renewed par value RM0.25) in end 2006. With the enlarged share capital, we expect a 5sen tax free DPS every year going forward as KJC hardly increases its DPS.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 46.0 14.7 76.9 (50.6) (62.3) (39.8) (5.4) 61.7 (11.4) (9.9) 14.1 25.7 47.7 37.8 52.4 (0.1) 0.5 1.4 37.7 52.4 79.5
RECOMMENDATION
The stock is currently trading at a PE of 11.9x, which we believe it is fair for a small cap stock and the nature of business that the company is in. Based on our DCF valuation method, we derive our fair value of RM1.15. We note that, the can manufacturing sector is still facing the threat of rising input commodity prices, which are likely to sustain at high levels in view of strong global demand going forward.
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Kinsteel
Integrated Long Steel Player
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KSB MK 171.86 694.31 4.60 | 1.00 1241.89 2.41 0.84 1.53 0.74 1.37 4.41
INVESTMENT MERITS
Veteran in manufacturing and trading of long steel products Owns 7 steel mills with an installed capacity of 500,000 tpy and is commissioning another 300,000 tpy bar and wire rod plant Acquisition of 51% interest in Perwaja Steel SB (PSSB) and the Gurun Assets transformed the company into one of the largest local integrated long steel players Impending 9MP, robust direct reduce iron (DRI) market and upcoming new capacity are immediate catalysts Massive synergy from PSSB and Gurun Asset yet to fully realise, hence a potential re-rating

Tan Sri Pheng Yin Huah Maju Holdings SB 44.7 33.5

COMPANY PROFILE
Kinsteel is an established player in the manufacturing and trading of long steel products. The company is a main producer of angle bars and has an added distinction of being one of the few U-channel bar producers in Malaysia. The group owns seven steel mills in the Gebeng Industrial area, Pahang with an installed capacity of 500,000 tpy and is currently commissioning its eighth mill, a bar and wire rod plant with a capacity of 300,000 tpy. Kinsteel was listed on the Main Board of Bursa Malaysia on 25 November 2002. The company recently completed the strategic alliance with the acquisition of a 51% shareholding interest in Perwaja Steel SB (PSSB) and the Gurun Assets. The enlarged group has transformed Kinsteel into one of the largest integrated long steel players in Malaysia.

KEY HIGHLIGHTS
Final countdown for the 9MP. We have seen positive momentum on the domestic steel industry after recent up-tick in steel prices following the stocking up exercise in anticipation for the execution of the 9MP. The 31% increase in development expenditure under Budget 2007 to RM46.5bn for the development of schools, universities and housing may push demand for steel products. On top of that, given the implementation of infrastructure development projects and construction works are the heavy consumer of long steel products thus Kinsteel is set to be main benecially being the integrated long player. Impending capacity to bump up production. Kinsteel is currently commissioning its eighth mill, a bar and wire rod plant with a production capacity of 300,000 tpy and expect commercial commissioning by 2HFY07.
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The company expects its bar and wire rod mill to boost revenues with higher gross prot margins. Apart from that, Kinsteel expansion is viewed as a step to divert its focus to non price control steel items to mitigate price risk. Unlocking synergy The acquisition of PSSB and the Gurun Assets has placed Kinsteel as an integrated long steel manufacturer. The strategic alliance also set to widen Kinsteels product range to includes upstream (DRI, billets, beam blanks and blooms), midstream (H-beams, I-beams), and downstream (wire rod, wire mesh, wire conditioning and nails) products that offer exibility to focus on the products that have better margins and demand. We think Kinsteel will gradually unlock the huge hidden synergy from the new structure and inch up the production gures, thus a potential re-rating. DRI under limelight. DRI is sold to upstream steel manufacturers to produce beam-blanks, blooms, billets and slabs. The main benet of DRI is that it is a highly metallised material and thus a purer iron source that use mainly in the manufacture of billets for high grade wire rods, heavy sections and hot roll coils (HRC). PSSB being the sole producer in Malaysia and one of the two DRI plants in South East Asia with few substitutes, the company position in DRI making is near monopoly. Given the surge of the substitute price namely scrap metal, we estimate the advancement of prot margin could be in the ofng. Apart from that, the de-bottlenecking exercise in the DRI plant by early 2HFY07 expects to raise its capacity to 1.5m tpy, hence resolve constrain in capacity on overwhelming demand.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 453.7 32.4 40.6 26.2 25.0 41.7 158.0 2.1 12.7 3.2 9.7 1.9 (3.33) FY05 550.2 21.3 36.8 20.5 19.7 17.9 (57.1) 1.9 6.9 1.7 22.6 2.2 (2.74) FY06 FY07f 1154.2 2186.8 109.8 89.5 265.1 324.0 126.3 194.5 70.3 105.6 41.8 50.3 134.1 20.2 4.4 4.9 10.4 17.3 2.6 4.3 9.7 8.0 0.9 0.8 (6.86) (5.88)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 116.9 170.7 (159.1) 0.0 128.4 60.0 42.7 102.7 25.7 0.0 128.4 158.9 (144.8) FY04 113.7 264.9 (229.7) 0.0 148.9 60.0 64.7 124.7 24.1 0.0 148.9 209.5 (199.7) FY05 FY06 151.5 2402.2 457.2 907.7 (381.1)(1213.6) 0.0 0.0 227.6 2096.3 110.0 170.0 95.9 579.2 205.9 749.2 21.7 703.1 0.0 644.0 227.6 2096.3 356.5 1201.7 (301.9)(1166.6)
COMPANY REPORT CARD

ROE. We believe the company is gradually unlocking the synergy from recently acquired PSSB and Gurun Asset, thus set to excite investor with an inspiring double digit ROE. Management. The company is managed by the second and third generation of the late founder Mr. Hong Kim Kee. With over 40 years of experience, Kinsteel success are assured. Dividend. The company maintains a generous dividend payout ratio averaging 24% since listing. We expect a decent dividend yield of 4.3% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (44.5) (119.1) (90.8) (7.1) (44.2) (735.5) 45.0 178.3 819.3 (6.6) 15.0 (7.0) 11.5 4.9 19.9 0.0 0.0 0.0 4.9 19.9 12.9
RECOMMENDATION
We are very excited with the massive unrealized synergy from the recent strategic alliance with Maju Holdings SB. We recommend Kinsteel a BUY with a 12-month target price tagged at RM4.72 or 16.9% upside potential. The fair value is derived from a composition of peer PER and peer P/B. Coupled with the decent dividend yield of 4.3% for FY07, the stock may potentially deriver a 12 months total return of 21.2%.
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Kossan Rubber Ind.

Growing Stronger and Stronger
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) KRI MK 159.87 789.74 5.25 | 2.27 275.44 0.26 0.72 3.27 1.49 0.87 1.19
INVESTMENT MERITS
One of the largest glove producers in the world Increase in production capacity by over 30% per annum Global industry growing at 12% per annum Net earnings growth is expected to be around 30% for the next 3 years Trading at forward PER of 15x and 11x for FY07 and FY08 respectively

Kossan Holdings (M) SB Prudential Mutual 53.5 7.0
COMPANY PROFILE
Kossan Rubber Industries, which was incorporated in June 1979 and listed in April 1996, is involved in the manufacturing of rubber-based products such as medical gloves, moulded rubber and extruded rubber. The company re-engineered its facilities to introduce technical rubber products and rubberto-metal bonded automotive parts for the OEM and replacement markets. Today, Kossan has an enduring reputation for high quality, reliability and service. Currently, Kossan is the third largest glove producer in world and is exporting to more than 50 countries in the world with the USA and Canada being its largest markets, accounting for 55% of revenue.

Month 1m 3m 6m 12m Absolute 1.24 4.70 62.25 117.25 Relative (1.79) (6.94) 27.29 60.13

KEY HIGHLIGHTS
Strong growing industry. Generally, the market for gloves is expected to continue to grow as regulatory standards on occupational safety are becoming more stringent coupled with the increase in world population. The rubber glove industry will remain strong and resilient with global consumption growth per annum of 12% (16bn pcs). Nonetheless, the industry has seen a certain degree of consolidation following the technological advancement in glove production together with higher latex prices that have led to some small-scale and uncompetitive producers being acquired by larger players.
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Aggressive expansion plan. Kossan has kick-started its 2007 expansion plan by commissioning another 13 production lines with capacity exceeding 1.5bn pieces/pa. Construction is near completion and production is expected to commence by end April 2007. By the end of FY07, the companys production capacity will expand from the current 5.2bn to 7.0bn pieces per annum. For further growth, 13 lines with a total capacity of 2.2bn pieces per annum will be added and will bring into total capacity of 9.2bn pieces per annum by the end of FY08. Ability to pass down latex cost. Despite the hike in latex price over the past few months, Kossan has still managed to maintain protability illustrating its ability to pass down the additional cost to its customers. This is mainly due to the emergence of new diseases such as SARS and Bird Flu and Bioterrorism which had created greater hygiene awareness in developing countries and made the usage of medical gloves mandatory in developed nations.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 277.8 381.3 573.9 726.5 54.7 37.3 50.5 26.6 42.0 51.9 74.4 89.5 29.3 36.2 48.6 63.4 22.1 28.9 39.6 51.4 13.8 18.1 24.8 32.1 32.0 31.3 36.7 29.8 0.85 0.99 1.19 1.44 4.2 6.0 8.0 10.0 0.8 1.2 1.6 2.0 35.8 27.3 20.0 15.4 5.8 5.0 4.2 3.4 (0.3) (0.5) (0.9) (0.9)
Balance Sheet (RMm)
COMPANY REPORT CARD

ROE. The ROE has increased from 4.7% in FY01 to 22.6% in FY06. ROE is expected to range from 24% to 26% in FY07 and FY08 with continued expansion of its plants. Management. The Managing Director Lim Kuang Sia, has more than 26 years of experience in the rubber industry. He is a qualied chemist and chemical engineer and highly technical as well as R&D driven. Dividend. We expect Kossan to pay a gross dividend of 10 sen per share for FY07 based on a payout ratio of about 25% translating into gross yield of 2.0%.
FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt)
FY03 103.4 92.6 (62.3) 6.9 140.6 66.6 55.2 121.8 16.5 2.3 140.6 44.0 (38.6)
FY04 FY05 FY06 128.3 172.3 229.6 119.3 146.6 202.7 (89.4) (124.1) (185.5) 3.0 1.9 2.5 161.2 196.6 249.3 66.6 79.9 79.9 70.7 78.8 111.0 137.3 158.7 190.9 21.6 35.7 57.9 2.3 2.2 0.4 161.2 196.6 249.3 57.7 85.3 140.2 (53.0) (81.2) (137.2)
RECOMMENDATION
Share price has outperformed the KLCI by more than 60% over the past 12 months. We have a fair value of RM6.40 by using the composite of 15x PER and P/BV of 3.6x over FY08 EPS of 42.5 sen and BV of RM1.78/ share.
FY04 FY05 FY06 20.5 34.1 47.4 (37.8) (58.6) (82.7) 18.2 24.2 31.6 0.9 (0.2) (3.8) 2.5 3.4 3.2 0.0 0.0 0.0 3.4 3.2 (0.6)
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Latitude Tree Holdings

Dining with Class and Elegance
Furnishing
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LATI MK 64.81 120.54 1.98 | 1.66 30.16 0.11 0.65 2.02 1.78 0.47 2.41
INVESTMENT MERITS
One of the largest furniture producers in Malaysia, with a niche in the household furniture segment, specically dining and furniture collection sets Positioned as an integrated furniture player with ventures into midstream and upstream production Export market includes USA, Canada, Europe, South Africa etc Boosting capacity with its 3rd Vietnam plant coming on stream mid-2007 Consistent dividend payout policy of 30%

Lin, Tzu-Keng EPF Lin Chen, Jui-Fen 19.9 13.5 11.3
COMPANY PROFILE
Latitude Tree Holdings (LTHB) was listed on the Second Board back in July 1997 but has since been transferred to the Main Board in August 2001. LTHB, with an annual turnover of over RM350m in FYEJun06, is among the list of the top household furniture manufacturers in Malaysia. With plants located in Vietnam, Thailand and Malaysia, the company manufactures and sells bedroom, dining, living room sets, Small Ofce Home Ofce (SoHo) systems, and collection items. Almost 100% of its productions are exported primarily to the US (80%), Canada, Europe, South Africa, Australia and the Middle East countries.


KEY HIGHLIGHTS
At present, the Group has a total of 4 factories in Malaysia, 3 in Vietnam and 1 in Thailand. The newly set up production facility in Vietnam, which will be running at full scale by July 2007, is capable of boosting revenue by an additional US$2m per month at full capacity. With the new plant, LTHB will enjoy 4 years of tax exempt and an additional 50% tax rebate for the subsequent 4 years, same for the 2 existing plants. Given its venture with CIMB Private Equity and Konsortium Kontrak into upstream-midstream production in Thailand, management aims to further reduce dependence on external sub-contractors for furniture components, hence improving margins. This JV company is currently enjoying a 7-year tax free status from the Thai government.
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Improving margin through upstream venture. Similar to its existing Terengganu plant, Grob Holz Co. Ltd mainly focuses on producing furniture components. This Thai-based company also does saw-milling work as most of its rubberwood supply is sourced from Thailand due to the seasonal rubberwood shortage in Malaysia. Also, in a quest to curb rising cost pressure, management is looking to increase the percentage of furniture components currently sourced from its Terengganu and Thailand plants which now stand at 50%. Riding on better quality production to increase margins. LTHB has specically allocated all its Vietnam production facilities to manufacture hiend bedroom, living room and SoHo system furniture sets. These products, which cater for a more premium and niche market, would not only provide better margins but also minimise competition, since lower end producers tend to under-cut each other. R&D - vital for growth. LTHB is continuously in search for means to achieve greater product satisfaction from its customers via constant R&D efforts. This is in line with its goals of securing ODM (original design manufacturer) status as well as maintaining the existing OEM (original equipment manufacturer) business sector.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 293.5 356.7 403.2 483.6 24.2 21.5 13.0 19.9 31.7 39.2 45.6 56.9 15.2 19.4 22.5 32.1 14.6 19.9 23.0 32.6 22.6 30.6 35.5 50.3 29.5 35.3 15.8 41.8 2.2 2.4 2.7 3.0 9.4 12.5 14.8 21.0 5.0 6.6 7.8 11.0 8.4 6.2 5.4 3.8 0.9 0.8 0.7 0.6 (1.3) (1.4) (1.5) (1.2)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 147.5 61.2 (62.4) 146.3 64.4 59.0 123.4 22.9 0.0 146.3 57.8 (47.0) FY04 157.5 94.4 (84.7) 167.3 64.4 66.1 130.5 36.7 0.0 167.3 81.5 (69.0) FY05 FY06 181.9 204.7 98.5 146.2 (97.1) (137.8) 183.2 213.1 64.6 64.8 76.8 91.7 141.4 156.5 41.8 47.5 0.0 9.1 183.2 213.1 92.9 119.6 (81.9) (92.0)
COMPANY REPORT CARD

ROE. ROE for FY05 and FY06 was 10.8% and 13.3% respectively. Going forward, we expect ROE to improve to 14.0% in FY07f due to improved capacity from its 3rd new plant in Vietnam and broader margins as a result of upstream expansion in Thailand. Management. LTHB started back in 1988 by the Lin Family from Taiwan, as a manufacturer of chairs for dining sets. Managing Director Mr Lin TzuKeng, has been the main driving force behind the continuous expansion of the Group. Currently, LTHB has grown into a complete high-and-medium-end dining and bedroom sets manufacturer. Dividend. Since 2002, the company has implemented a dividend policy to payout 30% of its net prot. LTHBs gross dividend for FY05 and FY06 was 9.4 sen and 12.5 sen respectively. Based on our forecasted EPS for FY07, we believe that Management will declare a 14.8 sen gross dividend or 8.0% yield.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 1.5 27.2 22.1 (18.8) (29.5) (37.6) 21.3 (9.0) 30.6 4.0 (11.3) 15.2 (4.5) (0.5) (11.9) 0.0 (0.0) 0.5 (0.5) (11.9) 3.8
RECOMMENDATION
Fair value of RM2.35 is derived from a blend of PER and P/NTA multiples that essentially values LTHB at 8.0x PER and 0.7x P/NTA. Downside risks include escalating raw material prices and the appreciation of the Ringgit, all of which may adversely affect operations or crimp margins.
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LCL Corporation
Furnishings
Found A New Gold Mine In The Middle East

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LCL MK 40.57 75.05 2.07 | 1.56 100.26 0.20 1.37 1.85 1.15 0.75 1.49
INVESTMENT MERITS
Strong outstanding order book of over RM400m that will last LCL for more than 2 years Established a strong foothold in Middle East, the biggest goldmine for LCL, where more >50% of its orderbook is located in the region Backward integration through strategic acquisition of synergistic subsidiaries Poise to register double-digit growth in earnings for at least the next 2 years, reecting a 3-year (FY05-FY08) net prot CAGR of 46.2% Trading at an undemanding forward PER of 4.2x and 3.1x in FY07 and FY08 respectively

Low Chin Meng Mohd Akib bin Abd Rashid Syed Ariff Fadzillah bin Syed Awalluddin 29.7 7.9 5.0

COMPANY PROFILE
LCL began as a small partnership in 1985 involved in t-out works and services by Mr. Low Chin Meng that subsequently took over the partnership and established LCL Furniture SB in 1994. The company then acted as a turnkey provider of interior t-outs works for both new development and refurbishment. LCL was listed in January 2004. Over the years, LCL undertook some backward integration by acquiring or establishing synergistic companies which provided products or services that complemented the interior t-out business. LCL has completed numerous projects since its inception and among the notable projects completed recently include KLCC Convention Centre, most of the Ministers ofces in Putrajaya, Sheraton Langkawi Beach Resort and others. The company is now focusing in penetrating more overseas projects particularly in India and Middle East via its strategic partnership with IJM Corp and local partner.

KEY HIGHLIGHTS
More overseas projects. Noting the highly competitive and slow growing domestic market, LCL has been aggressively identifying new markets abroad since 2004. The company has formed a 50:50 strategic partnership in India with construction giant, IJM Corp and set up another 49% owned joint venture in Qatar with a local partner. The JVs will give a platform for LCL to tap into a long list of mega projects in the Gulf region as well as the booming economy of India. Among the on-going projects overseas are the Novotel Hotel, India, La Cigale Hotel, Doha and the Qatar Royal Hotel, Doha. Middle East (ME) the next gold mine. We remain quite optimistic on LCLs prospects in the ME region. To-date, an estimated RM230m of current
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strong outstanding book consists of projects from the UAE alone. Such a large exposure in the region has given the Group a very strong foothold to secure vast available opportunities there, which warranted it to win some of the very prominent works, e.g. the design and t out of the East and West towers of Atlantis resort, which is the key landmark within the Palm Jumeirah development in Dubai, worth RM93.2m recently. Massive development boom, continuous support from other Malaysian contractors (e.g. IJM), constructive networking and stable economic environment especially in the UAE are the seeds that will ensure LCL to continue to ourish in the region. Huge order book. LCL is very aggressive in tendering for new projects both local and overseas. The company has to-date recorded an outstanding orderbook of more than RM400m that will last the Group for more than 2 years. In addition, the on-going tenders that stands in excess of RM1.0bn (mainly from overseas projects in the Middle East), LCL has a success rate of 15% to 20% based on historical track record. Backward integration. Becoming a one-stop interior t-out provider has always been the companys on-going strategy. Over the years, LCL undertook some backward integration by acquiring or establishing synergistic companies involved in furniture, metal, marbles, ceiling materials and others. The move was to complement the interior t-out business, ensure stringent product quality and trim down the dependency over outsourcing companies. In addition to its integrated strategy, the move has also enabled LCL to demand slight premium in prices to its products and works, translating into a further attering earnings margin for the Group.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 97.6 19.1 19.3 15.4 11.0 25.5 21.5 1.30 10.0 5.4 7.3 1.4 (0.75) FY05 FY06 FY07f 115.2 170.6 218.6 18.0 48.1 28.2 15.8 25.0 35.5 11.1 17.0 26.3 8.4 13.0 18.9 19.4 30.0 43.6 (24.0) 55.0 45.4 1.41 1.65 1.88 10.0 10.0 14.5 5.4 5.4 7.9 9.6 6.2 4.2 1.3 1.1 1.0 (1.72) (2.01) (1.98)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. LCLs ROE has been rather impressive, in the region of 20.0% for the past few years. Going forward, we expect LCL to register an ROE of 24.7% and 30.0% in FY07 and FY08 respectively. Management. Under the management of Mr. Low Chin Meng and a young and dynamic management team, LCL has growth tremendously from a small partnership to an international interior t-out provider. Dividend. Despite being a young listed company, LCL has maintained a generous dividend policy paying 10sen less tax per share since its listing in year 2004. Moving forward, we expect the company to maintain at least a 24% payout ratio.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (12.1) (28.1) (7.2) (7.5) (9.6) (4.6) (6.3) 48.1 8.8 (25.9) 10.4 (3.0) 26.3 (7.5) 2.9 (7.9) 0.0 0.0 (7.5) 2.9 (0.1)
RECOMMENDATION
BUY. LCL is currently trading at 4.2x and 3.1x in FY07 and FY08 EPS. Given the strong order book and on-going tenders, we deem the stock undemanding. The transfer to the Main Board may give it more prominence and address the perception among investors that the company is unexciting. We derive a 12-months target price of RM2.29 based on justied leading PER and Gordon Growth Model.
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Leader Universal Hldgs

Two Pronged Strategy Ahead
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LUH MK 436.46 290.25 0.85 | 0.36 4867.99 0.10 0.82 2.12 1.05 1.61 0.85
INVESTMENT MERITS
Market leader of wire and cable industry Implementation of the 9MP and possible undersea cable project to boost domestic demand for wire and cable products On-going product development and aggressive marketing to further boosts export Existing power plant expects to contribute a stable earning with projected NPV @ RM142.1m 2 new IPP with 200MW each look promising but huge earnings potential yet to factor in, hence potential a re-rating

Zun Holdings SB Employee Provident Fund Board 11.7 4.0
COMPANY PROFILE
Leader Universal Holdings is the investment holding company established in 1988 to facilitate a merger between Leader Cable Industry Bhd and Universal Cable (M) Bhd, two of the largest cable companies in Malaysia. The union propelled Leader Group into the largest wire and cable producer in ASEAN. The merger had reaped in benets like production capacity, manufacturing technology and product research. In 1995, Leader diversied via a JV with two Malaysian companies to develop the rst Malaysian-owned 35MW fuel oil red diesel engine Independent Power Plant (IPP) in Phnom Penh, Cambodia. With the experience and expertise accumulated, Leader is now geared up and recently won separate bids for the development of 200MW power plants each in Cambodia and Pakistan via the JV.


KEY HIGHLIGHTS
9MP a kicker to domestic cable & wire sales. Leader continues to dominate the domestic cable and wire industry. This division has shown a gradual improvement despite the lethargic construction sector via its continuous efciency improvement by introducing more value added products tailoring to industrys needs. The outlook for cable business looks positive as Leader has orders in hand worth about RM700m. The company is also upgrading and installing new manufacturing facilities to alleviate current limited capacity in certain plants as well as improve product quality. The 9MP is set to boost domestic demand for cable and wire and in particular the undersea cable project between Bakun and Peninsular Malaysia that is expected to consume substantial amount of high voltage cables. Penetrating into new export markets. Leader has established presence in more than 40 countries in Asia Pacic, South Asia, Middle East, Africa and European region. For the past 2 years, the company has been exporting 35%
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of its cable & wire products to mitigate the sluggish domestic market. With the companys continuous focus in product development and aggressive marketing strategies, we believe exports contribution is set to improve going forward. IPP a cash cow. Leader rst ventured into the IPP business in 1995 via a partnership with two other Malaysian companies to Build-Operate-Transfer (BOT) a 35MW power plant in Phnom Penh, Cambodia. Leader through 60% owned Cambodian Utilities Pte Ltd is the rst in Cambodia to have invested US$40m in a power plant which began operations in 1996. Owing to the prudent and sound management, the unit is expected to contribute a net prot circa RM22m p.a. (after MI) for the remaining period of the concession or net present value of RM142.1m. All eye on 2 new IPP. Leader is set to commit to more power plants. The Cambodian government had recently awarded Leader a contract to develop a 200MW coal-red plant just north of Sihanoukville on a 50:50 JV with Cambodia-based MKCSS Holdings. On top of that, the company has also entered into a 49:51 JV on 8 March 2007 with Gulshan Spinning Mills Ltd to jointly develop, build, own, operate and maintain a 200MW heavy fuel oil red diesel engine combined cycle power plant to be located in Gujranwala, Pakistan. We expect the combined equity contribution by Leader may exceed RM270m, hence the company is looking at nancing options and possibly to reorganize its power businesses for listing on a foreign stock exchange. Nonetheless, we take a prudent stand without factoring in any contribution from the new IPP as details remain sketchy but potential re-rating is high.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 1267.7 1602.8 2365.0 2538.2 25.6 26.4 47.6 7.3 79.9 105.8 120.9 127.6 25.4 47.0 67.1 76.0 15.2 21.9 35.3 42.6 3.5 5.0 8.1 9.8 (115.4) 44.3 61.4 20.6 0.8 0.8 0.9 1.0 0.0 0.0 1.5 2.0 0.0 0.0 2.3 3.1 19.1 13.3 8.2 6.8 0.9 0.8 0.8 0.7 (0.41) (0.43) (0.50) (0.78)
Balance Sheet (RMm)

FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 580.1 509.3 480.0 392.7 Current Assets 599.6 705.2 770.0 958.6 Current Liabilities (425.7) (493.5) (522.9) (640.4) Others 3.4 2.0 0.0 0.0 Total 757.4 723.0 727.1 710.9 Share capital 436.5 436.5 436.5 436.5 Reserves (105.1) (99.8) (91.0) (64.8) Shareholder Fund 331.4 336.6 345.5 371.7 LT Liabilities 335.0 290.8 273.6 220.5 Others 91.0 95.6 108.0 118.8 Total 757.4 723.0 727.1 710.9 Gross Debt 284.5 287.1 282.8 361.9 Net Cash/ (Debt) (186.4) (179.2) (188.7) (217.5)
COMPANY REPORT CARD

ROE. With the excitement and catalysts ahead, we think the company may deliver a double digit ROE going forward. Management. Leaders management is set to make a comeback with a 2-pronged growth strategy on the cable & wire and IPP businesses, hence prospect is bright. Dividend. The company has rewarded its shareholders with a 1.5 sen dividend payout in FY06. We estimate a satisfactory dividend yield of 3.1% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 35.1 54.4 72.7 7.1 (3.7) (0.0) (33.5) (63.7) (20.6) 8.7 (13.0) 52.0 98.1 107.2 94.2 0.3 0.0 (1.8) 107.2 94.2 144.3
RECOMMENDATION
Given the exciting developments ahead, we rate Leader a BUY with a 12month target price tagged at RM0.80 or 20.4% upside. The fair value is derived from a sum of part valuation methodology. Couple with the dividend yield of 3.1% for FY07, the stock may potentially deliver a 12-month total return of 23.5%.
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Leweko Resources
Look Out For Margin Expansion
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LEWE MK 115.12 189.95 1.85 | 1.10 277.63 0.01 (0.03) 5.53 1.21 0.68 1.43
INVESTMENT MERITS
Margin expansion as more logs will be harvested from own timber concession and more premium products coming on stream this year Oil palm plantation beneting from surge in CPO prices Generous dividend payout supported by rich cash ows Downstream expansion
COMPANY PROFILE
Leweko Resources Berhad (Leweko) assumed the listing of Timbermaster Industries Bhd on the 2nd Board after a major corporate exercise. Leweko was subsequently transferred to the Main Board in early 2005. The company holds about 5,000 acres of timber concession and is backed by a long-term contractual agreement to purchase logs from third partys concession of another 5,500 acres. The company has four divisions, namely logging, sawntimber, moulded timber and fresh fruit bunches (FFB). Each timber sub-segment contributes about one third of the total timber revenue while FFB makes up <10% of total annual turnover. The company is fundamentally sound with stable cash ows and low net gearing level. Furthermore, all its products have obtained certications which allow the company to easily penetrate overseas markets with high wood quality requirements.

Dato Leong Wei Kong Abd Aziz bin Jantan Koperasi Permodalan Felda Bhd 27.7 23.2 13.0


KEY HIGHLIGHTS
Margin expansion. We are likely to see margin expansion for the next two years, driven mainly by two aspects: (i) more logs will be harvested from own timber concession area for downstream activities and (ii) higher volume of premium products coming on stream. The management had anticipated log prices to surge further and hence did not harvest its own forest concessions last year. By sourcing most of the logs material internally, Leweko is expected to save costs signicantly as market prices for logs are still staying high rmly. Besides, Leweko has been awarded KOMO certication last year by the EU for its nger-jointed and laminated timber, which is widely used for door and window frames. KOMO is a qualication which represents compliance with the European wood quality standards. These products command a premium pricing of >20% higher compared to the lamscants products. Given these favourable developments, we forecast PBT margin to expand by 2%pts to 21.9% for FY07. Buoyant CPO price an added bonus. The continuous hike in CPO prices is expected to lift the earnings from Lewekos FFB sales. To recall, the company owns about 1,000 ha of matured oil palm plantation in Perak. Given the
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expected CPO price of RM1,900 per mt this year (2006: RM1,500/mt) and commendable yield of 30mt/ha, the plantation division is likely to perform even better in 2007. More generous dividend payout supported by rich cash ows. We are upbeat with the managements decision to reward its shareholders. Payout rate has increased to 32% in 2006 from 11% four years ago. The company has also declared a special interim DPS of 4.5sen for FY07, slightly higher than last years level. In view of the better earnings and rich cash ows generated by the company, we project a 9sen gross DPS for FY07, which represents a decent yield of 5.5%. Potential downstream expansion. The management indicated a possibility of downstream operation acquisition in short term to increase the companys vertical integration as well as to enhance utilisation of wood resources. We believe the companys long term sustainable growth will be supported via such acquisitions. Potential targets are likely to be companies engage in moulded timber and ooring manufacturing. With Lewekos good operating cash ows and a cash balance of RM17m, the potential acquisition is likely to be funded internally.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY03 FY04 FY05 FY06f 119.3 128.5 131.9 149.8 23.1 7.8 2.6 13.6 33.7 35.8 32.8 41.8 25.8 26.6 26.2 34.7 18.9 20.2 21.7 25.3 16.4 17.5 18.9 22.0 22.8 6.6 7.8 16.5 1.32 1.43 1.57 1.73 6.0 7.8 8.3 9.0 4.3 5.6 6.0 6.5 10.1 9.5 8.8 7.5 1.0 1.0 0.9 0.8 0.0 0.0 0.1 0.1
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 112.1 60.1 (12.2) 0.0 160.1 115.1 22.2 139.1 21.0 0.0 160.1 4.5 (3.9) FY04 107.5 78.2 (13.9) 0.0 171.8 115.1 20.7 152.4 19.4 0.0 171.8 4.2 1.0 FY05 98.1 94.2 (9.4) 0.0 182.9 115.1 19.1 165.0 17.9 0.0 182.9 5.5 5.3 FY06 106.3 101.8 (9.7) 0.0 198.4 115.1 4.9 182.9 15.5 0.0 198.4 5.7 11.4
COMPANY REPORT CARD

ROE. The average ROE achieved by Leweko over the past four years is about 12.5%. This is comparable to some big timber players in Sarawak. We expect ROE to rise steadily going forward, driven by better earnings from premium products. Management. The company is currently under the management of two directors, Dato Leong Wei Kong (MD) and Abd Aziz bin Jantan (ED). Datos Leong, who is also the founder of the company, has >30 years of experience in the timber industry. Meanwhile, Abd Aziz, who started the oil palm plantation in 1988, is responsible for the companys upstream activities particularly in timber harvesting. Dividend. We expect the company to pay 9sen gross DPS for 2007, of which 4.5sen has been declared in 1Q07. This translates into a decent yield of 5.5%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 11.8 (1.4) (4.0) 6.4 (1.2) 0.0 5.1 FY05 FY06 12.6 15.7 (0.8) (1.9) (6.2) (7.5) 5.5 6.3 5.1 10.8 0.0 0.0 10.7 17.1
RECOMMENDATION
We have a Buy rating for Leweko with a fair value of RM2.05. We value the company using its average PE of 9.3x over the last three years, based on our FY07 EPS estimate. Our fair value suggests an upside of 24%. We like the company for its sound fundamentals, good cash ows, steady earnings and sustainable long term growth.
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LNG Resources
New Capacity to Drive Growth
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LNGR MK 160.68 51.42 0.39 | 0.27 1116.37 0.02 (0.30) 6.78 2.26 0.78 1.44
INVESTMENT MERITS
New plant can increase annual capacity by 20% every year Have been protable since 1998 Dividend policy of at least 50% payout ratio Customer base are MNCs Riding on growing demand of micro connectors
COMPANY PROFILE
Incorporated in 1994, LNG Resources started as a simple tooling business and has since grown to become a one-stop precision engineering services provider. The company is principally involved in two core business, namely manufacturing of precision engineering components and manufacturing of precision injection moulded components. The products manufactured by the company are components used in the connector (75%) and semiconductor (25%) industries. LNG Resources customers are mainly MNCs located in Malaysia and overseas. It is the only Malaysian supplier providing manufacturing services for the design and fabrication of ne pitch connector moulds for Tyco, Hirose, FCI and Taiko Electronics, who are among the top 10 connector manufacturers in the world. For the precision engineering, accuracy of the companys manufacturing tolerance can be less than 3 microns.

Low Chee Thean Low Chee Thean Pahamin Ab Rajab 11.3 6.6 5.4


KEY HIGHLIGHTS
Focusing on connectors industry. According to industry research, worldwide sales of connector could increase by 12.6% in 2006, making four consecutive years of growth. For 2007, the sales are expected to increase by another 8%. Demand of connectors from various market sectors such as computers, medical, consumer electronics and mobile wireless is expected to remain strong. LNG Resources has been focusing on the connectors industry and revenue has increased steadily over the years, up by CAGR of 37% from 2001 to 2005. The company believes the demand for connectors is less cyclical compared to semiconductors. In addition, unlike semiconductors, connectors are used in a wider range of products. Repeating orders from existing customers. The bulk of LNG Resources revenue is derived from the MNCs, with their headquarters located in Japan, Europe and U.S. Most of the key MNCs customers have more than 5 years of business relationship with the company. With the companys technical capabilities in manufacturing precision moulds, dies and toolings components for small form factors, LNG is poised to continue to benet from the increase in global trend of consumer product miniaturization. These products command higher margins.
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Expanding manufacturing capacity. LNG Resources new plant, which costs RM6.7m, is scheduled to start operation by 3Q07. With a production oor size of approximately 120,000 sq ft, the factory would increase the companys annual capacity by 20% for the next 4 years. The expansion of manufacturing capacity is in-line with the companys strategy to secure more downstream production services and to be an integrated one-stop manufacturing services strategy. In 2006, LNG Resources has purchased 7 units of new plastic injection moulding machines costing about RM1.6m, which will enable mass production to cope with large volume requirements of its clients. Continuous R&D. LNG Resources will continue to work towards improving precision mould, die and tooling designs to achieve longer span, higher productivity and lower tooling maintenance cost. The company will also focus on manufacturing higher precision connector moulds, toolings and parts for its customers. This would enable the company to move the connector value chain and command higher margin.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 20.2 20.7 33.0 2.5 8.5 8.1 5.3 5.5 4.8 4.6 3.2 2.9 (29.0) (9.7) 0.15 0.14 2.8 2.8 8.7 8.8 10.0 11.1 2.1 2.2 0.0 0.1 FY06 FY07f 27.8 35.0 34.2 26.1 9.1 11.4 7.2 8.9 4.1 4.8 40.8 16.9 0.19 0.20 2.8 3.6 8.7 11.3 7.9 6.7 1.7 1.6 0.1 0.1
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 9.7 11.5 12.2 14.4 (1.9) (2.3) 0.0 0.0 20.0 23.6 9.1 15.0 9.9 7.6 19.0 22.7 0.8 0.9 0.0 0.0 19.9 23.6 0.7 0.3 5.0 7.0 FY05 FY06 11.8 20.3 19.7 27.7 (5.4) (13.0) 0.0 0.0 26.1 35.0 16.1 17.6 8.8 15.8 24.8 33.4 1.2 1.6 0.0 0.0 26.1 35.0 0.2 0.8 11.5 17.2
COMPANY REPORT CARD

ROE. With improving earnings outlook, LNG Resource ROE should be able to improve from 21% in FY03 to 25% in FY07. Management. Low Chee Thean, the Managing Director of LNG Resources, is the key person of the company. He founded LNG Resources and has more than 20 years of precision engineering experience in the mould and die industry. He leads the company in areas of strategic planning, business development and new ventures. His sound technical background has taken the company to the forefront of the precision engineering industry. Dividend. LNG Resources dividend policy states that a minimum of 50% of its net prot will be distributed to its shareholders.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 7.9 (4.1) (1.6) 2.2 5.0 0.0 7.2 FY05 FY06 7.8 9.0 (2.5) (3.3) (0.9) 0.6 4.4 6.3 7.2 11.7 0.0 0.0 11.7 17.9
RECOMMENDATION
LNG Resources is a company with stable growth. The company has been protable since 1998. FY07 PER of 6.7x is undemanding despite the forecasted FY07 EPS growth of 17%. We believe its current FY07 PER is below its fair value, although manufacturing based companies listed on MESDAQ tend to trade at a lower PER. LNG Resources is worth RM0.38, derived from pegging a fair FY07 EPS against MESDAQs FY07 PER of 8x.
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Loh & Loh

Moving on Up
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LLHL MK 68.00 158.44 2.50 | 1.52 10.89 0.33 (0.22) 3.04 1.08 0.42 2.24
INVESTMENT MERITS
The leader in dam construction, after securing and completed more than 50% of dam projects in the last decade The company is involved in the construction of some of the high prole works in recent years, most notably in the Sungai Selangor Water project (SSP1-SSP3) Civil construction gaining prominence, mainly in road works, railways and building Strong order book, at about RM600m with an annual replenishment at around RM300m Earnings improvement with 26% upside in earnings for FY07 and target price at RM3.15 at 12x earnings

Vital Achievement Sdn Bhd SP Setia Bhd 46.0 22.0

Month 1m 3m 6m 12m Absolute 0.87 16.00 20.21 51.96 Relative (2.79) 2.43 (6.32) 13.96
COMPANY PROFILE
The company was founded by the late P.L. Loh in 1965 and is now being managed by the sons, Mr. Loh Kim Tai and Mr. Loh kim Kah. The company is a water construction specialist where 60% of the groups earnings are derived from the water construction business, especially in dams, water treatment plants, reservoirs and sewerage. In addition the company is involved in waste water and pipeline for water supply network. The group is making inroads in to the civil construction with projects involving construction of bridges and buildings as well laying railway track for KTM and Rawang-Ipoh Double Tracking rail project.

KEY HIGHLIGHTS
The leader in dam construction. Loh & Loh has successfully secured and completed more than 50% of dam projects in the last decade and has pioneered the construction of Roller Compacted Concrete (RCC) Dam in Ipoh in 2003. Amongst its project are Putrajaya Dam, Gemencheh Dam and Kinta Dam. The company is also involved in the water pipeline and sewerage, via subsidiary, Water Engineering Technology Sdn Bhd (WET). Water treatment plant is up and rising. In recent years, the company has been involved in the construction of some of the high prole works, notably the SSP3 Rasa treatment plant (JV with George Kent (M) Bhd) for RM367m, and SSP2 Bukit Badong treatment plant at a cast of RM144m. To date, the company carried out works on over 30 water treatment plants nationwide with a combined capacity of 3,731mld or 30% of Peninsular Malaysias water supply. Internationally, the company has completed the Port Moresby Water Treatment Plant with a capacity of 184mld for RM32m in 2001.
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Civil construction gaining prominence. The main area of works concentrated mainly in road works, railways and building. The company has involved in the construction of the dual carriage vehicular bridge on Penang island, Penang Trafc Dispersal Scheme and building of bridges and laying the tracks for the Rawang-Ipoh Electried Double Tracking rail project. Strong order book. The outstanding order book now stands at about RM600m with an annual replenishment at around RM300m. Order book consists of mixture of water and civil works. So far, the company has put up tenders for jobs worth about RM700m. Open tenders success rate is expected to be between 10% and 15%. Looking forward to the 9MP projects. Water sector is one of the prime beneciary of the 9MP with allocation exceeding RM18b. The most notable is the Pahang-Selangor Interstate Raw Water Transfer project estimated to cost between RM3b and RM4n, and the construction of the Langat 2 treatment plant to the tune of RM4b. Given its track record and specialty, we are optimistic that the company would be able to participate in these projects. We also look forward to the construction of the North-South Double Tracking rail project, of which the company was involved in the laying of tracks for the recently completed Rawang-Ipoh stretch. Earnings improvement. We are anticipating a 26% upside in earnings for FY07, driven by the ongoing projects from the RM600m order book as well as its newly launched property project in Melawati at a GDV of RM80m. Upside could be capped should the price of raw materials i.e. steel and cement appreciated higher than expectation.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 140.4 138.4 214.5 278.9 (15.9) (1.4) 55.0 30.0 15.1 8.6 15.6 19.9 15.1 8.6 15.6 19.9 10.0 5.3 12.6 15.9 14.7 7.8 18.5 23.4 (13.7) (46.9) 137.9 26.0 2.22 2.24 2.38 2.55 8.0 8.0 8.0 8.0 3.4 3.4 3.4 3.4 15.9 29.9 12.6 10.0 1.05 1.04 0.98 0.91 48.6 28.1 0.1 0.1
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 76.3 121.9 (49.0) 149.2 68.0 76.8 144.8 4.4 149.2 56.4 FY04 63.5 135.1 (43.4) 155.2 68.0 82.8 150.8 4.4 155.2 48.6 FY05 80.5 131.5 (54.8) 157.2 68.0 84.2 152.2 5.0 157.2 28.1 FY06 89.6 162.8 (82.5) 169.9 68.0 94.0 162.0 6.5 168.5 56.0
COMPANY REPORT CARD

ROE. The company is averaging ROE of 6.2% since 2003. Management. The business has been with the Loh family since its inception in 1966 and looking the recent performance, it seems that the company is in good hands. Dividend. The company has a good dividend track record paying 8 sen per share and we expect the trend to prevail.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (14.4) 4.8 39.1 11.5 (20.7) (4.3) (4.9) (4.6) (5.4) (7.9) (20.5) 29.4 56.4 48.6 28.1 48.6 28.1 57.4
RECOMMENDATION
We are estimating a 26% growth to bottomline on expectation of higher billings from completed projects and full steaming of water works in Sandakan, Sabah and in Telibong, Sabah that carried a combined value of RM440m. Target price is at RM3.15, based on 12x FY07 earnings.
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London Biscuits
Pioneer in Long Shelf Life Cakes
Consumer Food
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LBB MK 72.43 122.41 2.03 | 1.50 148.33 (0.03) 0.80 1.42 1.08 0.86 1.56
INVESTMENT MERITS
No 1 cake maker in Malaysia Production capacity increased through acquisition and new production line Earnings going forward expected to grow by 13% per annum over next 3 years Decent dividend yield of over 7% Current share price has potential upside of about 45%

Liew Family EPF 51.3 13.0
COMPANY PROFILE
London Biscuits Berhad Group (LBBG) was founded in 1981; operating as a small scale producer, the companys main business was manufacturing corn-based snacks from a rented factory premises in Tampoi, Johor. It was acquired by the Liew Family in 1994 and was listed on the Second Board of Bursa Malaysia in January 2002 and transferred into main board in September 2003. LBBG is principally involved in manufacturing and marketing cakes, corn snacks and assorted confectionary selling in Malaysia and 65 other markets worldwide. Its main overseas markets are China, Hong Kong, Macau, Indonesia, Singapore, Taiwan, Thailand, Vietnam and the Middle East.


GROWTH CATALYSTS
Increase in production capacity. Products are categorised into 6 main types i.e. cakes, corn snacks, chocolate confectionary, chocolate toys, wafer rolls and jelly. Underpinned by strong export sales, LBBG has expanded its cake division by 25% from 1.36m cartons to 1.71m cartons (ctn). The cake division is the major revenue contributor of LBBG with more than 50% of total sales. A new line, which has a production capacity of 270,000 ctn per annum, is targeted to commence operation in 4QFY06. The company expects monthly contribution of RM1.5m in revenue upon full production. Acquisition of Kinos Food Industries. LBBG acquired a 77% stake in Kinos Food Industries S/B (Kinos) in May 2005 and this was later increased to 95.5%. Kinos is mainly involved in the manufacturing of cake, corn snacks, chocolate confectionary and chocolate with toys. The acquisition has offered LBBG a great opportunity to increase its production capacity without huge capital expenditure. Since the take over of Kinos, LBBG has rationalised its efciency by increasing its production capacity from 23% to 50% in FY06.
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Wide distribution channel. Currently, LBBGs products are sold to 60 countries and 90 customers through 320 distributors. LBBG is currently focusing on improving product coverage in its existing export markets and plans to increase its presence in the more developed countries such as US and Europe. Product innovation. LBBG has been consistently developing new products to expand its income base. The products use various brand names as a form of commercial protection and as part of its overall branding strategy. Brand names such as Lonbisco and Bin Bin have been bolstered by the addition of Kinos, which boasts the proprietary rights to noted pioneering products such as the Hiro cake, the rst domestically produced individually packaged cake and Sumi Jelly, which is thought by many consumers to be synonymous to jelly. Other noted brands include Ding Dang, Tora, Popo and Mizu. In addition, LBBG has embarked on a more aggressive local branding exercise such as appointing Erra Fazira as its local ambassador and sponsorship of various cartoon programmes such as Pokemon & Detective Conan, Doraemon and Disney cartoons.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 82.0 107.7 122.2 137.3 25.1 31.5 13.4 12.4 28.8 34.2 38.0 40.4 14.5 18.6 0.0 0.0 11.5 14.2 15.7 17.7 16.2 20.0 22.2 24.9 21.2 23.5 10.9 12.5 1.39 1.56 1.69 1.84 15.0 13.0 13.0 14.0 8.9 7.7 7.7 8.3 10.4 8.5 7.6 6.8 1.2 1.1 1.0 0.9 (1.1) (1.3) (1.1) (0.9)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 79.6 49.4 (47.1) 0.0 82.0 47.2 23.3 70.5 11.5 0.0 82.0 39.5 (29.3) FY04 104.1 85.4 (40.1) 0.0 149.4 68.2 24.8 93.0 56.4 0.0 149.4 78.3 (25.9) FY05 162.0 69.3 (65.9) 0.0 165.4 69.3 32.9 102.2 60.3 2.9 165.4 99.5 (81.0) FY06 183.6 71.3 (67.7) 0.0 187.2 71.0 41.9 113.0 72.9 1.4 187.2 108.5 (91.2)
COMPANY REPORT CARD

ROE. For the past 3 years, ROE ranged between 11% and 13%. Going forward, we expect ROE to range between 13% and 15% for the next 3 years. Management. The Executive Chairman and the Managing Director, Dato Liew Kuek Hin and Dato Liew Yew Chung, have been the driving force behind LBBGs growth and expansion over the past 12 years, assisted by a handpicked management team. Successes such as diversifying into value added products, automating processes to improve product quality and standards and the acquisition of Kinos has positioned LBBG well for its continual growth. Dividend. LBBG paid a dividend of 13 sen per share in FY06 translating into a yield of 7.7%. We expect the same payout in FY07.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 18.2 (4.9) 28.0 (24.6) (44.8) (19.7) 48.9 14.1 (9.6) 42.4 (35.5) (1.4) 10.0 52.4 16.8 0.0 0.0 0.0 52.4 16.8 15.5
RECOMMENDATION
By using the composite of 10x PER and P/BV of 1.3x over FY08 EPS of 24.9 sen and BV of RM1.87/share, we arrived at a fair value of RM2.46. Given the potential 45% upside, we recommend LBBG as a BUY.
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LTKM
Consumer Food
The Largest Single Layer Farm In Malaysia

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) LTKM MK 40.99 43.86 1.29 | 0.98 18.30 0.02 0.14 2.66 2.30 0.43 2.04
INVESTMENT MERITS
Largest single layer farm player with production capacity of 1.2m eggs per day Stabilised egg price ensures prot stability Decent dividend yield of 6.6% Trading at an undemanding P/BV of 0.5x for FY07 Current share price has potential upside of about 16%
COMPANY PROFILE
LTKM was listed on the Second Board in March 2000. The Company is one of the leading chicken egg producers in Malaysia with more than 21 years of track record. The company currently produces 1.2m high quality farm fresh brown hen eggs and specialty eggs with more Omega-3 and Vitamin E (LTKOmegaPlus) everyday for supply throughout Malaysia and Singapore.

Ladang Ternakan Kelang SB 56.80

Month 1m 3m 6m 12m Absolute 0.95 0.95 (8.62) 2.97 Relative (1.94) (10.15) (28.22) (28.78)
KEY HIGHLIGHTS
Production to increase gradually. With a 400-acre piece of land located at the Durian Tunggal District, Malacca, LTKMs farm presently accommodates more than 1.5m birds housed in semi-automated as well as fully automated cages. In addition, also located in the farm are a 5,000MT (per month) capacity feed mill plant, 2 egg-grading houses (equipped with Modern grading machines), dung house, 10 fertilizer processing plants and an ofce block. Production of eggs has been increased from 1.1m per day in the previous year to 1.2m per day currently. With ample land space, LTKM shall be able to increase its production output. However, the company plans to increase this gradually. Stable egg price. Egg prices averaged at about 20 sen in FY07 (April 2006-March 2007) and compared to the previous year of more than 22 sen. With the strong egg price in the beginning of the year, we expect egg price should be able to average at 21 sen for FY08. Currently, the industry is facing consolidation and we expect this should be benecial for larger farms such as LTKM.

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Support from MARDI. Besides regular farm fresh eggs, LTKM has entered into a technology licensing agreement with Marditech Corporation S/B, the commercial arm of MARDI for the production of Omega-3 eggs. MARDI is regularly doing R&D to improve the quality of the eggs. Allocation in agriculture sector under 9th Malaysia Plan (9MP). The Prime Minister has always stressed the importance of agriculture as the third engine of growth for the Malaysian economy (incentives accorded under Budget 2006). Efforts will be undertaken to increase utilisation of production particularly poultry and eggs. R&D will be concentrated on generating high yields and breeds; pest and disease control; post-harvest handling and mechanisation. The government has allocated about RM519.8m to develop this sector under the 9MP (RM202.8m in 8MP)

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS Growth (%) NTA/Share Div (Gross) Div (Yield) PER P/NTA Net Cash/ Share FY05 FY06 FY07f FY08f 76.3 89.7 87.6 95.8 9.4 7.2 17.5 (2.3) 10.4 23.1 12.2 13.3 5.5 16.8 6.4 7.3 4.8 14.9 5.5 6.2 12.0 37.1 13.6 15.5 (33.7) 209.6 (63.3) 13.9 1.76 2.09 2.17 2.28 6.0 7.0 7.0 7.0 5.6 6.5 6.5 6.5 8.9 2.9 7.9 6.9 0.6 0.5 0.5 0.5 (0.1) (0.0) 0.1 0.2
COMPANY REPORT CARD

ROE. We expect LTKM to register an ROE between 6% and 7% for FY07 and FY08. Management. Tight control in operations and prudent nancial management has enabled the company to remain protable despite the SARS outbreak in 2003 and 2004. LTKM is also focused on improving its operational systems and production at its farm. There are no plans to diversify into other areas of business. Dividend. The Company has no xed dividend policy. For FY06, LTKM paid an interim dividend of 3 sen dividend per share. We expect the company to pay a 7 sen nal dividend for FY06 which translates into a gross yield of about 6.5%.
Balance Sheet (RMm)

FYE 31 Mar FY03 FY04 FY05 FY06 Fixed Assets 57.2 64.0 71.3 80.0 Current Assets 23.0 27.8 23.7 38.0 (14.6) (16.2) (14.2) (16.6) Current Liabilities Others 1.0 1.0 1.3 0.3 Total 66.6 76.6 82.1 101.7 Share capital 40.1 40.1 40.1 41.0 Reserves 18.8 24.5 30.6 42.7 Shareholder Funds 58.9 64.6 70.8 83.7 LT Liabilities 7.7 12.0 11.3 18.0 Others 0.0 0.0 0.0 0.0 Total 66.6 76.6 82.1 101.7 Gross Debt 13.6 15.5 12.5 19.2 Net Debt (9.0) (10.3) (6.0) (1.8)
RECOMMENDATION
LTKM is currently trading at an undemanding P/BV of about 0.5x. We peg a fair value of RM1.23 by applying the composite of 7x PER over FY08 EPS of 15.5 sen and P/BV of 0.5x
FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year
FY04 8.3 (10.9) 4.9 2.3 2.8 0.0 5.1
FY05 FY06 14.6 16.6 (7.9) (20.7) (5.3) 4.0 1.4 (0.0) 5.2 6.5 0.0 0.0 6.5 6.5
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Malaysian AE Models Hldgs

From Models To Machines
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MAE MK 96.44 122.47 1.42 | 0.86 839.00 0.10 0.95 1.85 0.94 1.07 1.59
INVESTMENT MERITS
A one-stop automated materials handling systems (AMHS) solution provider Huge geographic diversity with 16 marketing ofces and 3 representative ofces spread across the globe Bulging order book of over RM270m and currently tendering for more than RM700m contracts Huge potential with its presence in China and also anticipating the completion its new plant in India and Vietnam Fairly valued at a target price of RM1.62 i.e. about 30% upside

Aemnic Corp Sdn Bhd Atlantis Asia Recovery Fund Lembaga Tabung Haji 33.8 8.3 2.7
COMPANY PROFILE
Malaysia AE Models Holdings (MAE) was established in 1979, listed on the Second Board of Bursa Malaysia in 1999 and was transferred to the Main Board in 2003. MAE Group is principally involved in the provision of one-stop automated materials handling and factory automation system solutions with a wide range of products and services. Besides having ofces across Malaysia, China, Thailand, Singapore, Indonesia, India, Australia, Philippines, Denmark, Germany and Japan, the MAE Group has a total of 11 production facilities i.e. 8 in Malaysia, 2 in China and 1 in Indonesia. Currently, management is anticipating the completion of its additional production facilities in India and Vietnam as well. With such a huge marketing base, MAE has managed to attract a host of popular clients, namely, Sony, Matsushita, Sharp-Roxy, Flextronic, Acer, Samsung, Nokia, Nestle, Petronas and Lafarge Group.


KEY HIGHLIGHTS
Large contracts in hand and a strong tender book. Currently, MAE has a huge order book of about RM280m, where the projects are mainly focused in Malaysia, China and Indonesia. The Group is also tendering for approximately RM700m worth of jobs. With a historical success rate of about 35%, management is optimistic that revenue gures will continue to surge upwards for FY08, with a historical growth of more than 20%. Going forward, the demand for logistic, sortation and warehousing systems from China and bulk handling systems from Indonesia, will serve as main revenue drivers for the next 2 -3 years. High rate of recurring income. Although most jobs are contract-based, MAEs does not have a cyclical earnings trend. Aside from the constant ow of contracts secured, the Group can expect recurring income to the tune of RM80m to 85m over the next 10 years, which is for the manufacturing of equipment for the E&E industry. Besides that, MAE also enjoys recurring
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income from the provision of service and maintenance work to some of the larger contracts. This accounts for 6 8% of total revenue each year. Niche market strategy play. MAEs niche market strategy of focusing on medium-scale projects affords the Group some degree of protection from some well-established international players, namely, Siemens Diametic of Germany, Swisslog of Switzerland and Okura of Japan. However, the Group has also managed to attract larger contracts from well-known clients e.g. Sharp-Roxy and Speedline Technologies. Through its recent RM13m contract awarded by FKI Logistex of Denmark, management believes that this initial small contract will lead to other larger deals from Denmarks biggest manufacturer of AMHS in the world. As for competition from Chinas lower end producers, given MAEs position as a one-stop AMHS and factory automation systems solutions provider, it does not compete for the lower end market. Wide geographical presence and huge production capacities. Utilising its 16 global marketing and representative ofces, MAE has a diversied client base. Its current order book of RM280m comprises approximately 85% overseas contracts, mostly from USA (27%), Indonesia (16%), China (14%) and Japan (13%). Going forward, we believe focus will be on China and Indonesian markets given that more than RM300m of contracts are currently tendered from that region. Besides that, production can be increased easily without incurring large CAPEX given that most of the production facilities are only running at 50 80% capacity. Currently, the rm is anticipating the completion of its new plants at India and Vietnam, which will mainly focus on maintenance and services activities and probably manufacturing subsequently.

FYE 31 May Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 186.0 286.8 348.5 399.0 16.7 54.2 21.5 14.5 29.1 38.3 49.6 57.5 12.6 18.6 27.0 33.2 9.0 11.9 17.6 22.0 9.4 12.5 18.5 23.2 (28.2) 32.7 48.0 25.1 1.47 1.59 1.76 1.97 0.5 1.5 2.0 2.2 0.4 1.2 1.6 1.7 13.5 10.2 6.9 5.5 0.9 0.8 0.7 0.6 (1.1) (1.5) (1.4) (1.2)
Balance Sheet (RMm)

FYE 31 May Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 68.7 138.4 (64.4) 0.0 142.7 60.5 27.7 88.2 51.7 2.8 142.7 95.1 (84.4) FY04 FY05 FY06 69.3 85.7 103.3 183.5 212.1 256.1 (43.7) (45.5) (159.4) 0.0 0.0 0.0 209.1 252.3 199.9 63.4 95.1 95.1 35.8 44.3 55.7 99.2 139.4 150.9 107.7 111.0 47.0 2.2 1.9 2.1 209.1 252.3 199.9 130.5 134.5 171.8 (98.2) (102.5) (140.5)
COMPANY REPORT CARD

ROE. MAE recorded 6.4% and 7.9% ROE for FY05 and FY06 respectively. We expect ROE to improve further to 10.4% for FY07 given the huge jump in net prot expected this nancial year. Management. Datuk Dr Lim Kee Sinn is the founder and group MD of MAE. Since 1984, with his highly educated team of professionals, MAE was nurtured from a trader of automation-related parts to become a one-stop AMHS solution provider as at today. Dividend. Gross dividend yield has improved from 0.4% in FY05 to 1.2% in FY06. Going forward, we expect the management to increase gross dividend to 2.0 sen, translating into a yield of 1.6% for FY07.

FYE 31 May Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (8.5) (10.4) (13.4) (8.2) (21.1) (26.5) 41.6 31.2 39.2 24.9 (0.3) (0.7) 7.5 32.3 32.0 (0.1) (0.0) (0.1) 32.3 32.0 31.2
RECOMMENDATION
We like MAE given its wide geographical presence especially its established network in China and India. However, we are cautious that MAE may face increasing cost pressure from rising steel prices, which is one of the main raw material used. Therefore, we fairly value MAE at RM1.62, derived from a blend of 8.0x PER and 0.7x Price to Book.
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Maxtral Industry
Beneciary Of Strong Timber Prices
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MXI MK 210.10 122.91 0.69 | 0.25 1185.08 0.09 0.30 1.52 0.88 1.41 0.32
INVESTMENT MERITS
Beneciary of sustainable rm timber prices Turbine power generator to cut production costs Rubber plantation in the pipeline Venturing into property development
COMPANY PROFILE
Sabah based Maxtral Industry (Maxtral) was incorporated in Jun 2002, and was listed on the 2nd Board in Aug 2003. Maxtral does not own any timber concession, but possesses an exclusive access to a 10,000 ha of natural forest in Sabah for seven years. The agreement was entered in Dec 2003, with a purchase consideration of RM37m. The company also involves in logs trading as well as processing of veneer, plywood and moulding products. Logs trading accounts for >75% of the total annual revenue while processing of veneer and plywood constitutes 18% of the turnover. Approximately 40% of total turnover is derived from export sales. Main export markets for logs are China and Vietnam. Meanwhile, Japan, Korea, Taiwan, and the US are the main markets for plywood and veneer. Since the listing in 2003, Maxtral has achieved a remarkable growth in revenue and net earnings, with an EPS CAGR of 65%.

Platinum Digital (M) SB Lau Mei Yong / Lau mii Yong Hadrons Capital SB 53.4 5.7 1.7

Month 1m 3m 6m 12m Absolute (2.50) 17.00 88.71 129.41 Relative 2.14 2.87 51.65 67.21

KEY HIGHLIGHTS
Beneciary of sustainable rm timber prices. The timber sector is generally poised to benet from the rm timber prices going forward. Strong timber demand from both industrial and emerging countries as well as limited supply from Indonesia are the main factors keeping timber price at high levels. We expect timber prices to stay rm notwithstanding the recent surge in log and plywood prices by about 21% and 12% respectively in 2006. Turbine power generator to yield costs savings. Maxtral has spent about RM10m to build a turbine and boiler since 2006. Instead of using diesel which is more expensive, the power plant uses burnt wood waste to generate energy. The plant is expected to commence by mid-2007 and it is likely to save about RM2.4m per year. This is about 8% of EBITDA.
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Rubber plantation in pipeline. Maxtral has previously intended to venture into palm oil plantation. The company, however, switched to rubber crop as the empty land in Sabah was found to be more suitable for rubber planting. The land area measures 2,951 acres and it is expected to take about six years for the trees to mature for latex harvesting. We expect some development expenditure would be incurred, which may potentially affect margins going forward. Venturing into property development. Maxtral has recently entered into a Land Purchase Option with Grand Monarch Corp. The targeted land has an area of 2,376 sqm, located in Lorong Yap Kwan Seng, which is within walking distance to KLCC. Based on the announcement, Maxtral is planning to construct a high-end low-density condominium on the land but no timeframe and development costs were disclosed. Hence, we have not factored any earnings coming from the property development into our projections. Although the development is expected to contribute positively to the companys earnings, it will only have a short term impact. We are also discouraged to see the company diverting from its core business.

Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. Maxtral recorded decent ROEs over the last four years. ROE improved to 9.6% last year from about 3% in 2003. Management. The company is currently under the management of a Taiwanese, Mr. Chen Shou-Ren, who is the Executive Chairman, and his spouse Mdm Lau Mei Yong, the MD of the company. They are hands on to day-to-day operations. Dividend. The company has not declared any dividend since its listing in 2003. However, its stable cash ows would support dividend payments in the near future.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (33.6) 37.5 29.4 (1.0) (7.4) (5.0) 35.6 (20.3) 26.6 1.0 9.9 50.9 (1.8) (0.7) 9.2 0.0 0.0 0.0 (0.7) 9.2 60.1
RECOMMENDATION
We have a Neutral call on the stock, with a target price of RM0.58. We derive our fair value based on the stocks average PE over the past two years of 9x over our FY07 FDEPS estimate of 6.44sen. Despite the absence of strong growth catalysts, the strong timber prices coupled with potential cost savings from its own power plant should ensure sustainable earnings going forward. We are, however, taking a Neutral stance on the rubber plantation given the high commitment of resources.
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MBM Resources
Continue to Dominate
Autoparts
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MBM MK 240.31 720.94 3.22 | 2.60 196.53 0.13 (0.04) 5.24 0.66 0.70 2.71
INVESTMENT MERITS
Robust demand growth for Perodua cars especially Myvi, with growth estimated at 7% y-o-y The Daihatsu and Hino combo helped to strengthen its grip in the small truck segment Production to expand from 200,000 units p.a to 250,000 units this year Attractive dividend policy with yield estimated at 6% BUY. Undemanding valuation at 8x FY08 PER

Med-Bumikar Mara EPF Valuecap 57.8 8.3 4.4
COMPANY PROFILE
MBM Resources (MBM) is principally involved in the distribution of Perodua vehicles, as well as the assembly and sales of Daihatsu and Hino trucks. MBM is the largest independent dealer of Perodua vehicles, accounting for approximately 10% of the total Perodua sales. MBM added Hino Malaysia and Federal Auto Holdings Sdn Bhd into its dealership in 2006. The group is also involved in the manufacturing of auto related spare parts via Oriental Motor Industries (steel wheel manufacturer), Summit Venture (truck body building) and WSA (vendor for Perodua and Proton interior parts).


KEY HIGHLIGHTS
Dominating the market. Perodua has taken the ght up to Proton. It was crowned the market leader in passenger car in 2006 at 42% market share versus 32% for Proton. We expect Perodua to remain on top with Myvi set to continue the consumers top favourite for the next 2-3 years, and coupled with the introduction of a new affordable model in mid-2007. Light truck market leader. MBM also has a strong establishment in the commercial vehicle market through its 71.5% ownership in Daihatsu Malaysia and a 42% stake in Hino Malaysia. Daihatsu dominates the light truck market with a 12.1% share in the commercial vehicle segment. The expanded portfolio would enhance its position in the market especially after with the increasing competition from Chinas Dong Feng, Hicom MTB and reconditioned trucks. Production expansion. Perodua has increased its production capacity from 150k units in 2004 year to 200k units presently. Capacity is likely to be increased to 250k and up to 300k to cater for future models and in preparation for the export markets. Perodua is spending some RM300m for this expansion plan.
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New model. Perodua will launch a new car in 1H07, which would be priced between the Kancil and Myvi. Although demand is expected to be favourable, we believe Myvi would still lead the line. Regional expansion. With greater participation from Daihatsu Motor, Peroduas prospect has been alleviated to become a regional manufacturing hub in the future. Peroduas manufacturing plant in Rawang is Daihatsus largest facility outside Japan. Favourable earnings potential. Perodua will remain as the main income contributor to MBM. Perodua sales are projected to grow by about 7% owing to the success of Myvi. For the group, we forecast strong earnings growth of 9% in FY08 largely driven by higher sales volume and margin recovery at Perodua level.

FYE 31 Dec Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) FY04 FY05 FY06 FY07f 805.8 944.8 132.2 224.3 58.0 21.3 15.8 8.1 530 49 54.8 70.3 72.6 96.7 122.3 143 46.1 73.5 91.2 99.3 19.6 31 38.6 41.6 (38.6) 59.4 24.5 7.8 2.4 2.5 2.77 3.05 18.0 18.0 15.0 18.0 6.0 6.0 5.0 6.0 4.8 9.4 7.8 7.2
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 397.1 337.4 (84.6) 649.9 234.5 294.0 601.6 48.3 73.1 649.9 70.8 67.1 FY04 FY05 FY06 479.0 536.2 572.1 302.9 375.6 379.5 (99.3) (209.6) (164.7) 682.6 745.8 786.9 234.5 234.8 238.5 310.1 352.5 421.4 634.6 587.3 659.9 47.9 51.5 10.4 89.7 107.0 116.6 682.6 745.8 786.9 95.0 108.0 77.4 0.9 43.7 30.8
COMPANY REPORT CARD

ROE. ROE for the past 3 years has averaged to 11.9% and this trend is expected to prevail for FY07 onwards. The company is in net cash position but may gear-up to nance the expansion program. Management. The MD is Mr. Looi Kok Loon and has been on the Board of MBM since 2001 and appointed MD from 1 March 2006. He is highly experienced and has held several senior positions in the Ministry of International Trade and Industry (MITI) and Daihatsu (Malaysia) Sdn Bhd (DMSB). Dividend. For the past 3 years, the company has declared a minimum of 18 sen dividend per share and the company will continue to do so for the foreseeable future. At the current price, dividend yield is attractive at 6%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (4.4) 39.4 63.0 (18.2) (19.0) 34.3 (21.5) (44.2) (62.8) (44.1) (23.8) 34.5 133.2 89.1 34.5 89.1 65.3 99.8
RECOMMENDATION
We value MBM at RM3.75 per share based on 8x 3-yr average PER for the company and combining the attractive dividend yield, we rate a BUY recommendation on the stock.
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MEMS Technology
>100% FY08 EPS Growth
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MEMS MK 653.08 470.22 0.75 | 0.40 8149.71 0.21 (0.07) 21.69 0.91 1.73 0.14
INVESTMENT MERITS
The only fully integrated MEMS company listed in Asia Qualied as one of the only two suppliers to a major mobile phone manufacturer Medical and industrial related pressure sensors will continue its organic growth Increasing usage of MEMS technology is various products Building a new plant in Penang to ramp up production capacity

AKN Capital SB Lembaga Tabung Haji Ooi Boon Leong 21.2 10.0 9.2
COMPANY PROFILE
MEMS Tech is the only fully integrated MEMS (micro-electro-mechanicalsystems) company listed in Asia, providing design, development, foundry, assembly and test services. The company is setting up a MEMS Innovation Centre in Penang that is partly funded by a STAR Grant from the government. The Innovation Centre will also undertake other technological centers of excellence including MDEC and institutions of higher learning. MEMS Tech is one of the only few companies in the world with the technology and patents to produce silicon microphones. Besides thermopile arrays for infra-red cameras and the ubiquitous pressure sensors, the core of the companys strategy is to take advantage of the MEMS Cluster for the Mobile Phones, which is likely to adopt MEMS products. Other applications include RF MEMS, accelerometers, silicon receivers, silicon speakers, etc.


KEY HIGHLIGHTS
Qualied as a supplier for a major mobile phone maker. After the sterling growth from inception stage to FY04, MEMS Techs earnings growth has slowed down since FY05. Initial growth phase of the company is driven by pressure sensor business while the silicon microphone business will be the next great leap forward. Production capacity currently stands at 5m units/ month for silicon microphone. With the new plant in Penang, production capacity will increase to 10m units/month by end of 2007. Capex for the new plant is expected to be approximately US$7m and could go up to US$20m if a wafer plant is required. A fast growing MEMS industry. MEMS is currently the hottest technology niche. From their humble origins of being used in air bags inkjet printer nozzles, MEMS products are increasingly being adopted for the mass market consumer electronics today. MEMS is the technology behind micro-mirrors, accelerometers, gyroscopes, silicon microphones, lab-on-a-chip, pressure sensors, thermopile arrays and other 3-dimensional silicon applications.
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Mass migration to silicon microphones. Silicon microphone is one of the fast growing applications for the MEMS markets. Unit of shipment is expected to increase from 60m in 2005 to 350m in 2008 as cellular phone makers continue to migrate from ECM microphones to silicon microphones due to lower manufacturing costs and time, better performance as well as much smaller size. For instance, many of the newest phones by Motorola and Sony Ericsson are using silicon microphones. It is believed that all the new phones in the future, or even other small electronic gadgets, will be using the silicon microphone technology. Organic growth for pressure sensor business. Pressure sensors contributed about 90% of its FY06 revenue and this business is expected to continue its organic growth going forward. Foreign shareholding to increase further. Legg Mason has recently bought 5% stake in the company while Blackhorse Asia Master Fund has also recently increased its stake in the company to about 3.5%. Foreign shareholding in the company is currently at about 10% and is expected to increase further.

FYE 30 Jul Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 48.3 50.2 75.0 160.0 42.9 4.1 49.2 113.4 16.9 16.8 22.5 49.0 13.8 14.0 19.3 44.5 13.7 14.0 19.3 44.5 2.1 2.2 2.9 6.6 65.6 2.1 32.8 130.5 0.13 0.14 0.15 0.20 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 34.1 33.4 25.2 10.9 5.6 5.0 4.8 3.6 0.1 0.0 0.0 0.1
Balance Sheet (RMm)

FYE 30 Jul Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 26.7 23.8 30.1 51.3 13.4 73.8 73.8 59.2 (5.7) (9.0) (15.6) (7.5) 0.0 0.0 0.0 0.0 34.5 88.6 88.3 103.0 11.1 32.1 64.9 65.3 3.2 37.4 20.2 35.7 14.3 69.6 85.1 101.0 20.1 19.0 3.2 2.0 0.0 0.0 0.0 0.0 34.5 88.6 88.3 103.0 5.9 5.0 3.8 3.3 (3.4) 51.0 34.5 7.1
COMPANY REPORT CARD

ROE. As MEMS Techs FY08 net prot is expected to increase by at least 100%, ROE is estimated to improve from 17.6% in FY07 to 31.2% in FY08. Management. MEMS Tech is run by a few top-class professionals. Dato Ahmad Kabeer bin Mohamed Nagoor, the Non-Independent Non-Executive Chairman of the company, is also Executive Chairman of AKN Technology. Ooi Boon Leong, Non-Independent Non-Executive Director of MEMS Technology, is also the founder of AKN Technology. Jonathan Ross was recently appointed as the technology strategy advisor of MEMS Technology. He was previously the head of technology research at Goldman Sachs. Dividend. No dividends are expected to be paid for the next two years, as MEMS Tech is still at a growing stage. After qualifying as one of the only two suppliers of silicon microphone to a major MNC, MEMS Tech could potentially become a fast growing company.

FYE 30 Jul Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 9.2 (8.0) (3.1) (1.2) (10.0) (25.3) 46.3 0.3 (0.2) 54.4 (17.6) 21.8 2.2 56.0 38.3 (0.5) (0.1) 0.2 56.0 38.3 9.8
RECOMMENDATION
Management revealed that MEMS Tech has been qualied as one of the only two suppliers to supply silicon microphones to a MNC which sold over a hundred millions of cellular phones last year. Based on the ASP and volumes indicated to us, MEMS Tech could potentially derive approximately RM85m revenue for FY08 from this qualication. Assuming a 30% net prot margin (vs management guidance of 35%-40% gross prot margin), this business could contribute approximately RM25m to its FY08 bottom-line. Adding on top of the companys pressure sensor business, which has been contributing about 90% of its total revenue thus far, MEMS Techs FY08 EPS is expected to jump by at least 100%. We have a BUY recommendation on MEMS Tech based on FY08 PER of 16x.
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Metro Kajang Holdings

Excessively Undervalued
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MKH MK 195.10 296.55 1.75 | 0.79 154.68 0.35 0.11 2.31 0.72 1.26 2.53
INVESTMENT MERITS
Market leader for property development in Kajang Successfully diversified into niche developments outside Kajang Less volatile and better contribution from non-property development operations Unbilled sales of more than 60% of property development revenue Excessively undervalued at more than 40% below RNAV, current NTA per share double that of share price and trading at a PE of 5.4x FY07

Chen Choy & Sons Realty S/B Skim Amanah Saham Bumiputera 42.28 8.56

COMPANY PROFILE
Metro Kajang started its rst township development project in Kajang in 1979. Since then, the group has completed more than 17,000 units of mixed development properties worth more than RM1.8bn, establishing itself as a reputable and prominent property developer, especially in the Kajang area. In addition, the Group operates a hotel and two shopping complexes in Kajang town itself. The group has also effectively expanded into furniture manufacturing, trading, food processing and agro-business, providing less volatile and dependency on project- based earnings. Metro Kajang was listed on the Main Board on October 1995 and have an impressive uninterrupted prot track record since the commencement of business.

KEY HIGHLIGHTS
Exposure in niche developments. Metro Kajangs move to diversify its property developments project out of Kajang has paid off handsomely. Its Pelangi Damansara II apartments next to Bandar Utama have locked- in sales of RM95m for FY07. The group is also undertaking projects along Jalan Klang Lama (Saville Residence) and in Damansara (Pelangi Sentral) with a total GDV of RM145m. On top of these niche apartment projects, Metro Kajang is involved in a RM40m GDV of semi- detached and bungalow developments in Cheras known as Zen Park. Replicating proven success. Metro Kajang will be repeating its success formula of over 99% take-up rates on new phases in ongoing township developments of Pelangi Semenyih and Taman Bukit Mewah. As such, the agship township developments are expected to continue provide a robust ow of revenue.
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Signicant contribution from associate. Metro Kajangs JV company with Faber has just started rolling out the 100-acre Rimbunan Melati mixed development project located near Jaya Jusco Kepong. The project is poised to provide another recurring revenue stream over the next four years with an estimated total GDV of RM558m. The group is also separately developing shop ofces within the area. Steady revenue from other businesses. Non-property development proceeds have been on an upward trend, contributing 26% of total revenue in FY06. Metro Point Complex, a new shopping mall with more than 200,000 sq. ft. of tenancy area, is expected to further increase its investment income. Moreover, the group is venturing into the agro-business and has managed to turnaround its food processing division. High unbilled sales. Metro Kajang has locked- in unbilled sales of RM140m in FY06 which is equivalent to more than 60% of property development revenue in that year. The group is targeting launches of RM336m in value in FY07 and thus far achieved good take-up rates for the new launches.

FYE 30 Sep Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 276.8 (3.5) 66.3 60.2 44.3 22.7 (10.6) 1.73 4.0 2.2 6.7 0.9 0.1 FY05 FY06 FY07f 236.0 309.8 321.2 (14.8) 31.3 3.7 54.5 71.7 74.4 52.4 79.7 77.6 37.5 50.5 55.1 19.2 25.9 28.2 (15.2) 34.4 9.2 1.99 2.14 2.35 5.0 5.0 5.0 3.3 3.3 3.3 7.9 5.9 5.4 0.8 0.7 0.6 (0.0) (0.2) (0.4)
Balance Sheet (RMm)

FYE 30 Sep Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 292.2 342.2 197.0 212.5 (82.9) (106.5) 0.0 0.0 406.4 448.2 144.8 195.1 211.0 202.4 355.8 397.5 49.2 49.8 1.4 0.9 406.4 448.2 48.6 38.3 (5.8) 16.8 FY05 FY06 390.9 457.7 194.4 243.9 (66.1) (128.1) 0.0 0.0 519.3 573.5 195.1 195.1 262.8 299.6 457.9 494.7 61.3 78.8 0.0 0.0 519.3 573.5 45.4 75.4 (10.2) (44.3)
COMPANY REPORT CARD

ROE. ROE for FY05 and FY06 were 8.8x and 10.6x respectively. We see this rate being sustainable going forward. Management. The Chen family is by and large responsible for the success of the group. Managing director Datuk Chen Lok Loi has more than 25 years of experience in property development and construction and is assisted by three other brothers who are part of the Board of Directors. Dividend. Metro Kajang has a informal policy of declaring a gross dividend of 5 sen or a payout ratio of 20%, whichever is lower. We expect the continuation of 5 sen gross dividends in future as with the last two FYs.

FYE 30 Sep Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 30.3 6.9 25.7 (4.1) (24.4) (45.2) (12.8) (2.8) 9.8 13.4 (20.3) (9.8) 41.2 54.6 34.3 0.0 0.0 0.0 54.6 34.3 24.5
RECOMMENDATION
Metro Kajang is currently excessively undervalued, trading at over 40% discount to its RNAV. Current NTA per share is 2x that of its share price while FY07 PE is at 5.4x. We believe this is largely due to the low share liquidity and visibility among investors coupled with a very stable although unbroken track record. We recommend a BUY with a target price of RM1.74.
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Metrod (Malaysia)
Expanding Territory and Earnings
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MTRD MK 60.00 175.20 3.10 | 2.00 25.37 0.13 1.45 3.06 1.20 0.67 2.30
INVESTMENT MERITS
Leading player in copper wires, rods and strips Impending 9MP to boosts domestic demand for copper products Riding on investment climate for Power Transmission & Distribution in Europe and expansion of electricity grid in China Expansion in China to double its existing capacity by early FY08 Unbroken prot and dividend payout since its inception in 1981

Metdist S. A. Bank Pembangunan & Infrastruktur Msia Bhd Tieton Group Ltd 42.1 20.6 12.0
COMPANY PROFILE
Metrod (M) was founded in 1981 by the Metdist Group with core activities in the manufacturing of electrical conductivity copper wires, rods and strips from its plant in Klang, Selangor. The companys products have wide applications ranging from engineering to household appliances to electrical and communication systems as copper possesses excellent electrical conductivity, superior resistance to oxidation and corrosion, adequate mechanical strength and is environmentally friendly. In 1996, the company was listed on the Main Board of Bursa Malaysia. Metrod move on to acquire Austrian based ASTA Electrodraht GmbH in March 2004 for RM160.6m. ASTA produces high quality at copper winding wire systems for use in heavy electrical machinery, especially continuously transposed cable (CTC). In Dec 2005, the company via ASTA bought a Dutch rm Insulated Conductors and Enameled Wires N.V, for RM20.2m which had established their operation in China. Given the overwhelming respond for copper product in China, the company is gearing up to double its existing capacity by early FY08.


KEY HIGHLIGHTS
Good news from 9th Malaysia Plan soon. Metrods domestic operation has remained challenging over the past few years due to the sluggish domestic construction activities. The company is currently operating at optimum capacity on its 2 furnaces with the shutting down of 2 smaller scale furnaces to enhance efciency. Impending 9MP particularly the undersea cable project between Bakun and Peninsular Malaysia has been touted as the most anticipated catalyst to local copper players. Apart from that, Metrod acquired Metrod Flat Products SB that is set to focus on at copper products to cater for customers in the region plus a wider product range, hence improving competitiveness.
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European market remains sound. In March 2004, Metrod acquired a 100% stake in Austrian based ASTA Electrodraht GmbH and ASTA Electrodraht GmbH & Co for RM160m. ASTA produces electrical wire and components for the power industry. Its main product is CTC, which is primarily used in large power transformers and currently has a 40% market share in Europe and 20% globally. Investment climate for Power Transmission & Distribution in Europe has pushed its production facilities at full capacity. Therefore, ASTA is investing in certain equipments to alleviate capacity constraints. China spirit... In December 05, Metrod via ASTA acquired a Dutch rm, Insulated Conductors and Enameled Wires N.V which produces paper covered rectangular wires, enamelled rectangular wires and others in China. Given the sustainable expansion of the electricity grid in China under its 11th 5 year plan, China plant is now running at optimum capacity. The Chinese government has adopted an ambitious plan in expanding its electricity generation, transmission, and distribution systems across China hence Metrod is expanding its plant to double its existing capacity by early FY08. Eyeing for new markets. The Group is actively looking into further growth opportunities in various parts of the world via synergistic acquisition. On top of that, its Thailand operation which suffered losses in FY05 has returned to the black last year and is expected to stabilize going forward. Nonetheless, the viability as an independent entity remains in question coupled with political uncertainty is expected.

Balance Sheet (RMm)

FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 49.0 167.4 148.3 138.3 Current Assets 238.2 368.7 432.6 565.8 Current Liabilities (140.4) (201.5) (339.8) (409.3) Others 0.0 39.0 31.4 30.5 Total 146.9 373.6 272.4 325.3 Share capital 60.0 60.0 60.0 60.0 Reserves 83.5 100.8 109.1 134.1 Shareholder Fund 143.5 160.8 169.1 194.1 LT Liabilities 3.4 212.8 103.3 131.2 Others 0.0 0.0 0.0 0.0 Total 146.9 373.6 272.4 325.3 Gross Debt 38.0 281.7 263.3 405.2 Net Cash/ (Debt) 61.0 (186.6)(205.5) (337.1)
COMPANY REPORT CARD

ROE. Metrod continues to show consistent improvement in the ROE over the years with FY06 ROE at 17.1%. The companys policy by practicing back-toback orders has even out the impact from cyclical copper prices and together with few key catalysts ahead, we expect Metrods ROE to further improve in the coming years. Management. Management is led by Lord Bagri, an English lord who is a wellknown gure within the international copper community. With more than half a century in the copper business, Lord Bagris capability is unquestionable. Dividend. Metrod has registered an unbroken track record in rewarding shareholders by paying a generous dividend since its inception. Hence, we expect a decent dividend yield of 6.3% in FY07.

FYE 31 Dec FY04 FY05 FY06 Cash Flow from Ops (16.6) (2.0) (109.1) Cash Flow from Investing (162.5) (26.1) (15.1) Cash Flow from Financing 134.6 (6.5) 132.7 (44.5) (34.6) 8.5 Net Increase in Cash Cash at Beginning of Year 99.0 54.5 17.4 Other Changes 0.0 (2.5) 0.1 Cash at End of Year 54.5 17.4 25.9
RECOMMENDATION
Despite the prudent management and strong prot record, Metrod is still trading at very cheap 5.1x FY07 EPS. We are placing a 12-month target price of RM3.62 or 24% upside. The fair value is derived from a composition of peer PER, peer P/B, peer EV/EBITDA and Gordon Growth Model on estimated FY07 gures. Coupled with the decent dividend yield of 6.3% in FY07, the stock may potentially deliver a 12-month total return of 30.3%.
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Muhibbah Engineering (M)

Bringing Harmony to your Portfolio
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MUHI MK 149.62 792.98 5.30 | 1.15 890.35 270.0 1.11 1.10 1.08 1.33 2.14
INVESTMENT MERITS
Niche construction expertise in port expansion and oil terminals locally and abroad Healthy orderbook of RM1.4bn and bidding for contracts amounting to RM10bn Airport concessions in Cambodia to boost bottom line from increased visitor arrivals 77% 3 year CAGR to 2008 is achievable with growth from concessions and major construction contracts in Yemen and Johor Sum of parts based price target at RM5.70

Mac Ngan Boon EPF 18.2 3.5

COMPANY PROFILE
Home grown Muhibbah Engineering (Muhibbah) can be touted as a miniconglomerate with 4 key areas of interest: Construction and Engineering Specializing in construction of marine projects, civil projects, oil & gas related works, and other EPCC (Engineering, Procurement, Construction and Commissioning)/Turnkey engineering works. Cranes 58% interest in Favelle Favco, which manufactures customized heavy duty cranes for the oil & gas and high rise construction industry. Shipyard Provides shipbuilding, repairs and maintenance of oil & gas marine support vessels. Concessions Owns a 21% stake in Roadcare Sdn Bhd, a 15 year road maintenance concession in Malaysia, and holds airport concessions through 30% owned Societe Concessionaire de l Aeroport in Cambodia.

KEY HIGHLIGHTS
Oil & Gas leads the way. As of FY06, 77% of Muhibbahs orderbook consisted of contracts relating to the oil & gas industry. This is derived from the Groups expertise in construction of port and oil jetty which has been developed over the years. Some illustrious projects the Group has worked on previously include Jurong Oil Terminal in Singapore, Port of Tanjung Pelepas, and the marine facilities in Kertih. Driving earnings for the next 2-3 years will be two main recently awarded contracts which are the RM581m EPCC work for an oil jetty in Yemen, as well as RM450m worth of construction works for an oil terminal off the Port of Tanjung Pelepas. Going forward, we see that the Group could further capitalize on its presence in Yemen and the Middle East, where an estimated US$10.9bn worth of investments is needed for oil platforms and
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terminals. As for its crane manufacturing arm, 80% of its RM430m orderbook are also oil & gas related. Please refer to our write up on Favelle Favco. 9MP could add colour too. Muhibbah is a beneciary of the 9MP with its experience in bridge works. The Group is already handling piling works for the widening of the Penang bridge, building a relationship with UEM Builder. With plans for a second bridge in tow, Muhibbah have a strong chance in getting some EPCC works from UEM Builder. Visit Cambodia! Muhibbahs airport concessions alone make up 50% of the Groups earnings. Over the past 3 years, visitor arrivals by air to Cambodia have seen an astounding growth of 64% to 1.03m people. This stems from two key reasons which will continue to be growth drivers going forward. The rst is the attraction of the Angkor Wat Heritage Site, which was the destination of 57% of the visitors to Cambodia and saw more than 1.5m visitors in 2006. Secondly is the emergence of low cost carriers like Air Asia, which has improve accessibility and affordable to visit. Going forward, another airport is planned to open in Sihanoukville, touted as Cambodias answer to Langkawi or Pangkor. Sihanoukville, besides being a beach resort is also Cambodias main port and is populated with several casinos. Shipbuilding, small but brimming with potential. With the capacity for building 6 marine support vessels a year, Muhibbah now has an order book of RM191m for its shipyard in Port Klang. The Groups specialty is the construction of anchor handling tug and supply boats as well as offshore supply vessels. Besides that, Muhibbah is also a leading ship repair player in Port Klang. Going forward, Muhibbah has plans to build ships for its own use to capitalise on high charter rates for ships like AHTS. This could signicantly boost margins as ship chartering can earn gross margins in the 50% level.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 970.7 1105.6 1185.6 1343.8 (2.6) 13.9 7.2 13.3 48.1 59.6 67.2 78.6 55.4 65.0 79.7 90.2 26.1 33.8 47.1 53.8 17.4 22.6 31.5 36.0 2.7 3.1 4.0 4.0 2.19 2.53 3.09 3.71 3.0 4.0 5.0 6.0 0.6 0.8 0.9 1.1 30.4 23.5 16.8 14.7 2.4 2.1 1.7 1.4 0.4 0.7 0.7 0.7
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. Muhibbahs construction and crane businesses yield only 3-5% EBIT margins and this brings down the Groups ROE to single digit levels. Future ROEs are expected to increase above 10% as we expect more earnings contributions from the airport concessions in Cambodia. Management. Muhibbah is owned by the Mac family who has been in the engineering and construction business for more than 20 years. Dividend. Muhibbah has a dividend payout of 17% in FY06 and is expected to maintain at least a 15% payout going forward. Gross yields at this level are very low at below 1%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (2.3) 22.9 7.8 (18.7) (23.0) (19.1) (7.4) 40.1 (22.9) (28.3) 40.0 (34.2) 70.6 44.9 85.0 2.6 0.2 2.4 44.9 85.0 53.2
RECOMMENDATION
We are positive on Muhibbahs prospects given its exposure to the high growth industries like oil & gas and construction within and outside Malaysia. In addition, the airport concessions in Cambodia add a good deal to the Groups bottom line especially with a third airport to be open in late 2008. We value Muhibbah at RM5.70, based on the sum-of-parts valuation methodology.
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Mycron Steel
Bouncing Back
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) MSB MK 179.00 153.94 1.09 | 0.66 170.63 0.05 0.26 1.92 0.03 1.34 1.27
INVESTMENT MERITS
Veteran in Cold Rolled Coil (CRC) making 9MP to boosts steel demand, hence brighter prospect for Mycron Upgrading existing facilities and installing new production line to improve product quality enhance prot margin and increase capacity by 44% Moving up the value chain from its 20% stake in PMP Galavanisers SB and increasing off-take for Mycrons new capacity Possible revision on local HRC requirement, thus potential rerating for Mycron

Melewar Industrial Group Bhd Melewar Equities (BVI) Ltd 54.5 5.2

COMPANY PROFILE
Mycron Steel is the rst cold-rolled coils (CRC) manufacturer in Malaysia, having started its operations in 1990 via Cold Rolling Industry Malaysia SB which is a subsidiary of Maruichi Malaysia Steel Tube Bhd. In 2002, Melewar Group emerged as a major shareholder of Maruichi and renamed it to Melewar Industrial Group a year later. In June 2004, Melewar oated its CRC manufacturing subsidiary on the Main Board of Bursa Malaysia as Mycron Steel. The company is a manufacturer of CRC steel sheets, which are primarily used for making steel pipes and tubes, drums, furniture, components for home electrical appliances, and automobile parts. Presently, Mycron has a 35% share in local CRC market.

KEY HIGHLIGHTS
9th Malaysia Plan to lift steel demand. We are hopeful on the implementation of the 9MP. The announcement of the 2007 Budget saw a 31% increase y-o-y in development expenditure to RM46.5bn and focusing on the development of schools, universities and housing needs. We expect a huge demand for building material that will indirectly push for higher CRC sales. New capacity in the pipeline. To further strengthen its position in high quality CRC, Mycron is upgrading its existing line and installing a new plant to expand capacity from 180,000tpy to 260,000tpy. The new plant will involve the installation of a new Combination Skinpass cum Tension-Leveling Mill, together with ancillary equipment, and a new batch of annealing furnaces expected to begin commercial operation by early CY08. Apart from that, Mycron has entered into a technical service agreement in mid of 2006 with Japanese steel producer, JFE Steel Corp to improve the production yield and quality of the companys CRC. We are supportive of the move, as the company will be able to produce higher grade cum thinner gauge CRC up to
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0.2mm that command better demand and prot margin via additional value added processes as well as economies of scale from higher output.. Synergy from horizontal integration. Mycron has made a strategic investment to acquire 20% stake in Sarawak based PMP Galvanisers SB from Multi Resources Holdings SB for RM17m. PMP is installing a RM85m steel coil galvanizing plant in Kuching with rated capacity of 150,000 tpy. PMP has signed an off-take agreement for 75,000 MT per year from Mycron as feed material for their galvanizing plant that is presently under commercial test run. We view the investment in PMP as a srategic investment since the tie-up would propel Mycron up the value chain and guarantees a buyer for its additional capacity. Relax in HRC import? At present, domestic CRC producers are required to take in 40% of local HRC from sole producer Megasteel SB. With Mycron and other CRC players have aggressively been negotiating for higher import quota from MITI, we believe the government may eventually relent and revise the policy soon given the new CRC capacity scheduled to come on-stream by end of this year. Moreover, Megasteels HRC is unable to accommodate the stringent requirements by Mycron for the newly installed higher cum thinner gauge CRC production.

FYE 30 June Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY07f^ 357.3 325.5 490.3 32.5 (8.9) 50.6 46.3 (7.5) 47.0 35.7 (15.6) 31.4 26.1 (12.2) 22.9 14.6 (6.8) 12.8 10.8 (146.7) 287.9 1.2 1.3 1.4 6.9 0.0 4.4 8.1 0.0 5.1 5.9 (12.6) 6.7 0.7 0.7 0.6 (0.20) (0.33) (0.63) FY08f 380.0 (22.5) 41.1 26.8 19.8 11.1 (13.6) 1.5 3.7 4.3 7.8 0.6 (0.76)
^ change in FYE to June resulted to 17 months a/c
Balance Sheet (RMm)

FYE 30 June Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 127.5 190.0 - 152.2 139.8 - (48.7) (81.8) 0.0 0.0 - 231.0 248.0 - 179.0 179.0 - 43.2 49.0 - 222.2 228.0 8.8 20.0 0.0 0.0 - 231.0 248.0 - 44.5 77.2 - (35.8) (58.3)
COMPANY REPORT CARD

ROE. Mycron slip into the red in FY06 following a sharp fall in steel prices worldwide and inconsistent supply of HRC by Megasteel. Nonetheless, the company is making a come back and expect to record a ROE of 9.7% for FY07 (17 months account due to change of FYE). Management. Mycron management comprises of a competent team of professionals as the main driving force of the company. Dividend. The company maintains a generous dividend policy with committed payout ratio of 25% translating to a decent dividend yield of 5.1% for FY07.

FYE 30 June Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 9.5 - (27.3) - (5.3) (22.5) - 41.2 23.2 8.7 10.2 0.0 8.7 0.0 0.0 8.7 18.9
RECOMMENDATION
Underpin by the improved market sentiments, impending new capacity and better overall product quality, we rate Mycron a BUY. We derived a 12 month target price of RM1.13 from a composition of peer PER and P/B. Coupled with the dividend yield of 4% for CY07, the stock may potentially deliver a 12 month total return of 35.3%.
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Naim Cendera Hldgs

The King of Borneo
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) NCH MK 250.00 1000.00 4.74 | 2.91 355.42 0.88 (0.23) 3.75 2.38 0.73 2.01
INVESTMENT MERITS
At the forefront of Sarawak development since Sarawak is one of the biggest beneciary under the 9MP with allocation amounting to RM15.1b Comfortable construction order book, in excess of RM3.4b Established name in Sarawak property market with 8 major property development areas in Sarawak and Sabah (total land bank of 4,700 acres) Strong earnings growth envisaged underpinned by the implementation of 9MP projects Healthy balance sheet with good dividend

Datuk Hasmi bin Hassan Datuk Abdul Hamed Sepawi 35.8 21.6

Month 1m 3m 6m 12m Absolute (6.16) 26.92 32.00 30.37 Relative (9.05) 12.72 3.46 (7.07)
COMPANY PROFILE
Naim Cendera Holdings Berhad is a company listed on the Main Board of Bursa Malaysia Berhad. The Companys 100% owned subsidiary, Naim Cendera Sdn Bhd (NCSB), is primarily involved in property development and construction. NCSB was formed on 12 April 1993 and has been active in the property and construction elds since September 1995. It focuses on two principal areas: integrated property developments combining residential, commercial and industrial properties with infrastructure and public amenities; and contracting of construction, civil engineering and infrastructure projects.

4.80 4.30 3.80 3.30 2.80 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
At the forefront of Sarawak development. Sarawak is one of the biggest beneciary under the 9MP with allocation amounting to RM15.1b. Being a dominant player in the state, we believed that Naim would the key beneciary from the increased development spending in the state. Strong construction order book. The companys outstanding order book is in excess of RM3.4b with the latest project secured is the RM1.3b ood mitigation project in Kuching. This project is still in early planning stage with construction scheduled to start in late 07. Other projects in hand are housing construction works from Syarikat Perumahan Negara amounting to RM70m, Pasukan Gerak Khas Batu Kawa at RM300m, Dewan Undangan Negeri at RM130m, upgrading of Kuching/Sibu road at RM150m, Phase 2 of Institut Latihan Peruindustrian Miri at RM33m, MRSM, Mukah RM48m, and Pengoh Dam at RM230m
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Having a rm footing in Sarawak property market. The company has 5 on-going property development projects in Sarawak, occupying a total landbank of more than 3,600 acres, which should last for the next 10 years. The undeveloped landbank is about 3,700 acres. Naim controls about 40% of the Sarawak housing market. Expecting more goodies. The development in Sarawak under 9MP has only just began with the most prominent is the RM1.3b ood mitigation project, while others are various road upgrading works. We strongly believe that there will be more announcements on projects in Sarawak given the sizeable allocation under the 9MP in the near future. A new project the group is bidding is the Sabah-Sarawak gas pipeline project. Strong earnings growth envisaged. We expect a much stronger earnings momentum going forward, underpinned by the recent projects awarded as well as strong order book replenishment estimated at RM1.0b/year. Against the backdrop, we are estimating its earnings to post a 27% growth for FY07 and 9% growth for FY08. Healthy balance sheet with good dividend prospect. The company is in a net cash position at RM120.3m, raising the expectation of potential higher dividend in the pipeline. In FY06, the company has proposed a gross dividend amounting to 15 sen/share and this translates to an attractive 3.75% yield. We anticipate a higher payout this year at a gross dividend at 17 sen/share.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 333.8 23.2 104.9 113.5 69.3 27.7 43.0 1.58 9.0 2.3 14.4 2.53 0.5 FY05 423.1 26.7 121.5 123.1 79.1 31.7 14.2 1.84 12.0 3.0 12.6 2.17 0.5 FY06 530.5 25.4 104.1 108.5 67.3 26.9 (15.0) 1.96 15.0 3.8 14.9 2.04 0.5 FY07f 600.2 13.1 106.5 101.0 92.1 36.9 36.9 2.16 17.0 4.3 10.9 1.86 0.5
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 290.4 306.7 191.4 201.8 289.9 365.3 518.9 597.1 (92.1) (141.2) (152.1) (210.3) 488.2 530.8 558.2 588.6 250.0 250.0 250.0 250.0 102.2 143.9 245.5 279.2 352.2 393.9 459.5 529.2 135.9 137.2 98.7 97.7 488.2 530.8 558.2 588.6 2.2 0.8 0.2 1.7 126.0 125.5 133.7 120.3
COMPANY REPORT CARD

ROE. In the past three years, the company managed to maintain ROE at an average of 16.5%. Management. The group is run by Dato Hasmi Hasnan who has 30 years experience in property development and construction. Dividend. We are estimating a DPS at 17 sen/share with a yield of 4.3%.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 37.6 55.6 38.6 (9.6) (6.2) (8.1) (30.2) (42.5) (42.5) (2.2) 6.8 (11.9) 124.6 122.3 131.8 122.3 129.1 119.9
RECOMMENDATION
We value the stock using the sum-of-parts method to arrive at a target price of RM6.15/share. At that target price, the implied PER would be at 13.3x FY08 earnings, which is still a discount to the sectoral average.
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New Hoong Fatt

Providing Auto Body Parts Solutions
Autoparts
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) NHF MK 75.16 151.06 2.30 | 1.63 67.51 0.14 0.34 2.85 1.22 1.01 1.80
INVESTMENT MERITS
A niche player in the auto body parts replacement market with a diverse range of product portfolio consisting of over 1,000 product types Growth driven by growing number of cars on the road Well managed operations with an eye on cost factors to ensure margin stability and expansion Trading at forward PER of 6.3x for FY07 earnings Decent dividend yield of 7.0%

Kam Lang Fatt @ Kim Leng Fatt Wong Ah Moy Kam Foong Keng 29.6 13.5 5.0
COMPANY PROFILE
New Hoong Fatt Holdings (NHF) is a dominant auto body parts maker for the replacement market in Malaysia with an extensive product portfolio ranging from metal body parts like hoods and doors to plastic parts such as lamps, bumpers and grilles. To complement its in-house product range and to ease buyers effort in shopping for the right products, NHF imports about 7,000 components globally. Being in the replacement market, which is less competitive and coupled with its distinctive edge as the sole Malaysian replacement steel auto components maker, NHF has registered a commendable track record with an annual prot growth of 12% over the past 3 years.


KEY HIGHLIGHTS
As NHF intends to remain focused on the replacement market, the key drivers ahead would hinge on its strategies deployed to spur growth. Domestic market. NHFs main driver is the number of passenger vehicles registration as well as the auto accident rate in Malaysia. For the registration rate, it was growing commendably at a CAGR of 9.9% from 1992 to 2002. This upward trend has hit circa 7m in 2006 on the back of improving economic outlook and increased middle income earners which would result in higher demand for cars. Meanwhile, the accident rate hit 341,232 in 2006 or about 5% of total vehicles on the road and the amount is increasing every year. These factors will drive the future growth of demand for NHFs products on the domestic front with a customer base of over 500.
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Export. Given the fast growing auto industry in the ASEAN region coupled with the liberalisation of AFTA, the ASEAN market offers a huge potential for NHF. Hence, NHF plans to capitalise on this by further expanding its regional market presence especially in Thailand, the fastest growing auto market in ASEAN, followed by Indonesia and the Philippines. Currently, 21% of export sales go to ASEAN. Meanwhile the Middle East and South Africa are growing strongly and with export sales of 28% and 19% respectively. Running more efcient. NHF adopted various measures to keep production costs low. This includes the use of self-produced metal moulds (30% cheaper than that of ready-made); emphasis on the Kaizen principle to improve efciencies; centralised warehouse and computerised logistic systems; and stringent quality control procedures to reduce the defective rate. The rising production volume leading to greater economies of scale has also boosted efciency levels.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 146.6 154.2 156.9 164.3 15.3 13.5 17.1 14.2 39.2 36.0 41.7 44.2 27.9 25.1 30.7 27.4 22.5 20.8 26.9 23.3 29.9 27.7 35.8 30.9 42.5 (7.6) 29.4 (13.5) 1.60 1.83 2.10 2.30 8.0 11.0 14.0 14.0 4.0 5.5 7.0 7.0 6.7 7.2 5.6 6.5 1.3 1.1 1.0 0.9 (0.2) (0.5) (0.4) (0.2)
Balance Sheet (RMm)
COMPANY REPORT CARD

ROE. The ROE going forward is expected to hover around the 12% region. Balance sheet is healthy with low net gearing of 0.15x and strong interest coverage of 18.4x. Management. NHF is headed by the founder, Mr Kam Lang Fatt, who has extensive experience in the auto sector. The groups current and future success also depends on the senior management team, which is closely-linked to the family, who are hands-on in NHFs daily operation. Dividend. The board has declared an interim dividend of 3 sen per share and recommended a nal dividend of 11 sen per share, which totaled to 14 sen for FY06, translating into a yield of 7%.
FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 107.6 166.3 182.6 187.3 Current Assets 56.7 64.5 75.2 73.6 Current Liabilities (20.6) (43.1) (68.9) (50.7) Others 0.0 1.0 2.0 3.0 Total 143.7 188.7 190.9 213.2 Share capital 72.1 72.9 75.2 75.2 Reserves 58.3 76.1 91.6 117.2 Shareholder Funds 130.4 149.0 166.8 192.3 LT Liabilities 13.3 38.7 22.1 17.8 Others 0.0 1.0 2.0 3.0 Total 143.7 188.7 190.9 213.2 Gross Debt 5.2 36.6 46.1 40.0 Net Debt 3.5 (11.5) (36.8) (28.2)

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 29.8 31.5 42.4 (37.4) (52.2) (23.3) 3.3 25.5 (16.7) (4.2) 4.8 2.5 8.8 4.6 9.4 0.0 0.0 0.0 4.6 9.4 11.8
RECOMMENDATION
We peg a target price of RM2.39 by using the average of 8x PER over FY07 EPS of 31.1sen and P/BV of 1x. At current share price, NHF is trading at an undemanding P/NTA of 1.0x for FY06.
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NTPM Holdings
A Premier Pick
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) NTPM MK 624.00 299.52 0.51 | 0.30 721.08 11.0 0.35 3.63 2.00 0.87 0.23
INVESTMENT MERITS
Malaysias biggest tissue paper manufacturer with a market share of >50% EBITDA margins have strengthened to the >20% level from 18% before due to economies of scale, and reduced cost of raw materials Output is expected to increase as utilization on machinery improves and this will drive topline growth Laudable dividend yield of 7.1% expected for FY07 Fair Value of RM0.57 offers an attractive upside of 18.8%

Lee See Jin Lee Chong Choon Teoh Teik Lin 29.3 11.5 6.0
COMPANY PROFILE
NTPM has single-handedly become Malaysias biggest tissue paper manufacturer since its inception in 1979. With well known brands like Premier, Cutie, Royal Gold, Intimate, and ConV, NTPM satises 50% of Malaysias tissue paper needs. Besides local sales, NTPM also exports its products to Singapore (20% of revenue), and several other countries within the region like Australia, Thailand, Vietnam, New Zealand and even the Mauritius. The Groups current production capacity is 250 MT of tissue products per day and its product range consists of facial tissue, toilet rolls, kitchen towels, sanitary napkins, and others like cotton balls and buds.


KEY HIGHLIGHTS
Increasing utilisation of new machinery. An additional 100MT per day of production was installed in late 2005 and this has been a growth driver for the past 9M07. However, utilization of this new machinery has not reached its peak. As of FY06, the rate was at the 55-60% level. We expect utilisation to increase to 70% over FY07 and FY08, fuelling revenue growth of at least 10-15% going forward. Achieving economies of scale. NTPM has beneted from the economies of scale with every additional metric tonne produced as utilization improves and production increases. EBITDA margins of the Group have improved to 21.8% in FY06 compared to 18.2% in FY05. We believe this to sustainable going forward, as long as there is no sudden spike in the price of pure tree pulp.
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Constantly growing demand. Demand for NTPMs products has not seen any slowdown as tissue is a consumer durable. Demand increases in tandem to standard of living as the economy grows. Furthermore, tissue usage in Malaysia is at a low 5-6 kg per annum level compared to developed countries like Singapore or the US, which stands at >10kg of consumption per capita. This indicates that there is ample growth to be seen over the years in Malaysia. Increasing use of recycled pulp. The continued usage of more recycled pulp should keep margins intact. At the moment, recycled pulp bought from local producers is estimated to cost about RM500 per MT. This is signicantly lower than virgin pulp, which costs between RM2, 000 and RM2, 300 per MT. Thus, by tweaking the ratio of virgin and recycled pulp (e.g. from 20:80 to 30:70), NTPM is able to enhance its margins.

FYE 31 April Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 216.5 237.1 275.3 302.1 7.5 9.5 16.1 9.7 43.1 46.5 57.0 61.4 26.6 25.7 38.9 43.1 21.0 20.9 31.9 35.4 3.4 3.4 5.1 5.7 (26.3) (0.4) 52.6 11.0 0.24 0.23 0.25 0.28 2.5 2.8 3.4 3.4 5.1 5.7 7.1 7.1 14.3 14.3 9.4 8.5 2.0 2.1 1.9 1.7 0.0 0.0 0.0 0.0
COMPANY REPORT CARD

ROE. ROE is anticipated to trend upwards the >20% level considering on the back of net prot growth of 10-15%. Management. The Groups MD, Mr. Lee See Jin is the founder of NTPM and has more than 26 years of experience in the paper industry. He has also roped in his son, Mr. Lee Chong Choon, to help man the fort. Dividend. NTPMs dividend payouts have been consistent at the 50-60% over the past few years. Management hopes to maintain a minimum payout of 40%.
Balance Sheet (RMm)

FYE 31 April Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 116.3 60.3 (54.8) 0.0 121.8 62.4 38.4 108.7 12.5 0.6 121.8 30.7 (24.1) FY04 141.4 67.9 (59.6) 0.0 149.8 62.4 61.0 131.2 17.9 0.7 149.8 37.1 (29.0) FY05 172.7 78.0 (87.2) 0.0 163.5 62.4 77.4 147.7 15.1 0.7 163.5 66.3 (58.3) FY06 166.5 90.8 (96.3) 0.0 161.0 62.4 71.7 142.0 18.5 0.5 161.0 61.0 (49.3)
RECOMMENDATION
NTPM has come back on investors radar given that operations have shaped up and the Group is well on its way to achieve 50% y-o-y growth in FY07 due to the increase in capacity as well as achieving economies of scale. With growth at the 15-20% level, the Group offers a steady growth and should continue to pay attractive dividends. Given this, we give NTPM a BUY rating with a fair value of RM0.57, which is derived from pegging FY08 earnings to the manufacturing sector average PE of 10x.

FYE 31 April Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 39.3 28.1 32.1 (37.7) (45.5) (10.9) (0.1) 17.2 (17.3) 1.5 (0.1) 3.8 6.6 8.1 8.0 0.0 (0.0) (0.0) 8.1 8.0 11.7
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Ornasteel Holdings
On The Roll
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) ORNA MK 380.00 478.80 1.47 | 0.71 1384.24 0.19 (0.01) 3.61 0.60 1.47 1.69
INVESTMENT MERITS
Key manufacturer of Cold Rolled Coil in Malaysia 9MP to boost steel demand, hence brighter prospect for Ornasteel Newly installed thinner gauge CRC capacity to improve competitiveness, reduce imports, enhance prot margin as well as bump up volume Preferential rate set under AFTA may benet Ornasteels export gures Continuous improvement exercise to facilitate costs saving, higher production yield and better quality products

China Steel Asia Pacic Holding Pte Ltd Lembaga Tabung Angkatan Tentera Lembaga Tabung Haji 45.0 10.0 4.9
COMPANY PROFILE
Ornasteel was incorporated in Malaysia under the name Ornasteel Enterprise Corp (M) SB in 1991 by Taiwanese businessman Datuk Yao Wu Mian. The company began operation in manufacturing steel pipes in 1993 followed by Cold Rolled Coils (CRC) in 1994. Another subsidiary, Group Steel Corp was also formed in 1994 to produce Galvanised Steel Coils (GI) and Pre-painted Galvanised Steel Coils (PPGI). Both were then acquired by Taiwans China Steel Corporation (CSC) in 2000 and listed in 2004 where CSC together with the China Development Industrial Bank Inc offered 47.5% and 3.86% respectively for sale via an IPO to satisfy the requirement that at least 40% of its shares to be held by Malaysian citizens.


KEY HIGHLIGHTS
Being a market leader in CRC with 66% market share and a leading player in GI and PPGI with about 26% share of the market, Ornasteel is now looking to grow its at steel products. Key catalyst to drive the company going forward are:: 9th Malaysia Plan to lift steel demand. We are hopeful on the implementation of the 9th Malaysia Plan (9MP). The 2007 Budget saw a 31% increase y-oy in development expenditure to RM46.5bn, focusing on the development of schools, universities and housing needs. We expect a huge demand for building material that will indirectly push for higher CRC, GI and PPGI sales. New plant a next booster. Ornasteel is in the nal stage of commercial test run for its new CRC plant within the vicinity of its existing plant at Melaka. The new rolling capacity of 180,000 tpy will boost its CRC capacity to 624,000 tpy. The new rolling mill is designed to produce quality thin gauge CRC up to
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0.16mm hence enabling the company to expand its existing export markets. We believe Ornasteel may benet from its integrated position that offers exibility in product mix as compared to its peers. On top of that, the new mill will reduce thinner CRC (1B coil) imports for its GI production, thus enhancing prot margin. This is timely as present market trend favours thinner gauge steel sheet to reduce input costs. AFTA and continuous improvement. Under the Asia Free Trade Area (AFTA) agreement, manufacturers which consume at least 40% local content will enjoy a Common Effective Preferential Tariff (CEPT) schemes at 0% to 5% tariff for exports within the ASEAN member countries. As Ornasteel is one of the few manufacturers that fullled this requirement, the company may push for higher exports once its new CRC mill sets in. Apart from that, the company has been aggressive in improving its efciency by raising production yields as well as product quality. These measures include the earlier conversion to natural gas from electricity for power source had successfully slashed operating expenses by RM8m per annum. Relax in HRC import? At present, domestic CRC producers are required to take in 40% of local HRC from sole producer Megasteel SB. With Ornasteel and other CRC players all aggressively negotiating for higher import quota from MITI, we believe the government may eventually relent and revise the policy given the new CRC capacity scheduled to come on stream this year. In addition, Megasteels HRC is unable to accommodate stringent requirements for the newly installed higher cum thinner gauge CRC production.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04^ FY05^ FY06 FY07f 1168.9 1240.4 1024.6 1212.9 35.4 6.1 (17.4) 18.4 194.7 108.6 112.2 132.9 152.7 67.8 80.8 99.0 119.4 57.4 71.4 79.2 31.4 15.1 18.8 20.8 78.4 (51.9) 24.5 10.9 1.4 1.5 1.7 1.8 0.0 5.0 10.0 11.1 0.0 396.8 793.7 880.0 4.0 8.3 6.7 6.0 0.9 0.8 0.7 0.7 (0.43) (0.01) (0.07) 0.15
^ FY04 & FY05 gures were adjusted against amortization of negative goodwill and FY05 gure for 13 months due to change of FYE.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 - 367.3 - 458.7 - (196.4) 0.0 - 629.6 - 380.0 - 147.2 - 527.2 - 102.4 0.0 - 629.6 - 202.4 - (163.8) FY05 357.4 366.3 (78.7) 0.0 645.0 380.0 202.6 582.6 62.4 0.0 645.0 57.9 (3.9) FY06 393.4 422.0 (85.2) 0.0 730.2 380.0 258.5 638.5 91.7 0.0 730.2 79.4 (27.0)
COMPANY REPORT CARD

ROE. Despite a set back in steel prices in CY05, Ornasteel continue to record a double digit ROE since listing. Given the catalysts ahead, the company is set to gradually improve the ROE to 11.9% in FY07. Management. Ornasteels management is led by Dr. Chung Yeong-Huei whom has extensive knowledge and experience in steel industry. Under his strong leadership and the backing from CSC, the success of Ornasteel is secured. Dividend. The company maintains a generous dividend policy with a committed 50% payout ratio based on gross basis and should translate into a decent yield of 8.8% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - 182.5 98.9 - (20.7) (106.5) - (146.6) 6.0 - 15.3 (1.6) - 38.7 54.0 0.0 0.0 - 54.0 52.4
RECOMMENDATION
Given the strong drivers ahead, we recommend Ornasteel a BUY with a 12-month target price of RM1.65 or 30.7% upside. The fair value is derived from an eclectic valuation approach of peer PER, peer P/B and historical PER band to FY07 gures. Coupled with the generous 50% dividend payout policy (gross), the stock can potentially deliver a 12 months total return of 39.5%.
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Pantech Group Hldgs

Cheaper Exposure To Oil & Gas
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PGHB MK 150.00 303.00 2.63 | 1.18 -
INVESTMENT MERITS
A leading pipes, ttings and ow controls (PFF) player with 39.9% market share in the domestic oil and gas industry Burgeoning oil and gas exploration in Malaysia with 50 offshore platforms to be installed to lift Pantechs sales High crude oil price, new explorations worldwide and the advent of bio-diesel projects, are all catalysts for Pantech New production line to bump up capacity to 16,500 tpy, alleviating constrains in existing facilities and improve prot margin Expect improved margins and exponential growth over next few years given the strengthening oil & gas industry

CTL Capital Holding SB GL Management Agency SB Koperasi Permodalan Felda Lee Liang Mong 24.3 16.9 15.8 6.1
COMPANY PROFILE
Pantech Group Holdings history can be traced back to 1988 when Pantech Corporation SB (Pantech Corp) was established to take over the partnership of Jimmy Chew and Goh Teoh Kean. Since then, Pantech became Malaysias leading suppliers and stockist of quality stainless steel, API Pipe, Fittings, Valves, Flanges and more. As part of the groups expansion plan, Panao and Pantech Kuantan were established to penetrate the Singapore market. Pantech Steel SB was incorporated in March 2000 to produce butt-welded carbon steel ttings such as elbows, tees, reducers and end-caps by deploying the latest technology and adherence to manufacture quality butt-welded ttings efciently. Pantech Steel exports more than 80% of its products to countries such as, the United States, Canada, South America, Europe and ASEAN. The company was listed on the Main Board of Bursa Malaysia on 15 February 2007.

Month 1m 3m 6m 12m Absolute 9.78 Relative 2.55 -

2.20 2.00 1.80 1.60 1.40 1.20 1.00 Feb-07 Mar-07 Mar-07 Mar-07
KEY HIGHLIGHTS
Robust oil & gas exploration in Malaysia. Malaysia at present has around 270 offshore platforms and the industry expects an additional 50 to be installed in the country over the next ve years. These new platforms are key drivers for the sales of new equipment like pipes, ttings and ow control (PFF) solutions. Pantech also presence in the major hubs for oil and gas, petrochemicals and palm oil reneries within the Peninsula Malaysia. To further extend its market reach, the company plans to set up its presence in East Malaysia, with Labuan identied as a base to further penetrate the domestic market for PFF solutions in places such as Miri and Bintulu in Sarawak and Kikeh in Sabah, as well as neighbouring Brunei. With its extensive presence within Malaysia, Pantech will be closer to its existing and potential customers.
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Galloping into new market. Persistent high crude oil prices above US$50/ barrel in recent years have elevated exploration, development, maintenance and production activities within the oil and gas industry. This is reected from higher investments in equipment and upgrading of existing platforms. Pantech is to further expand its business into other overseas markets including Vietnam and Indonesia in the forthcoming years. The company believes there ample opportunities for oil and gas exploration and production activities in markets such as Indonesia, Brunei, Thailand and Vietnam. This expansion plan allows Pantech Group to ride along the growth wave arising from any oil and gas development projects within the region. On top of that, the advent of bio-diesel projects as alternatives to fossil fuel in Malaysia will eventually require huge amount of oil & gas standard PFF. New production line to bump up volumes. Pantech Steel manufacturing facility has a rated capacity of 11,000 tpy on 2 shifts of 12 hours per shift on a 6 day week basis. The company has been running at maximum capacity for the past one and half years, hence any new capacity increase would boost earnings of this division. As a result, Pantech is investing RM7m to expand its production oor space in its existing factory in Klang, and a further RM14m for the purchase of production machinery and other equipment such as forklifts, cranes, packing equipment and product testing facilities. Upon commissioning of the new line by end of FY08, the new manufacturing facility will improve capacity to 16,500 tpy plus a wider product as well as size range thus improving the companys competitiveness. Given the higher prot margin via some value adding activities, contributions from its Klang plant is set to push Pantechs prot margin higher.

FYE Feb Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 105.6 169.8 240.2 275.0 97.5 60.7 41.5 14.5 18.8 35.5 41.5 47.4 15.0 29.3 34.6 39.1 10.1 21.6 27.0 31.0 6.7 14.4 18.0 20.7 338.5 114.4 24.9 14.8 0.5 0.6 0.8 1.0 0.0 0.0 3.0 3.4 0.0 0.0 1.5 1.7 30.1 14.0 11.2 9.8 3.2 2.6 2.1 -
Balance Sheet (RMm)

FYE Feb FY04 FY05 FY06 9MFY07 Fixed Assets 41.9 Current Assets 165.3 Current Liabilities (89.0) Others 0.0 Total 118.2 Share capital 62.5 Reserves 25.5 Shareholder Fund 88.0 LT Liabilities 30.2 Others 0.0 Total 118.2 Gross Debt 95.5 Net Cash/ (Debt) (82.4)
COMPANY REPORT CARD

ROE. Pantechs focus in the lucrative oil & gas segment is set to experience more attractive margins and exponential demand growth, therefore an attractive ROE >20% is anticipated going forward. Management. Pantechs management comprises a competent team of professionals that is the driving force behind the success of the company. Pantechs achievements over the last 3 years have been tremendous. Dividend. Despite being a young listed company, management realises the importance of rewarding shareholders hence a gross dividend of 3 sen for FY07.

FYE Feb FY05 FY06 9MFY07 Cash Flow from Ops (6.7) Cash Flow from Investing 17.4 Cash Flow from Financing (0.2) Net Increase in Cash 10.4 Cash at Beginning of Year 0.0 Other Changes 0.0 Cash at End of Year 10.4
RECOMMENDATION
Given the exposure to the oil and gas industry and impending major catalysts in the pipeline, we are upbeat on the companys prospect going forward hence our BUY call with a 12 month target price tagged at RM2.22. The fair value is derived from steel stockists peer PER plus 20% premium on oil and gas sector premium over steel sector on CY07 gures.
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150
Pelangi Publishing
A Leading Publisher
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PPG MK 80.00 54.40 0.80 | 0.64 80.42 (0.05) 0.00 3.00 1.75 0.62 0.80
INVESTMENT MERITS
The leading publisher in Malaysia New production facility to boost earnings New systems to add value and increase operation efciency Looking forward to overseas expansion Attractive dividend yield of 8.8%
COMPANY PROFILE
Pelangi Publishing Group (PPG) rst started off as a partnership under the name of Pelangi Educational Enterprise in 1980 and was listed on listed in April 2004 on the Second Board of the Bursa Malaysia. The company is mainly involved in the publishing of past year question papers and revision books for public examinations. Within a period of 20 years we have grown from strength to strength publishing over 8,000 titles, spanning three different languages - English, Bahasa Malaysia and Chinese.

Sum Kown Cheek Fang Mei Sin Yap Chong Koy 19.6 15.9 6.1

Month 1m 3m 6m 12m Absolute (1.45) (6.85) (0.73) 0.65 Relative (5.17) (17.87) (22.75) (28.60)
GROWTH CATALYSTS
Over the years, the government has been constantly upgrading textbooks syllabi and contents. Also, the recent conversion of Mathematics and Science to English has brought about an increase in PPGs revenues. Moving on, there may be constant changes in our education system, resulting in the need to purchase updated editions. Expansion in production capacities. At the moment, PPG is operating in 3 printing factories and 5 publishing houses locally and overseas (Indonesia and Thailand), all of which are running at near full capacity. On top of that, they have another printing factory under construction in Bangi, with a built up area of 70,000 sq ft. This facility is expected to be operational by the end of this year.

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New 70,000 sq ft Bangi printing facility. PPG expects this factory to increase revenue from the printing segment in FY08, by 10%. Management indicated that the new factory will enhance the quality and diversity of its printing services as well. The building has been completed and the machines are expected to be installed by the end of the year. Operations in China, Thailand and Indonesia. PPGs target market would be those with a large population and lower production costs. At the moment, Management hinted that plans are already in place for entry into South East Asia region. IT to increase efciency. PPGs online bookstore offers information of goods available as well as latest products, recommendations and up to date pricing. Products available include books, multimedia, stationeries etc.

FYE 30 Sep Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 70.7 59.9 63.5 67.3 6.0 6.0 8.9 (15.3) 13.4 12.0 12.8 14.1 11.8 9.7 8.6 9.6 8.7 6.8 6.0 6.7 10.9 8.4 7.5 8.4 0.6 (22.4) (11.3) 11.8 0.75 0.80 0.83 0.87 5.0 6.0 6.0 6.0 7.3 8.8 8.8 8.8 6.3 8.1 9.1 8.2 0.9 0.9 0.8 0.8 0.1 0.0 0.1 0.1
COMPANY REPORT CARD

ROE. ROE in the past 2 years ranged from 12% to 17.0%. With reference to our forecasted gures for 2007, we expect ROE to be in the similar range. Management. The managing director, Mr Sum Kown Cheek left the teaching profession to join Penerbitan Pelangi Sdn Bhd in 1993. He has been in the publishing industry for over 10 years, which has led to the success of PPG under his guidance. Dividend. Management declared total gross dividend of 6 sen per share for FY06, translating into a gross yield of 8.8%. We expect this to be maintained for FY07.
Balance Sheet (RMm)

FYE 30 Sep Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Funds LT Liabilities Others Total Gross Debt Net Debt FY03 FY04 FY05 FY06 - 34.5 37.5 40.1 - 46.6 47.7 47.8 - (18.5) (18.2) (15.5) - (4.1) (1.9) 0.7 - 58.6 65.1 73.2 - 40.0 40.0 40.0 - 10.0 16.0 21.0 - 50.0 56.0 61.0 7.6 8.1 11.0 0.9 1.0 1.1 - 58.6 65.1 73.2 9.8 10.1 12.8 - 10.9 8.4 0.0
RECOMMENDATION
We peg a fair value at RM0.74 by using the composite of 8.2x PER and 0.9x P/BV over FY08 EPS of 8.4 sen and BV/share of RM0.84.

FYE 30 Sep Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 9.0 2.8 8.7 20.4 0.0 (0.0) 20.4 FY05 FY06 6.2 (0.4) (3.7) (5.2) (4.6) 0.1 (2.1) (5.5) 20.4 18.3 (0.0) (0.0) 18.3 12.8
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Pintaras Jaya
Laying the Foundation
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PINT MK 80.06 108.89 1.76 | 0.83 75.28 0.28 (0.42) 3.66 0.44 1.36 1.65
INVESTMENT MERITS
A foundation and sub-structure specialist in the elds of (i) piling and foundation systems, (ii) earth retaining systems, and (iii) sub-structures & basements, as well as civil engineering and building works Prospect buoyed by growing construction activities under 9MP Further supported by the growing demand for high rise residential Sound nancial health with revenue and net prot 5-yr CAGR at 12.2% and 6.1% respectively

Pintaras Bina Sdn Bhd Dr. Chiu Hong Keong PNB 36.0 12.4 11.2
COMPANY PROFILE
Pintaras Jaya was incorporated as a limited company on 23 November 1989 by its founder, Dr Chiu Hong Keong, a civil and geotechnical engineer. The Company was listed on the Second Board of the Kuala Lumpur Stock Exchange on 21 December 1994 and was subsequently transferred to the Main Board on 18 May 1998. The company is the specialist in the elds of (i) piling and foundation systems, (ii) earth retaining systems, sub-structures, basements and earthworks, (iii) building works, and (iv) civil engineering works.


KEY HIGHLIGHTS
Every structural work needs it. Laying the foundation for the construction of structures is a crucial phase of construction and makes the companies involved in it as specialists. Foundation works comprises of three major types, which are (i) piling and foundation systems, (ii) earth retaining systems, and (iii) sub-structures & basements. Apart from that, the group has also progressed into the area of civil engineering works which included bridges, earthworks and roadworks as well as water-related and sewerage works in association with construction projects. Budding infrastructure and buildings activities. The infrastructure and buildings works are expected to increase under the 9MP, where small scale projects dominates, involving the construction of schools, hospitals, universities, and roads. This bodes well for Pintaras. Amongst its biggest works are RM62m earthworks and sub-structure job for the government ofce building in Precint 4, Putrajaya, JB new CIQ (RM30m), RM22m piling works for JB Sentral, and 20 bridges for Guthrie Corridor Expressway amounting to RM62m.
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Piling it on the growing high-rise property market. The growing popularity of the construction of high rise properties is a bonus to the company given its expertise in preparing sub-structures and basement works for such developments. In the past few years alone, the company has provided services to more than 10 high rise developments totaling RM55m and those are just in the Mont Kiara area. Minimal risks from short term contracts. An interesting point for the contracts for piling, earthworks and sub-structures is its short term nature, normally lasting for about 3 to 6 months. This will minimise the risk of uctuating material prices and preserve margins for any of those projects. For the past 5 years the company has managed to maintain PBT margin at an average of 14.7%. Earnings supported by manufacturing businesses. The manufacturing division is made up of Prima Packaging Sdn Bhd (manufacturing of industrial metal containers for paint, lubricants food industries) and Corplast Packaging Industries Sdn Bhd (manufacturing of corrugated plastic sheets for industrial packaging). For the past 6 years, the manufacturing operation has provided the group a steady income ow with operating prot averaging RM3.4m over the period. Expanding its operation. Currently, the company is expanding by adding more equipment in view of a more works in the future. At the moment, the company is looking at an average of RM11m worth of jobs per month and we expect the numbers to rise to more than RM15m in FY08 onwards as more construction works are projected to come on stream. The group is condent of having RM50m worth of jobs at any given time in its nancial year.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 87.4 116.5 94.5 155.3 28.5 33.3 (18.9) 64.3 12.0 14.1 14.2 35.7 12.2 14.1 14.1 34.6 9.9 10.2 10.5 24.6 12.4 12.8 13.1 30.7 4.2 3.0 2.9 134.3 1.46 1.56 1.65 1.79 5.0 5.0 5.0 5.0 3.7 3.7 3.7 3.7 11.0 10.6 10.4 4.4 0.93 0.87 0.82 0.76 0.8 2.9 1.9 1.9
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 47.9 88.4 (20.5) 115.8 80.1 31.5 111.6 4.1 115.8 6.0 (2.7) FY04 42.7 92.8 (15.1) 120.4 80.1 37.1 117.2 3.3 120.4 0.8 FY05 43.9 110.2 (26.7) 127.4 80.1 44.4 124.5 2.9 127.4 2.9 FY06 41.3 116.6 (23.1) 134.8 80.1 52.1 132.2 2.7 134.8 1.9
COMPANY REPORT CARD

ROE. The company has an average ROE of 8.5% since 2003. Management. The business is run by its founder, Dr Chiu Hong Keong, a civil and geotechnical engineer. Dividend. The company has a good dividend track record, paying 5 sen per share and we expect the trend to be maintained.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 19.1 11.7 23.2 (4.3) (17.1) (3.1) (10.3) (3.9) (2.9) 2.8 (11.5) 13.6 31.4 34.2 22.7 34.2 22.7 36.3
RECOMMENDATION
Forecast is tricky for the company as jobs are short term in nature and no works are being carried forwards into the next nancial year. Nevertheless, historical trends have been encouraging with revenue and net prot 5-yr CAGR of 12.2% and 6.1% respectively. We expect further improvement in FY08 and using the CAGR as benchmark, prots for FY08 will be at RM26m or EPS at 32.5 sen. We have pegged a 10x PER to FY07 earnings, translating to a fair value of RM3.07/share.
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Plenitude
No Looking Back
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PLEN MK 135.00 297.00 2.26 | 1.32 329.81 0.67 Net Cash 2.30 0.76 1.17 3.49
INVESTMENT MERITS
The openings of Jusco and Tesco and the upcoming monorail in Plenitudes Taman Desa Tebrau in Johor Bahru will increase the value, marketability, attractiveness of the properties Led by a team of strong and shrewd management Sizeable land bank to underpin long-term earnings Net cash of RM0.27 per share as of 31st Dec06 Greatly undervalued, trading at 48.2% discount to RNAV of RM4.24

Ikatanbina SB Ong Bee Kuan En Primeurs SB 45.5 15.2 7.2
COMPANY PROFILE
Plenitude was listed on the Main Board on the 18th November 2003. The Group has a diverse portfolio of business ventures related to the Groups core competencies in property through its ve-wholly owned subsidiaries. This includes property development, property investments as well as beach hotel ownership and management. The Groups success over the past few years is attributable to the development of its strategically located properties in the Peninsular Malaysia, namely Taman Desa Tebrau in Johor Bahru, Taman Putra Prima in Sepang, The Residences at Changkat Kiara and Changkat View Condominium in Sri Hartamas, as well as the Bandar Perdana in Sungai Petani. Plenitude still has over 2,000 acres undeveloped land with a GDV of over RM4bn. In 2001, the Group acquired the 3-star, 200 rooms Tanjung Bungah Beach Hotel for RM19.1m from Danaharta. Plenitude has also acquired another 10.6 acres piece of freehold land at Bandar Batu Feringgi, Penang.


3.00 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 Oct-06 Nov-06 Dec-06 Jan-07 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Taman Desa Tebrau project, JB. This RM1.9bn development, sitting on a 965.7-acre site and located only 14km away from JB town, has enjoyed a strong 86% take-up rate for its current launches so far. Currently with a GDV balance of about RM1.2bn or 61.3% of the total GDV, we expect the demand for properties in Desa Tebrau continue to be encouraging over the other developers within the Tebrau Corridor, following: (i) the recent opening of Jusco Tebrau City and the upcoming Tesco by year 2008; (ii) the upcoming monorail connecting JB and Desa Tebrau by year 2009. Taman Putra Prima, Puchong. This 451-acre project is another prime development within the Puchong-Sepang vicinity and has so far achieved encouraging take-up rate of about 71%. Currently with a balance GDV of RM570m or 51.4% of the total RM1.1bn, the development is expected to be
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completed by year 2012. The development is well-mixed with more than 68% planned for medium cost residential property and 23% for low cost apartments to meet the demand for affordable housing. The Residences And Changkat View, Sri Hartamas. Plenitude is currently enjoying a rather encouraging take-up rate of more than 75% and 65% for The Residences and Changkat View respectively. Having recently launched Block C in Changkat View, the Group will be launching Block D condominiums together with The Batai and Liku bungalows soon with GDV of RM199m. Bandar Perdana, Sg. Petani. Currently with a GDV balance of RM1.1bn (of the total RM1.3bn) awaiting to be developed, Bandar Perdana is experiencing a rather slower take-ups as compared to Plenitudes other developments. Henceforth as part of its aggressive re-planning to bolster the sales of its properties in Bandar Perdana, Plenitude to launch its Lot 88s rst, which carry even higher GDVs continue to refocus on selling its unsold units rst. Bandar Batu Feringghi, Penang. Located along the important tourist belt in Penang, Plenitude has recently acquired this 10.6 acres piece of land and for developments of high-end condominiums, semi-Ds and super-link units, plus a commercial area on a hilly tract overlooking the sea with an estimated GDV of over RM150m which will be launched sometime in year 2008.

FYE 30 June Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 193.1 220.6 186.0 217.6 10.8 14.2 (15.7) 16.9 68.9 74.0 60.6 61.1 70.0 75.0 61.6 62.1 49.0 52.4 43.1 43.4 36.3 38.8 32.0 32.2 3.5 6.8 (17.6) 0.7 3.17 3.51 3.80 4.09 6.5 7.5 7.5 7.5 2.9 3.4 3.4 3.4 6.1 5.7 6.9 6.8 0.7 0.6 0.6 0.5 0.7 0.5 0.8 0.9
Balance Sheet (RMm)

FYE 30 June FY03 FY04 FY05 FY06 Fixed Assets 299.4 260.1 310.0 340.8 Current Assets 115.9 294.8 283.7 303.3 Current Liabilities (114.2) (173.9) (164.9) (161.5) Others 0.0 0.0 2.6 2.6 Total 301.1 381.0 431.3 485.2 Share capital 101.3 135.0 135.0 135.0 Reserves 183.7 245.7 292.8 338.8 Shareholder Fund 284.9 380.7 427.8 473.8 LT Liabilities 16.2 0.3 3.6 11.3 Others 0.0 0.0 0.0 0.0 Total 301.1 381.0 431.3 485.2 Gross Debt 32.0 20.0 10.0 30.6 Net Cash/ (Debt) 11.3 88.9 90.0 73.6
COMPANY REPORT CARD

ROE. Due to the Groups relatively large landbank, FY06 ROE was at 11.6% (FY05: 12.1%). Going forward, we expect Plenitude to register an ROE of 8.8% in FY07. Management. Apart from running the company well, the management demonstrated its shrewdness in asset trading. For example, Plenitude disposed of a piece of land in Tebrau (30 acres) to Jusco for RM12.4m prot in 2003. Early 2004, it acquired another piece of land in Kota Tinggi (258 acres) to shift the development of low cost units from its existing Taman Desa Tebrau. Dividend. Plenitude declared a gross of 7.5sen (comprising 3sen taxexempted and 4.5sen less tax) in FY06, which was higher than 5.5sen in FY05 and 5sen in FY04. Going forward, the Group expects to maintain at least a dividend payout of 7.5sen.

FYE 30 June Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 28.5 0.8 30.9 60.1 26.6 0.0 86.8 FY05 FY06 3.4 (11.4) (0.2) 1.5 0.4 6.2 3.6 (3.7) 86.8 90.4 0.0 0.0 90.4 86.7
RECOMMENDATION
Plenitude has been trading at a signicant 48.2% and 38.5% discount to its RNAV of RM4.24 and NTA/share of RM3.58 respectively. We rate Plenitude a BUY with a 12-month target price of RM3.39, based on 20% discount to its RNAV.
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156
Prestar Resources
On The Right Track
Steel
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PRST MK 177.60 134.98 0.87 | 0.47 699.84 0.14 0.92 2.08 0.76 1.21 0.83
INVESTMENT MERITS
A at steel product producer covering a niche market Transformed according to market changes and currently focuses on premium grade steel market that commands better margins with fewer competitors Divested part of Posmmit to steel giant, POSCO resulted in a smaller slice but bigger pie scenario Strong management team with more than 2 decades of experience in the steel industry and now looking for new opportunities abroad Unbroken prot record despite being involved in the cyclical steel industry

Fabulous Essence SB Toh Yew Keat Md Nahar Bin Noordin 28.9 9.6 5.7

COMPANY PROFILE
Prestar Resources Bhd (Prestar) was incorporated on 12 July 1984 by the Toh family as a small family business producing wheelbarrows. Since then, the company has expanded tremendously and presently exports its products overseas as well as ventures into other upstream products such as hand trucks and other hot-dip galvanized products. The Group was listed on the Second Board of Bursa Malaysia in 1995. Prestars management is aggressive in expanding its business, gradually embarking on different segments of at steel related products including steel coils and sheets, carbon steel pipes, hollow section for furniture, highway guardrails and others. Prestar was promoted to the Main Board in 2003 and is now on track to venture into premium grade steel products which command better prot margin with fewer competitors.

KEY HIGHLIGHTS
Allegiance with POSCO. Prestars divestment of 5.3m ordinary shares or 37.9% of Posmmit Steel Centre SB to POSCO was completed on 13 February 2007. We expect the company to recognize an extraordinary gain from the disposal of around RM10m and subsequently reduce its gearing to 0.6x in 1Q. Though Prestars stake in Possmit is reduced to 30%, we believe Posmmit will be the platform for POSCO to penetrate into the high grade steel market within the region. Overall the divestment should ensure Prestar a smaller slice but bigger pie situation. Moving up the value chain, by moving away from the highly competitive commercial grade steel such as steel pipes for furniture. Prestar is now focusing on premium grade steel namely stainless steel and auto tubes via its subsidiary Prestar Precision Tubes SB that has already national car
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makers, Proton and Perodua as its clients. In addition, the impending 9th Malaysia Plan is expected to signicantly boost steel demand hence better sales for Prestar. Taping into the Northern region. Prestar had in 1999 established Tashin Steel SB (Tashin) via a 51:49 strategic partnership based in Penang with a similar business prole as Posmmit in a bid to widen its market share especially in the Northern region. Tashin ensures timely delivery to its customers nationwide that should translate into better efciency. Leveraging on its vast experience in the Northern Region, Tashin has grown by leaps and bounds over the last few years and is currently the Groups second largest prot generator. New plant in Vietnam? Prestar wholly-owned subsidiary, Prestar Manufacturing SB has proposed to set-up a company in Vietnam and has acquired a piece of industrial land in Ho Chi Minh City, Vietnam for the setting up of a manufacturing plant to produce a wide range of steel related products in Vietnam. The company has received an Investment license pertaining to the registration of Prestar Industries Vietnam Co. Ltd. on 5 March 2007. Despite prospect from the impending steel plant in Vietnam looks encouraging, details remain sketchy.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 454.7 31.7 70.5 52.7 26.3 15.0 128.5 0.8 4.6 6.0 5.1 0.9 (1.01) FY05 FY06 FY07f 533.6 527.4 432.0 17.4 (1.2) (18.1) 36.3 49.4 54.3 16.6 29.5 40.4 5.6 11.2 15.1 3.1 6.3 8.5 (79.1) 101.4 34.8 0.8 0.9 1.0 3.1 2.5 11.0 4.1 3.3 14.5 24.2 12.0 8.9 0.9 0.9 0.8 (0.98) (1.07) (0.60)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. Prestar made a signicant recovery having suffered from a sharp plunge in steel prices in mid 2005. The company recorded a ROE of 7.4% in FY06 and is set to improve based on prospective key drivers. Management. The companys management is responsive to market changes and has transformed the company accordingly to weather the heavily cyclical steel industry. Dividend. The company has proposed a 5% nal dividend less tax for FY06 and interim dividend of 22% less tax for FY07. We believe the early dividend payout is inline with the realization of the disposal gain from Posmmit as well as managements optimism on the upcoming year performance

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (32.0) 39.6 0.5 (6.8) (17.2) (17.7) 46.8 (18.8) 11.6 8.1 3.6 (5.5) 0.1 8.1 11.7 0.0 0.0 0.0 8.1 11.7 6.1
RECOMMENDATION
Given the much improved market sentiment, the upcoming steel demand from the impending 9MP and early interim dividend for FY07, we have a BUY recommendation on Prestar. We tagged our 12-month target price at RM0.86 derived from a blended valuation of peer PER and peer P/B.
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Prinsiptek Corp.
Rivaling Well With Bigger Boys
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PSIP MK 126.78 110.30 1.20 | 0.70 171.11 0.11 0.81 1.63 1.02 1.04 0.63
INVESTMENT MERITS
Strong order book of about RM400m A niche contractor with experience constructing government quarters for uniform units, PCB is expected to secure some packages of the RM2.2bn allocated for the segment under the 9MP Strong PBT margin of around 10% is expected to be maintained for the next 2 years Still trading at a forward PER of 4.7x and 3.7x in FY07 and FY08 respectively vs its peers average PER of over 10.0x

Daya Setempat SB Foo Chu Pak Foo Chu Jong 40.0 9.4 8.5
COMPANY PROFILE
Prinsiptek (PCB) was listed on the Second Board via a Reverse Takeover of L&M Corporation (M) Bhd on 10th December 2003, and subsequently transferred to the Main Board on 5th July 2005. PCB thus far has completed major projects for both the public and privates sectors, including hotels and hostels for the Genting group worth RM190m and several important rehabilitation projects in Shah Alam and Ulu Klang. The Group is also engaged in property development, trading of building materials, investment holdings and manufacturing and trading of ready mix concrete. PCB plays its role as a turnkey contractor for the government and private sector in the construction of residential properties. PCB is registered with PKK (Pusat Khidmat Kontraktor) as a Class A contractor and CIDB (Construction Industry Develoment Board Malaysia) as Grade D7 contractor. These registrations allow the Group to bid and undertake construction projects of unlimited value.

Month 1m 3m 6m 12m Absolute 0.58 14.47 3.57 (6.48) Relative 1.58 0.64 (19.45) (31.94)

KEY HIGHLIGHTS
Strong order book that will last for about 2 years. PCB has an outstanding order book of about RM400m. This mainly comprises of the construction of government apartments for the private sectors as well as an army quarters. Another mainstay contribution to its outstanding order book is its new 5 storey of low cost apartment project in Thailand worth RM193m. Good 9MP play. PCB is actively bidding for about RM437m worth of projects and is quite hopeful in securing at least 50% of it soon. A sum of RM2.2bn has been allocated to build 46,000 units of government quarters for uniform services personnel. Given PCBs specialty in the constructions of these buildings and its niche in securing small to mid size projects, PCB could be in the forefront to receive some projects from the 9MP.
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Property segment to contribute a larger role. Although property development did not stand out much in FY06 (8.5% to total turnover), the segment is poised to be rather outstanding in the coming years. PCB currently has in hand RM345m worth of projects to be launched: (i) Bangi. Of the RM40m worth of GDV launched in year 2006 the housing development has achieved >90% take-up. Going forward, PCB will be launching RM35m worth of gated-housing community in 2H07. Average selling price of about RM140psf vs >RM150psf to RM500psf in Putrajaya, the Bangi development has been absorbing a substantial spillover demand from Putrajaya. (ii) Gombak. Divided into 2 parcels of land, the rst parcel comprising of shoplots worth a GDV was launched in Jan07. Although there have been numerous enquiries, no sales have been made to-date. The 2nd parcel of land comprising Semi-Ds and bungalows in a gated-community worth a GDV of RM45m will be launched in Sept07. (iii) Jalan Pahang. Due for launching in Sept07 with a total GDV of RM80m, the development will comprise retails lots and service apartments. Enlarging exposure in Thailand. PCB has recently forged another JV with a local Thai to undertake a development worth a GDV of RM175m in Thailand. In addition to the RM194m 5-storey walk up ats secured a year ago from Thailands National Housing Authority, PCB has to-date a total RM369m worth of development projects in the country.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 294.8 305.3 315.9 341.1 59.3 3.6 3.5 8.0 37.5 31.8 30.6 39.9 34.3 28.2 26.5 34.7 24.6 20.6 18.0 23.3 19.4 16.2 14.2 18.4 1.3 (16.5) (12.4) 29.5 0.54 0.69 0.79 0.95 2.5 2.5 2.5 2.5 2.9 2.9 2.9 2.9 4.5 5.3 6.1 4.7 1.6 1.3 1.1 0.9 (0.6) (0.9) (0.8) (0.9)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. PCB registered a 19.2% ROE in FY06 (FY05: 26.4%). Going forward, we expect PCB to register a 21.1% and 22.1% ROE in FY07 and FY08 respectively. Management. The key management team has a long history of 10 to 20 years of experience in the construction and civil engineering industry. Dividend. PCB has been paying a consistent gross dividend of 2.5sen for the past few years. Going forward, we do not expect dividend payment will have any deviation from its current policy.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 (49.3) (7.6) 48.0 (8.9) (20.1) (24.2) (53.3) FY05 FY06 (26.7) 10.5 2.2 (4.4) (16.6) 11.3 (41.2) 17.5 (53.3) (94.4) 0.0 0.0 (94.4) (77.0)
RECOMMENDATION
A BUY. PCB is still trading at a forward PE of 4.7x and 3.7x in FY07 and FY08 respectively, a signicant discount to its average peers PE of 10.0x. We value PCB using the sum-of-part method.
OSK
160
Progressive Impact Corp.

Others
Progressing Into A Total Environmental Solution Provider

INVESTMENT MERITS
PICB MK 94.00 116.56 1.28 | 0.74 148.06 0.05 (0.39) 5.75 1.73 0.55 0.53
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM)
A Total Environmental Solution Provider, ranging from environmental consultancy, lab testing service to environmental training Asset-light company with strong balance sheet, cash rich with net cash position of over RM25m leading to potential expansion plans Secured income stream from DoE coupled with other contracts, boosting NP margin to over 20% for past 3 years Attractive dividend payout policy of 40%

Zaiyadal Keluarga S/B Haji Zaid Bin Abdullah Hassan Bin Hussain 38.8 20.3 4.5
COMPANY PROFILE
Progressive Impact Corporation (PICB), which was listed on the Second Board on October 2004 is known as a total environmental solution provider. Through its 2 major subsidiaries, wholly-owned Alam Sekitar Malaysia SB (ASMA) and 59%-owned Australian laboratory, ALS Technichem (ALS), together they provide environmental monitoring and consultancy, waste management and lab testing services. Recently, PICB had also acquired Perunding Good Earth (PGE) and Novosh Dynamics (Novosh), which provide environmental training services.


KEY HIGHLIGHTS
Guaranteed revenue stream from environmental consultancy services. PICB had secured a 20-year contract from the Department of Environment since 1995. For the remaining 8 years, the Group is poised to enjoy guaranteed revenue of about RM25m each year. However, we do see that reliance on this concession-type income has decreased signicantly over the years, due to a rise in other overseas projects. During Apr 2006, PICB secured its maiden overseas contract in Jeddah, Saudi Arabia, estimated at RM1.24m. The group was also rewarded with a 2nd project in Jeddah a few months later, worth RM1.7m. Today, PICB has managed to secure consultancy contracts in Sudan, Indonesia, Qatar and Brunei as well. Laboratory Testing, the growth driver. Since the acquisition of PT ALS Indonesia (ALSI), the Laboratory Testing business has become a major revenue generator i.e. approximately 40% of FY06s total income. The ALS Group operates over 50 laboratories in 20 countries and is the largest independent analytical group in the Asia-Pacic region. PICB plans to diversify its ALS business to include WearCheck Testing, Specialized Mercury Testing and Biological Monitoring. These are seen as the potential key drivers, since these services are applicable to many industries including
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Oil & Gas, Transportation and Power Plants. Besides the RM3.6m contracts with Halliburton, Total and Conoco secured last year in Indonesia, ALS had recently secured a contract with Petronas Dagangan. Environmental Training services to value add. Through the expertise of PGE and Novosh, which were both acquired last year, PICB has positioned itself to be a Total Environmental Solution Provider. Basically, the new subsidiaries are involved in the provision of Environment, Safety and Health consulting and training. Major industries covered include oil & gas, electrical & electronics, cement, automotive and etc. Environmental Sustainability Resource Centre (ESRC). Novosh, which also provide Total Quality Management Services, will be offering environmental trainings through partnerships with Open University. This ESRC will be a collaboration between PICB and DoE, aiming to provide Environmental Institute Malaysia courses. Novosh will also work with universities and other environmental NGOs to produce public seminars and conferences. Aggressive overseas market penetration. PICB Group has ventured into most of the South East Asia countries although presently the main revenue contributor is Indonesia. Besides getting orders from markets like Pakistan, Japan and Sudan, the Group will be pursuing businesses in Brunei, Qatar, Philippines and Yemen this year. We believe that PICB is in the midst of setting up a JV company in Saudi Arabia, enhancing its presence in the Middle East.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 51.0 42.4 (26.7) (17.0) 19.5 19.6 16.8 15.1 10.8 8.7 11.5 9.2 (56.2) (19.9) 0.49 0.53 4.2 5.7 3.4 4.6 10.8 13.4 2.5 2.3 0.2 0.3 FY06 FY07f 55.5 69.2 31.1 24.7 27.1 32.6 22.1 25.8 12.2 14.7 13.0 15.7 40.3 21.0 0.59 0.69 8.3 8.6 6.7 6.9 9.6 7.9 2.1 1.8 0.3 0.2
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 41.1 39.5 43.1 35.3 (36.5) (6.4) 0.0 0.0 47.6 68.4 20.9 47.0 14.8 11.0 35.7 58.0 9.0 7.6 3.0 2.8 47.6 68.4 12.7 4.2 2.5 18.8 FY05 FY06 41.1 42.1 36.5 47.0 (6.6) (9.7) 0.0 0.0 71.0 79.4 47.0 47.0 15.7 22.2 62.7 69.2 4.6 3.5 3.7 6.7 71.0 79.4 1.2 0.4 25.9 25.6
COMPANY REPORT CARD

ROE. FY05 and FY06 recorded a ROE of 13.8% and 17.6% respectively. For FY07, we expect ROE to improve further to 18.9%, mostly due to stronger growth from its Lab Testing and Environmental Training segments. Management. The Group MD, Haji Zaid Bin Haji Abdullah, founded PICB in 1990. He was also one of the founding members of the Shapadu Group. Together with his highly educated and experience management team, Haji Zaid has guided PICB to be an internationally recognised integrated environmental service provider. Dividend. Management declared 8.3 sen gross dividend for FY06. Going forward, we believe the company will maintain its dividend payout policy of 40%, sustainable through its strong net cash position, translating into a gross yield of 6.9% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 14.7 (5.4) (0.9) 8.4 14.4 0.0 22.9 FY05 FY06 18.0 5.3 (4.9) (5.6) (8.9) (0.8) 4.2 (1.1) 22.9 27.0 0.0 0.0 27.0 25.9
RECOMMENDATION
We like PICB given its involvement in a unique sector regulated by the Department of Environment. Aside from its secured income from DoE for the next 8 years, we believe the Groups Lab Testing segment will be the next major income generator. We fairly value PICB using an average of 11.0x PER and 2.0x P/Book, arriving at FY07s target price of RM1.55.
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Protasco
Defensive Player
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PRTA MK 300.00 288.00 1.22 | 0.79 778.37 0.08 Net Cash 3.74 1.01 1.43 0.93
INVESTMENT MERITS
Outstanding order book of RM589.7m that will last until year 2009 Libya is poised to become Protascos next gold mine 3 15-year concessions with a total estimated outstanding order book of about RM2.0bn Owns approximately RM50m of major equipments and machinery that enables the Group to carry out major construction projects Huge exposure to road-related infrastructure works from the 9MP Dividend at least 8.76sen going forward, translating into a yield of 9.1% Strong balance sheet and cash ow position

Hasnur Rabiain Bin Ismail Yap Oon Neo Chong Ket Pen 12.0 10.3 7.8

COMPANY PROFILE
Protascos history can be traced back to the early 1990s when its founders Dato Hasnur Rabiain and Dato Chong Ket Pen started a road construction business via the setting up of HCM Engineering S/B. For more than a decade, Protasco has turned into an integrated one stop total infrastructure solutions provider, involved in numerous works for the progress of the nation. The Group is principally involved in road construction and maintenance that has added to Malaysias reputation for road networks which are among the nest in Asia; bridge and building constructions; engineering services and consultancy; as well as tertiary education and training. Protasco received a few years ago 3 long-term public sectors concessions by the government which have been giving the Group a secured stream of income for many years and years to come. In recent years, Protascos venture into Libya has gained momentum of which >50% of its current outstanding orderbook are in the country.

KEY HIGHLIGHTS
Strong outstanding order book for projects on hand. As of FY06, Protasco has an outstanding order book of RM589.7m, excluding the outstanding order book from concession projects of about RM2.0bn. Well-backed by three concessions. Protasco currently has in hand 3 longterm public sector concessions from the government which are expected to continue to contribute a total stable stream of income of about RM200m p.a. or an EBIT of RM41.4m p.a. (conservative gures) until year 2018. Currently with a conservative estimated outstanding orderbook of about RM2.0bn, the 3 longterm concessions include the: (i) maintenance of the 6,000km federal road
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in Peninsular Malaysia with an expected recurring income of about RM162m p.a., expiring in February 2016; (ii) maintenance of the 373km federal road in Sarawak with an expected recurring income of about RM15m p.a., expiring in year 2018; and (iii) 15-year concession valued at a total of RM348.3m in fees to provide Federal and State Government or any 3rd party whose works are publicly funded a range of services with an expected recurring income of RM23.2m p.a. which will expire in December 2011. Libya, the next gold mine. With the liberalisation of Libya, the country is fast opening up for more opportunities for foreign venturers like Protasco. It has to-date secured a total of RM240.1m worth of contracts from the country within a period of less than 2 years. Currently with a total of 83,200km roadways including 47,590km of paved and 35,610km of unpaved roads to be repaired, upgraded and maintained, we believe Libya will poise to be the next gold mine for Protasco to strengthen its orderbook portfolio. 9MP exposure? We are concerned over Protascos ability to replenish its orderbook in Malaysia which has slowed of late. Nonetheless, given Protascos expertise in road construction, maintenance and management in running road concessions, we believe the Group will be in good stead to secure some road-related and other infrastructure projects from the 9MP. Its strong balance sheet (net cash of RM84.2m or 28.1sen/share) could add a stronger avour for it to secure some handsome PFI jobs.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 582.4 (21.8) 93.6 87.9 46.0 15.3 (21.7) 1.00 8.2 8.5 6.3 1.0 0.44 FY05 FY06 FY07f 519.3 539.2 536.1 (10.8) 3.8 (0.6) 86.4 97.7 82.5 79.2 79.6 63.7 41.0 26.3 29.2 13.7 8.8 9.7 (10.8) (35.8) 10.8 1.03 1.05 1.08 8.8 8.8 8.8 9.1 9.1 9.1 7.0 10.9 9.9 0.9 0.9 0.9 0.37 0.28 0.47
Balance Sheet (RMm)

FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 190.2 182.0 174.5 168.6 Current Assets 364.2 344.4 306.6 324.3 Current Liabilities (223.7) (186.7) (135.5) (133.2) Others 0.4 2.1 2.7 3.3 Total 331.1 341.8 348.3 363.0 Share capital 150.0 150.0 150.0 150.0 Reserves 134.2 150.0 159.3 164.5 Shareholder Fund 284.2 300.0 309.3 314.5 LT Liabilities 12.0 9.9 8.4 8.2 Others 34.8 31.9 30.6 40.4 Total 331.1 341.8 348.3 363.0 Gross Debt 10.7 3.5 3.9 5.8 Net Cash/ (Debt) 172.1 132.4 110.9 84.2
COMPANY REPORT CARD

ROE. ROE for the past 3 years ranged from 41.3% in FY03 to 8.4% in FY06. ROE for FY07 and FY08 are anticipated to be 8.4% and 9.1% respectively. Management. The management team has more than 20 years of experience in the industry. Dato Hasnur Rabiain and Dato Chong Ket Pen, the founders of Protasco, were the ones who brought forth the fruits that the Group is bearing today. Dividend. Since Protasco was listed in FY03, it paid a gross dividend of 5 sen in that year and 8.8 sen for both FY04 and FY05, translating into a gross yield of 9.1% at current share price. According to the management, it will continue to maintain dividend at that level.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 8.6 (9.2) (45.8) (46.4) 182.2 0.0 135.8 FY05 31.5 (13.8) (40.5) (22.7) 135.8 0.0 113.1 FY06 29.3 (9.2) (43.7) (23.6) 113.1 0.0 89.5
RECOMMENDATION
BUY for dividend. Our RNAV estimation on Protasco is RM1.98. Nonetheless, due to the lack of any major visible catalysts ahead, we are applying a 40% discount to its RNAV (vs 30% previously) to derive our 12-month target price of RM1.19. The most obvious appeal of Protasco at this juncture is its strong dividend payment with strong yield. Should growth catalysts of Protasco become clearer again especially from Libya and the 9MP, there may be further share price re-rating.
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Putrajaya Perdana
Sustained Double Digit Growth
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) PUPB MK 135.00 272.70 2.11 | 1.50 212.28 0.32 Net Cash 1.37
INVESTMENT MERITS
Strong outstanding order book of RM1.4bn on the back of RM2.3bn orderbook will last the Group for another 3 years Putrajaya Perdana (PPB) is one of the only few contractors that have been given such exclusiveness to the construction works and developments in Putrajaya Leveraging on the niche Energy Efcient Buildings concept as its new growth catalyst Zero borrowings and sitting on a cash pile of RM37.8m or RM0.28/ share 3-year (FY05-FY08) net prot CAGR of 13.7% Trading at forward PER of 6.8x in FY08, still a discount to its peers PER of over 9.0x

Eastern & Oriental Bhd Putrajaya Holdings S/B 50.8 20.0

Month 1m 3m 6m 12m Absolute 13.06 18.23 Relative 4.82 1.48 -
COMPANY PROFILE
Putrajaya Perdana Bhd (PPB) was initially incorporated as a private limited company on 9th July 1998 and was subsequently converted into a public limited company on 17th June 2002. The Group is principally involved in construction and property development. In FYE3/06, its construction arm dominated about 93% of the Groups total turnover while its property arm contributed about 7%. To-date, PPB has completed about RM2.5bn worth of projects since year 1991 of which 86.5% of it were located in Putrajaya. Amongst the most notable ones were the design and build of the entire government complex on Parcel D at Precinct 1 (worth RM596m) and the Ministry of Finance ofces at Precinct 2 (worth RM280.6m). PPBs outstanding orderbook portfolio is currently standing at RM1.4bn which comprises a mixture of public and private funded projects. The Group is also the market leader in the construction of Energy Efcient Buildings (EEB). Amongst the most notable completed EEBs was the government building for the Ministry of Energy, Water & Communication (MEWC) worth RM115m.

2.40 2.30 2.20 2.10 2.00 1.90 1.80 1.70 1.60 1.50 1.40 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Strong outstanding orderbook of RM1.4bn which will sufciently last the Group for the next 3 years. To-date, PPB has completed about RM2.5bn worth of projects of which 86.5% is located in Putrajaya and about 57% comprises of public projects. Putrajaya, a eld of gold mine. PPB is one of the other three companies in a joint venture spearheaded by Putrajaya Holdings S/B (PJH), a government unit to plan and develop the new township of Putrajaya. It is worthwhile to note also that PJH has a 20% stake in PPB. To-date, PPB has completed about RM2.2bn worth of projects in the new township. At this point in time, the main
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focus of PPB has been on the construction and development of Government administrative buildings and quarters. The 12,184 acres Putrajaya is gearing up to have some 335,000 residents in its 67,000 homes when fully completed by year 2012. Leveraging on Putrajaya for further growth. PPBs focus is not just within the walls of Putrajaya. The Groups renowned presence and competitive position in Putrajaya have given it a very strong platform to further grow its portfolio of projects outside the boundary of the new township. At this point in time, PPB has already secured several major projects outside of Putrajaya, which include the MARC Service Residence and Pavillion Kuala Lumpur as well as the Kolej Universiti Kebangsaan Teknikal Malaysia in Malacca, with an outstanding orderbook of RM77.7m, RM355.4m and RM323m respectively. Large development opportunities and strong take-ups. PPBs development arm is principally involved in the development of Precinct 16, Putrajaya at this juncture. With an estimated undeveloped landbank of 29.94 acres, the development is expected to continue up to year 2010. In the pipeline, PPB intends to launch 15 units of bungalows in Apr07 (GDV RM49.5m) and 2 more developments worth a GDV RM49.1m in Oct07. PPB currently holds 3.87 acres of commercial land in Melaka for further development. To-date, all its previously launched properties have had >85% take-up (unbilled sales of RM2.5m). PPB still has approximately RM286m worth of developments of which will be spread for few years until year 2010. High barrier to entry in Putrajaya to other developers. On construction of government ofces and infrastructures, there is a very low barrier to entry. As for property development and development for government quarters (houses provided for civil servants), however, only PPB, SP Setia and Putrajaya Holdings (PJH) have the exclusive rights to develop the new township.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 329.1 435.3 634.7 822.6 (24.9) 32.3 45.8 29.6 43.1 46.6 54.0 68.2 43.8 45.4 50.5 64.6 31.4 32.5 36.1 46.2 26.2 27.1 26.8 34.2 (20.3) 3.4 (1.1) 27.8 1.10 1.37 1.53 1.84 0.0 0.0 6.7 6.7 0.0 0.0 3.3 3.3 7.7 7.5 7.5 5.9 1.8 1.5 1.3 1.1 0.3 0.7 0.9 0.9
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 25.7 79.9 90.6 - 288.6 270.8 289.5 - (221.1) (220.8) (217.7) 3.8 3.8 3.8 - 96.9 133.7 166.2 - 20.0 20.0 20.0 - 76.9 112.1 144.6 - 96.9 132.1 164.6 0.0 1.6 1.6 0.0 0.0 0.0 - 96.9 133.7 166.2 1.7 0.5 0.0 - 14.4 40.8 84.4
COMPANY REPORT CARD

ROE. PPBs ROE has been rather decent vs. other contractor-cum-developers at 16.8% as of 9MFY07 (FY06: 21.9%, listing in Oct06). Going forward, we expect PPB to register a 19.4% and 20.3% ROE in FY07 and FY08 respectively. Management. Strong fundamentals are not the only appeals of the Group. Its determined management team has been the key driving force behind the Group. Dividend. During the IPO in Oct07, PPB indicated that it would pay a gross dividend of 6.7sen going forward. In 3QFYE07, PPB declared an interim dividend 5sen.
FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year
FY04 (2.3) (3.7) (80.6) (86.7) 101.6 0.0 14.9
FY05 FY06 8.3 46.3 18.1 (3.2) 0.0 0.0 26.4 43.1 14.9 41.3 0.0 0.0 41.3 84.4
RECOMMENDATION
A BUY. We value PPB at RM2.64 based on blended valuation of RNAV and pegging its FY08 FDEPS of 29.8sen to peer PER of 9.0x. PPB is still trading at a forward fully-diluted PER of 6.8x in FY08, still a discount to peers of 9.0x.
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QL Resources
Diversied Resource Based Company
Consumer Food
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) QLG MK 220.00 616.00 3.10 | 2.57 252.11 (0.04) 0.75 3.58 1.95 0.49 1.11
INVESTMENT MERITS
Uninterrupted earnings track record for the past 18 years Expect double digit growth for the next 2 years Increased production capacity in the MPM plant Venturing into CPO plantation to drive long term growth Current share price has potential upside of about 27%
COMPANY PROFILE
QL was founded in 1987, initially as a small-scale trader in marine-based products but subsequently growing into an integrated resource-based food agricultural group. The company was listed on March 2000 and transferred into the main board in January 2002. Currently, QL is a diversied agricultural based group of companies which is involved in marine product manufacturing (MPM), crude palm oil (CPO) milling and integrated livestock farming (ILF). A major player in resource-based agro business. The company has an uninterrupted earnings track record for the past 18 years. For FY06, QL achieved net earnings of RM48.3m, a 33.7% rise from FY05 or 37.3% CAGR since FY03. This translates into a ROE of 23.6%.

CBG Holdings SB Farsathy Holdings SB 49.1 14.1


3.00 2.90 2.80 2.70 2.60 2.50 2.40 Oct-06
GROWTH CATALYSTS
Demand in MPM growing strong. The MPM plant in Sabah was accorded the pioneer status for 10 years. Meanwhile, the second phase expansion of shmeal plant at Hutan Melintang has been completed. Total production capacity is expected to reach 80,000MT per annum by the end of FY07. Moreover, QL has 23 deep sea shing licences to ensure a steady and sustainable sh supply and reduce the dependence on external supplies.
Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
Integrated livestock farming division. ILF comprises the distribution of feed meal raw materials and poultry farming. QL is the leading distributor of animal feed raw materials such as corn and soya bean throughout Malaysia with 18% market share. Apart from animal feed, the company is also one of the leading poultry egg producers with a daily production of 1.1m eggs per day where 70% of the activities are located in East Malaysia. The ILF division is the main revenue generator for the company, contributing 60% of the groups total revenue and 40% of PBT.
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Strong and stable revenue and earnings from CPO milling. This division contributed 20% of revenue and earnings for FY06. QL has 2 independent CPO mills able to process 600,000 tonnes of fresh fruit bunches per annum into 120,000MT of CPO, equivalent to 90% of capacity. This is an important prot generator for the company as the operation cycle is relatively short and provides strong cash ows. QL is enjoying favourable tax incentives in the form of pioneer status and tax allowances. Venturing into plantation. QL recently announced that it has entered into a JV with Hang Ting Pte Ltd of Singapore and PT Pipit Citra Perkasa of Indonesia to jointly develop two parcels of plantation land in East Kalimantan, Indonesia measuring approximately 20,000 hectares, into an oil palm plantation. Total investment of the proposed JV is expected to be about US$22.3m (RM81m) with QL holding about 74.5% stake. According to management, this project will require a gestation period of at least 6 years before seeing positive returns. Bio-diesel licence granted. QL was recently granted a bio-diesel licence in June 2006, and recently acquired 2 parcels of land of 20 acres each at Lahat Datu, Sabah for the building of a bio-diesel plant.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings FD EPS (sen) Growth (%) NTA/Share Div (Gross) Div (Yield) PER P/NTA Net Cash/ Share FY05 FY06 FY07f FY08f 941.6 1010.5 1106.2 1195.1 4.7 7.3 9.5 8.0 66.1 85.3 105.5 121.7 46.1 59.1 68.1 76.8 36.1 48.3 54.7 62.7 16.4 22.0 24.9 28.5 34.3 33.7 13.3 14.6 0.73 1.12 1.29 1.50 7.5 9.0 10.0 11.0 2.7 3.2 3.6 3.9 17.1 12.8 11.3 9.8 3.9 2.5 2.2 1.9 (1.0) (0.9) (0.8) (0.9)
Balance Sheet (RMm)

FYE 31 Mar FY03 FY04 FY05 FY06 Fixed Assets 188.7 208.8 239.2 300.4 Current Assets 196.9 232.4 239.9 274.8 Current Liabilities (195.9) (228.4) (221.8) (222.4) Others 2.4 2.7 3.9 8.5 Total 192.1 215.5 261.3 361.2 Share capital 60.0 60.0 75.0 110.0 Reserves 50.0 71.5 84.8 140.0 Shareholder Funds 110.0 131.5 159.8 250.0 LT Liabilities 54.8 64.1 86.2 90.5 Others 27.3 19.9 15.3 20.7 Total 192.1 215.5 261.3 361.2 Gross Debt 197.5 227.7 235.3 227.5 Net Debt (184.7) (200.1) (215.0) (201.5)
COMPANY REPORT CARD

ROE. QL has an impressive track record with ROE ranging between 18% to 25% for the past 5 years. We expect ROE going forward to stay above 20% for the next 3 years. Management. The Managing Director, who is also the founder of the Company, has been in the business for more than 18 years. Dividend. We expect QL to pay 9 sen dividend for FY06 based on a payout ratio of about 25% translating into a gross yield of 3.2%. We expect the company to pay about 10 sen for FY07, translating into a yield of 3.6%.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 54.7 36.7 50.9 (42.9) (52.3) (71.7) (0.4) 7.6 25.7 4.9 11.4 (8.0) 10.4 21.8 13.8 0.0 0.0 0.0 21.8 13.8 18.7
RECOMMENDATION
By using the composite of 13.3x PER and P/BV of 2.4x over FY08 EPS of 28.5 sen and BV of RM1.53/share, we arrived at a fair value of RM3.73. Given the potential 33% upside, we maintain our BUY rating on QL.
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Ramunia Holdings
Execution is Key
Oil & Gas
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) RH MK 238.13 309.56 1.59 | 0.96 1,359.20 15.0 0.58 1.84 0.45 1.66 0.65
INVESTMENT MERITS
Ramunia is soon to be the largest of the 7 Petronas licensed fabricators in Malaysia in terms of yard capacity Strong orderbook of RM1.5bn and bidding for contracts in excess of RM8bn Gaining traction overseas with newly set up international operations To ride on strong demand for production facilities in Malaysia and worldwide CAGR of >100% to FY08

Dato Azizul Rahman Concerto Investment Ltd 55.9 4.2
COMPANY PROFILE
Ramunia is one of the 7 Petronas licensed oil & gas offshore platforms fabricators in Malaysia and based on manufacturing capacity it is currently the 3rd largest. Some key products and services of the Group include fabrication of oil and gas platforms and other structures, transportation of built structures, hook up and commissioning, and manufacture of platform pedestal cranes through a JV with Herkules Crane Ltd. Ramunias yard is located at the south eastern tip of Peninsular Malaysia at Teluk Ramunia. Ramunia was listed on the second board of Bursa Malaysia after a complicated RTO of Saship Holdings. Operations of the Group started in 2001 and as a result from the RTO, Ramunia has been left with some ICULS and ICPS which have heavy dilutive effect on its EPS. To note, the dilutive effect, inclusive of a private placement and warrants will bring the Groups share base to 788.4m from 238.13 currently.

Month 1m 3m 6m 12m Absolute 16.1 13.0 4.8 21.5 Relative 8.4 (0.6) (18.5) (8.9)

KEY HIGHLIGHTS
Yard 3 onstream soon. Ramunia is in the process of acquiring its third yard that will bring yard space to some 170 acres, making it the biggest Petronas licensed fabricator in Malaysia. To note, the Group was facing a capacity crunch towards to tail end of 2006 hence had to purchase Yard 3. Current capacity of the Group stands at 31,000 MT per annum and with Yard 3 the Group will be able to accommodate up to 80,000 MT pa by 2008 if it maintains a utilization of at least 50%. The acquisition is expected to be completed by April or May this year and the extra capacity will spearhead the Groups overseas orderbook.
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Gaining strength overseas. Ramunia recently snagged itself a major overseas project worth RM308m from Carigali PTTEPI gas project in the Malaysia-Thai joint development area. The contract was for the fabrication of 4 well head platforms and jackets and will contribute to the Groups income through to FY09. The Group continues to be bullish on its growth potential overseas hence is bidding for some RM5bn worth of contracts. We see that the Group stands a very good chance in winning bids when more yard capacity comes on stream. To note, there is currently a shortage of fabrication space worldwide. Next Step, Transport and Installation. T & I involves the transportation of fabricated works like topsides and jackets using barges to locations offshore and then proceeding to install the structures. This is still an undercapitalized area for Ramunia as it secured its rst T & I contract only mid last year. Currently, the Group has to charter ships for these works hence able to earn only thin margins. Going forward, Ramunia hopes to acquire tugs and barges to facilitate T & I and this will boost the Groups margins which are relatively thin now at 11-12% at PBT level.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 203.8 351.6 629.7 956.6 - 72.6 79.1 51.9 22.1 39.9 95.6 143.3 (20.4) 28.3 68.1 110.5 (27.1) 17.7 40.9 66.3 (3.4) 2.2 5.2 8.4 296.8 (165.1) 131.4 62.2 1.28 1.86 2.07 2.86 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (11.4) 17.5 7.6 4.7 1.9 2.1 2.9 1.7 0.1 0.1 0.2 0.1
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 211.1 256.4 - 177.3 268.7 - (118.4) (226.7) 0.0 0.0 - 269.9 298.4 - 115.9 118.8 - (25.9) (7.6) - 90.0 111.2 - 48.9 56.5 0.8 0.5 - 139.7 168.2 - 125.0 161.8 - (91.9) (134.5)
COMPANY REPORT CARD

ROE. Still at single digit ROEs but we see gradual improvement given the strong orderbook currently. Management. MD, Encik Arshad, has been exposed to various sectors of the oil & gas industry in Malaysia 18 years of direct exposure to oil & gas fabrication businesses. Dividend. Given the high growth nature of the industry, and the potential need to plough prots back as capex to further upgrade the yard, we are not expecting any dividends at this point of time.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 (53.9) (37.0) 70.1 (20.8) 0.0 0.0 (20.8) FY06 22.6 (51.2) 13.8 (14.8) (20.8) 0.0 (35.6)
RECOMMENDATION
Ramunia is well positioned in the industry to ride on larger contracts locally as well as overseas. Once yard 3 comes fully onstream we expect to see a sharp increase in contract ow for the Group and hence clearer prospects. But until that happens, we remain conservative with our estimates due to the lack of track record. Fully diluted, FY07 gives a PE of 28.8x while FY08 16.3x. We fairly value the company at RM1.32 and are NEUTRAL for now.
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Ranhill
Moving on
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) RANH MK 597.27 758.53 1.67 | 1.00 1529.36 0.01 2.16 0.39 0.76 1.89 1.51
INVESTMENT MERITS
The company has submitted claims for the losses in Sudan but settlement process may be lengthy Company is capable to absorb such losses without taking major hit to its balance sheet should the VO claim be unsuccessful Strong construction order book at RM9.4b would keep the group construction business busy over for the next 4 to 10 years Recurring income from water, power, toll road, and oil & gas

Lambang Optima Sdn Bhd Ranhill Corporation Sdn Bhd EPF 30.4 23.9 3.9
COMPANY PROFILE
The company started off in 1973 as engineering consultants, which expanded rst into engineering, procurement and project management, then to turnkey construction, facilities management, development and ownership of projects. At present, the company is focusing on sectors essential to nation-building: oil & gas, power, water and infrastructure. Apart from that, the group holds four concession asset, in water distribution in Johor, IPP in Sabah, Oil & Gas in Indonesia & the Philippines as well as road toll concession (operational in 2008) in Johor, that would provide recurring earnings for years to come.

Month 1m 3m 6m 12m Absolute (2.33) 0.00 16.04 (8.17) Relative (5.53) (11.38) (10.41) (31.58)

KEY HIGHLIGHTS
Reconstructing the construction business. Ranhill is still smarting from the misfortune in Sudan where costs overrun issue casts a dark could over the company. Works at Muglad Basin has been completed and handed over to the principal in August 2006 and has been operational ever since. It is reported that the facility is producing 200,000 barrels/day. Claim is in place. The company has submitted US$200m in claims for the cost overruns but we believe that the settlement process would be lengthy. Some reports stated that the cost overrun was at around US$70m or RM245m with Ranhills portion at RM135m (55% stake). Nevertheless, the groups shareholders fund of RM992.8m as at FY06 is more than enough to absorb the losses. Strong order book at RM9.4bn. Bulk of the order book is from Libyan housing project amounting to RM6.6b, of which initial works on Phase 1 will start in 3Q this year. Phase 1 will involve building 10,000 units apartment units at a cost of US$400m. This project would keep the group busy for the next 4 years. Other projects are the Senai-Desaru Highway (RM925m), Powertron 2 station (RM570m), Pakistan Hydropower (RM384m) and SAJH capital works at RM897m.
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Toll road concession. The Senai-Desaru Highway is currently under construction and is expected to be completed late this year. Toll collection is anticipated to start in 1Q08 with trafc estimated at 40k-50k vehicles per day. The toll rates is benchmarked against PLUS at RM0.136 per km with agreed escalation of 10% every 3 years until 2032. Upside from water. RUB is a 70% subsidiary that operates the water concession for the State of Johor with a concession running through until 2030. In the concession, SAJH is guaranteed an IRR band of 14%-15%. Apart from that, RUB is venturing into Thailand (20-yr concession) and China (29-yr concession) in the water supply and waste water treatment. Both these concession have guaranteed minimum off-take and tariff attached. Powering Sabah and Pakistan. Ranhill gains from recurring income from its IPPs in Sabah and the upcoming Pakistan Hydropower. Ranhill owns the Powertron and Tuaran plants, which has a combined capacity of 310MW, for a 25-year concession. The works on Powertorn 2 is ongoing and this will add another 190MW capacity. Laraib Hydroelectric plant in Pakistan will be constructed later this year with operation slated in 2010. Laraib will provide Ranhill another 25 years of steady cashow. Energy gaining ground. Ranhill has three oil & gas blocks in onshore Indonesia, which are Jatirarangon, Citarun and Batu Gajah. Jatirarangon gas eld has a reserve of 60-80bcf, while Citarum is the main project that provides the company with a 30-yr contract. The company is expecting exploration works to start by 1H07. Indicative reserve is at 150 Bbmoe. The latest block secured is the Batu Gajah gas eld but it is still early to determine the reserve level. Ranhill also has two gas blocks in the Philippines, which is under development stage.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 1,492.3 1,419.8 1,636.7 1,858.4 88.2 (4.9) 15.3 13.5 171.2 214.9 432.2 505.5 95.8 74.9 265.0 347.6 33.1 (12.7) 129.2 162.7 5.5 (2.1) 21.6 27.2 (31.6) (138.2)(1119.9) 25.9 1.60 1.57 1.66 1.92 1.5 1.5 1.5 1.5 1.2 1.2 1.2 1.2 22.9 (59.9) 5.9 4.7 0.79 0.81 0.77 0.66 (2.65) (3.59) (3.54) (3.47)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 99.3 656.6 (375.7) 380.2 118.5 133.9 252.4 127.8 380.2 227.8 (178.1) FY04 FY05 FY06 486.4 8,378.48,886.0 856.1 2,175.8 2,251.1 (702.9) (1,209.3)(1,618.4) 639.7 9,344.9 9,518.7 118.5 597.3 597.3 182.2 356.4 334.8 300.7 953.6 932.0 339.0 8,391.3 8,586.7 639.7 9,344.9 9,518.7 628.9 2,777.7 3,162.7 (405.1) (1,584.7)(2,167.5)
COMPANY REPORT CARD

ROE. The companys average ROE stood at 7% since FY03. Management. The group is led by Tan Sri Hamdan Mohamad who has been with the company since 1981. Dividend. No dividend policy is in place but the group has paid gross DPS of 1.5 sen for FY05 and FY06.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 52.4 16.5 86.0 154.8 26.0 180.9 FY04 FY05 (8.7) 214.9 (247.6) (441.3) 798.3 187.0 542.0 (39.4) 180.9 722.8 722.8 683.2
RECOMMENDATION
We expect strong growth coming from the construction division from the commencement of the construction of Phase 1 Libyan housing project. For the concession segment, we anticipate a moderate growth without taking into account any upward adjustment on rates. We believe that company is able to absorb the losses in Sudan without taking a major hit to its balance sheet should the claim be unsuccessful. The company is fairly valued at RM2.04/ share based on sum-of-parts valuation. The fair valuation would be reduced to RM1.81/share if we take into consideration Sudans losses at RM135m.
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Ranhill Utilities
Still Smooth
Water
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) RANU MK 294.50 689.13 3.08 | 1.17 571.53 (0.54) 2.01 0.43 2.10 1.44 2.82
INVESTMENT MERITS
A steady growth in water consumption with a CAGR of 2.9% since 2000 and growth is estimated to be 3% p.a in tandem with the population growth in Johor Upside in earnings is assured as the concession will enable the company to maintain its IRR within the 14% and 18% range throughout the concession period Expanding into other states and China & Thailand BUY with target price at RM3.46/share with an estimated IRR at 16%

Ranhill Bhd Lambang Optima 70.0 7.6
COMPANY PROFILE
Ranhill Utilities is the parent company of SAJ Holdings Sdn Bhd (SAJH), which holds a 30-year concession to distribute water in Johor beginning 1 March 2000. The concession for SAJH covers the whole range of services, from water treatment to distribution and billing. SAJH is the rst fully integrated water service provider before Puncaks acquisition of Syabas. The company is also involved in the NRW reduction program in the state of Melaka.

Month 1m 3m 6m 12m Absolute (5.74) (20.14) 85.48 52.32 Relative (7.98) (28.57) 46.44 15.98

KEY HIGHLIGHTS
Steady demand for water. The consumption of water in Johor is at about 1,363 mld (million litres per day) and the state estimates consumption to reach 2,600 mld by 2030, translating into a CAGR of 2.9%. Upside in earnings is assured. The concession is structured to enable the company to maintain its IRR within the 14% and 18% range throughout the concession period. Should the gazetted tariff is lower than the scheduled tariff, the state government will compensate SAJH the difference, thus eliminating concerns over the cashow prospect. The company is getting an average of 2.4% hike in its water tariff this year, and this has been taken into consideration. Overseas concessions. RUB holds two water concessions overseas, one in Thailand and the other in China. The Thailand project is a 20-year concession involving three BOT projects, with a combined capacity of 36,400m3/day. As for China, the companys 70% subsidiary KWI Far East, has a 37% stake in a 29-year water distribution concession and a BOT for a 100,000 m3/day water treatment plant for Yi Chun City, in Xiangji Province. These projects are still in the early stages with insignicant contribution in the near future.
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Prospect from SJER. The development of SJER will provide a better prospect with rising population and vibrant economic activities. The SJER plan is estimated to increase the population in Johor from 2.3m to 3.0m by 2025. Johor ood could affect earnings. RUB is looking at an estimated loss of revenue of between RM800k and RM900k in (but it could be larger as the assessment is yet to be nalised) from the recent ooding. On the ip side, cleaning works could provide some reprieve to the company as consumption could pick-up thereafter as this would require plenty of water. The company is looking to recoup the revenue loss from the cleaning up works, estimated to be around RM400k. New Water Bill would change the industry landscape. The cabinet has approved the new water bills that would result in the formation of SPAN (Suruhanjaya Perkhidmatan Air Negara) and PAAB (Syarikat Pengurusan Aset Air Berhad) to oversee the implementation for the water industry. Concession holders would have to meet the end-June 2007 deadline and decide weather to remain as it is or to migrate under PAAB. The full implementation for SPAN and PAAB is scheduled by end-June 2008.

FYE 30 Jun Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04* FY06^ 490.3 818.5 15.7 66.9 174.9 576.3 121.8 254.7 79.4 187.0 27 64.2 (16.0) 138.0 2.58 2.85 2.9 1.2 0.91 0.82 (3) (4.3) FY07f FY08f 648.6 678.2 (20.8) 4.6 551.3 596.8 267.0 308.20 213.5 221.9 72.5 75.4 13.0 3.9 3.15 3.80 1.1 1.1 0.74 0.62 0.72 (0.27)
Note: * FYE31/12, ^18-mths FYE30/6
Balance Sheet (RMm)

FYE 30 Jun FY02* FY03* FY04* FY06^ Fixed Assets 6111.2 6387.6 6741.1 7702.1 Current Assets 649.8 586.0 901.5 724.5 Current Liabilities (309.0) (392.2) (459.2) (397.0) Others Total 6452.0 6581.4 7183.4 8029.6 Share capital 294.5 294.5 294.5 294.5 Reserves 181.6 276.1 355.5 544.7 Shareholder Fund 476.1 570.6 650.0 838.8 LT Liabilities (5975.9)(6010.8) (6533.4)(7189.9) Others - (0.9) Total 6452.0 6581.4 7183.4 8029.6 Gross Debt 912.0 1079.0 1701.5 1858.5 Net Cash/ (Debt) (427.4) (671.2) (879.3)(1265.5)
COMPANY REPORT CARD

ROE. ROE of the company averaged at 18% for the past 3 nancial years. We expect ROE to remain sustainable at that level. Management. The company is run and controlled by Tan Sri Hamdan Mohamad, who is the majority shareholder of parent company, Ranhill Berhad Dividend. RUB has not declared any dividends due to the requirement for the company to have to maintain an FSCR (Financial Service Cover ratio) of not less than 2.25x for its RM1.28bn BAIDs, The FSCR needs to be at 2.5x if dividends are to be declared.

FYE 30 Jun FY03* FY04* FY06* Cash Flow from Ops 102.8 178.6 266.4 Cash Flow from Investing (260.0) (282.0) (416.3) Cash Flow from Financing 80.4 517.2 (89.5) Net Increase in Cash (76.8) 413.8 (239.4) Cash at Beginning of Year 484.6 407.8 821.6 Other Changes Cash at End of Year 407.8 821.6 581.6 * FYE December ^ 18 months due to a change in year end from Dec to Jun
RECOMMENDATION
We rate RUB a BUY with a target price of RM3.46/share based on DCF computation. Based on our estimate, RUBs IRR calculation is at a favourable 16%, which is within the 14% to 18% range.
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Rohas-Euco Ind.
Prospecting for Regional Expansion
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) ROH MK 68.38 114.87 1.80 | 0.85 277.10 0.27 (0.12) 2.50 1.44 0.84 1.58
INVESTMENT MERITS
Demand for telco transmission tower is expected to grow as telcos aim for greater market penetration Power sector should provide the growth catalyst driven by the proposed undersea cable between Sarawak and Johor The company has signed a MoU studying a hydropower project in Laos and to add membrane-technology water ltration business in its operation EPS growth for FY07 is estimated at 22.7% Dividend is at a consistent 5 sen/share translating to a yield of 3%

Puan Sri Nik Anida Bt Nik Mansor Chan Liew Hoon George Sia Bun Chun 26.0 6.0 4.6
COMPANY PROFILE
Rohas-Euco is involved in the fabrication of steel lattice tower structures for the power, telecommunications and microwave transmission sectors, as well as the manufacture of pressed steel sectional water tanks.

KEY HIGHLIGHTS
Lattice tower fabricator. The main business activity of the company is the fabrication and installation of galvanized steel lattice for power transmission towers, microwave and telecommunication towers. Telco sector expansion. Rohas should benet from the race for telco dominance has been going on for the past several years and the migration into 3G and Wimax as well as greater broadband penetration would lead to infrastructure expansion. According to various reports, the telco industry is expected to spend close to RM1.0b in capex to meet the requirement of 7,500 new towers for 3G by 2008. Power sector. The business for the power segment mainly comes from Tenaga Nasional. At the moment, local power tower projects are progressing at a rather slower pace but is expected to pick up signicantly should the proposed undersea transmission line from Bakun to Johor materialized. The cable network would span 700km in Sarawak and 600km from Sarawak to Johor. The 700km of land cables would require about 2,100 towers and this bodes well for Rohas.

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Hydropower in the pipeline. In July 2006, the group inked a MoU with the Lao government for the Nam Sane 3 hydroelectric power project, undertaken on a BOT basis, with a 30-yr concession. The feasibility studies should be completed by end 2007. Rising raw material prices is a problem but plans are afoot. The group is undergoing capacity expansion program to boost production from 27,000 MT/annum to 30,000 MT. This expansion will reduce exposure to contract manufacturers and is expected to result in costs savings of RM200/MT. Battery is off but water treatment is coming. The company is disposing its battery operation but is looking at other venture to diversify its earnings base with a target to secure long term recurring income. Apart from the Lao hydropower, the group is looking into membrane-technology water treatment operation in the region. Although it may not materialize soon, we see these moves will the company onto the next level.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 170.8 152.3 182.8 210.2 62.6 (10.8) 20.0 15.0 16.5 21.6 31.9 35.3 17.5 21.4 31.0 34.4 8.2 15.0 22.8 25.4 11.9 22.0 33.4 37.1 12.9 84.4 51.7 11.2 1.11 1.59 1.84 2.23 5.0 5.0 10.0 5.0 3.0 3.0 6.0 3.0 14.1 7.6 5.0 4.5 1.51 1.06 0.91 0.75 0.3 0.3 0.4 0.4
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 31.1 103.6 (46.1) 88.6 68.4 23.4 91.8 3.2 88.6 227.8 (178.1) FY04 FY05 FY06 33.9 32.9 27.4 164.8 153.1 178.5 (96.9) (69.8) (73.7) 101.8 116.1 132.1 68.4 68.4 68.4 39.3 40.2 57.2 107.6 108.6 125.6 5.9 7.5 6.5 101.8 116.1 132.1 628.9 2,777.7 3,162.7 (405.1) (1,584.7)(2,167.5)
COMPANY REPORT CARD

ROE. The average ROE of the company for the past three nancial years is at 11.2%. Management. The MD, Mr. George Sia, has been with the company since the 1974 and was appointed as MD of Rohas Euco Industries in 1976. Dividend. The company has a good dividend track record, consistently paying 5 sen per share with exception in FY06 at 10 sen.
RECOMMENDATION
Earnings for FY07 is expected to grow by 22.7%, but margins is estimated to be lower from 17% in FY07 to 16% given the higher material prices. We arrive at a fair value of RM2.97/share based on FY07 EPS pegged against 8x forward PER (average steel PER).

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (18.9) 11.6 7.9 (0.5) (0.5) 3.5 15.3 (15.5) 9.8 (4.1) (4.5) 21.2 36.0 31.8 27.4 (0.0) 0.1 0.0 31.8 27.4 48.6
OSK
176
Sanichi Technology
A Reputable APIM Player
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) SANI MK 113.50 44.83 0.55 | 0.25 1389.23 0.03 -
INVESTMENT MERITS
A major advance plastic injection moulds manufacturer Winner of 2004 Enterprise 50 Award Programme by Deloitte 95 customers comprising MNCs, OEMs, ODMs Negotiating a joint venture deal with a Portuguese partner On track to meet FY07 forecast as stated in the IPO prospectus
COMPANY PROFILE
Sanichi is the designer and fabricator of advance precision injection moulds (APIM) and conventional plastic injection mould (CPIM) for the plastic injection industry. While there are many CPIM manufacturers in Malaysia, Sanichi is the only major local APIM manufacturer. The company has 95 customers comprising MNCs, OEMs, and ODMs such as Dyson, Electrolux, Hitachi Koki, Panasonic Communication, Seiko Instruments, Sharp Manufacturing, Shin-Etsu Polymer, etc. Sanichi is the winner of 2004 Enterprise 50 Award Programme by Deloitte and SMI ICT Adoption Award.

Pang Chow Huat Mohd Abdullah bin Mohd Mohaidin Chen Choon Lee 39.0 10.0 4.2

Month 1m 3m 6m 12m Absolute (10.35) 5.41 16.42 Relative (12.87) (6.14) (8.50) -
KEY HIGHLIGHTS
Lack of local APIMs. Industry research shows that most of the local mould fabricators are focusing towards CPIMs because of the lack of industry expertise, technical know-how and the ability to establish successful business networks with OEM/MNCs. Hence, most of the advanced moulds required are imported from overseas. In 2005, about 95% of APIMs required in the country is imported. As the biggest local APIM player with 5% market in 2005, the company is in the position to capture market share that is currently held by the importers. A growing APIM market. Demand for APIM is expected to continue growing as the need for faster, more effective and innovative manufacturing of plastic parts and components has become inevitable. APIM technology also helps to reduce cycle times and improve the quality of moulds fabricated. The plastic parts and components fabricated using APIM technology also have better detailed nishes and better functional quality. About 80% of its 1HFY07 revenue was contributed by APIM. Expanding to foreign countries. To capture some potential MNCs customers currently locate in Thailand, Sanichi is building a new plant (16,000 sq. ft) in the country, which is expected to commence operation in May of this year. The new plant is expected to generate about RM5m during the rst year of operation. On the other hand, the company is also expected to expand to Vietnam by end of 2007 and form strategic alliances in Europe and Japan

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soon. The company plans to set up an international engineering task force in order to increase the level of collaboration with its customers in terms of technology and product design. This will translate into stronger bonding with the client. Expanding manufacturing capacity. Sanichi has purchased a 65,000 sq ft land next to the current factory. The new building is expected to complete in early 2008 and the additional capacity should be ready by 3Q 2008. Fabrication of larger moulds. Sanichi is moving into fabricating larger moulds catering for the large component for the E&E and automotive industry. The company has already invested in larger machineries that can fabricate moulds that weigh up to 30 tonne. This will help the company to capture wider market, both locally and globally. The company has penetrated the automotive sector in the local central region and is looking forward to expand its market presence in the European countries, Middle East and other Asian countries. Portugal business project. Sanichi is currently negotiating a joint-venture deal with a Portuguese partner. Under this deal, the potential partner could give more than RM10m worth of orders to Sanichi. The negotiation is at an advanced stage now.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 15.0 21.3 28.0 36.5 57.2 42.0 31.3 30.4 5.0 21.3 11.1 14.0 3.5 4.7 8.6 10.7 3.0 3.9 6.8 9.2 3.7 4.7 5.9 8.0 86.3 27.3 27.4 34.7 - 0.26 0.32 1.4 1.4 3.5 3.5 10.8 8.5 6.6 4.9 1.5 1.2 - (0.0) (0.0)
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 -
COMPANY REPORT CARD

ROE. ROE is expected to improve from 23.3% in FY07 to 27.6% in FY08. Management. The business was founded by Dato Dr Pang Chow Huat. He realizes that there are too many companies focusing on mass production of CPIMs and therefore has decided to focus the direction of Sanichi towards the APIM market. He has successfully transformed Sanichi into a major local APIM manufacturer. He has 14 years of precision engineering experience. Dividend. Sanichi does not have a xed dividend policy but we expect the company to pay 10 sen tax-exempt dividends in FY07.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 -
RECOMMENDATION
Both revenue and net prot of Sanichi have been increasing since FY03. Sanichis FY07 net prot is expected to increase by 76.5% but the company is now trading at FY07 PER of 6.9x and FY08 PER of 5.1x. MESDAQs average FY07 PER is now trading at about 11x. Although we realize that manufacturing companies listed on MESDAQ tend to trade at a discount compared to the MESDAQs average PER, we believe the current discount is too deep. Pegging a fair FY08 PER of 7x, Sanichi is worth RM0.56.
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Scicom MSC
A World-Class BPO Player
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) SCIC MK 258.87 152.73 0.72 | 0.35 812.51 (0.01) (0.53) 13.42 2.35 0.14
INVESTMENT MERITS
Top 100 Outsourcing Firms in the world, by NeoIT Major third party outsourced call center companies for Nokia 50% dividend payout policy Clear earnings visibility and expecting 49% net prot growth Trading at discount compared to overseas call center providers
COMPANY PROFILE
Scicom is a leading provider of customer contact center services within the Business Process Outsourcing (BPO) space in the Asia Pacic region. It is a specialist in a specic segment of the global NPO space which offers premier inbound customer care and high value technical support. Scicom also provides customer service training products, contact center consulting and marketing services. Bulk of its revenue is derived from the contact center services from Nokia, Singtel, Celcom, Petronas, HSBC, etc. Scicom has operations in Malaysia and India and currently supports 15 languages, across 27 countries/ territories. This linguistic spread includes English, French, Arabic, 7 languages native to the Asia Pacic region and 5 native languages in India. Scicom is a Support Center Practices (SCP) certied. The SCP certication program establishes the service quality benchmark for all IT service support centers and help desks. The company is also the rst contact centre in South East Asia to be awarded the ISO 9002 and has recently been re-certied as being ISO 9001:2000 compliant. Scicom was named Top 100 Outsourcing Firms in the world (2006) by NoeIT as well as Call Center Service Provider of the Year (2005) by Frost & Sullivan Malaysia Telecoms Award and has also received numerous gold awards from internationally recognized SMART Award and CCAM Award since 1998.

Netinsat Asia Leo Suresh Ariyanayakam Krishnan A/L C K Menon 16.1 12.4 5.4

Month 1m 3m 6m 12m Absolute (5.51) (0.26) 12.67 57.15 Relative (10.84) (14.96) (15.22) 11.05

KEY HIGHLIGHTS
Nokia contracts. Nokias call centers are handled by several third parties and Scicom is one of the biggest contractors. Nokia is Scicoms largest customer and contributed 49% of its total revenue in FY05. Scicom is currently handling the call centers for Nokia in ve separate regions, which include India, Asia Pacic, U.S, Middle East and Africa. None of the existing Nokia contracts on hand will be expired in FY07. Singtel contracts. Scicom secured a three-year RM25m outsourcing contract from Singtel in October 2005. The contract is to manage Singtels technical help-desk. The billings have already started in 2Q FY06.
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Revenue from existing contracts. All the contracts which contribute to Scicoms past years revenues will be carried forward. In other words, FY07 revenue will be at least the level of FY06, unless key customers have decided to shift to other call center providers. Riding on Nokia name. The successful implementation of the contact centers for Nokia has increased Scicoms visibility and awareness in the industry. The newly established wholly owned subsidiary in U.S will provide a platform for Scicom to tap into the outsourcing market in the North American region where many companies in the region are actively seeking for third party outsourcing. Cross-selling to existing clients. Scicoms current BPO model consists of four modules namely contact center, human capital consultant, training and contact center management. Since these services are highly integrated, there is a large potential for Scicom to secure business from the existing clients by offering other services that is currently not used by the client. A fast growing industry. AT Kearney, Frost & Sullivan, McKinsey and Deloitte have ranked Malaysia as one of the most favorable outsourcing locations in the world. M&A. M&A is part of Scicoms strategy to grow its business.

FYE 30 Jun Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 46.5 54.0 17.8 16.1 7.3 9.4 4.0 5.4 3.6 5.4 2.4 3.6 2.4 50.9 - 0.20 0.0 0.0 0.0 0.0 24.7 16.4 3.0 - (0.0) FY06 FY07f 77.9 120.4 44.4 54.5 14.9 22.4 10.8 16.0 9.1 13.5 3.6 4.8 (1.5) 35.0 0.14 0.16 2.8 4.2 4.7 7.1 16.6 12.3 4.1 0.2 0.1 0.1
Balance Sheet (RMm)

FYE 30 Jun Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 11.8 15.9 9.9 33.6 (8.1) (11.2) 0.0 0.0 13.6 38.3 7.5 12.8 4.5 24.1 12.0 37.0 1.6 1.3 0.0 0.0 13.6 38.3 3.2 2.5 (0.6) 19.6
COMPANY REPORT CARD

ROE. The companys ROE is expected to improve from 27.1% in FY06 to 39.5% in FY08. Management. Under the guidance of Leo Ariyanayakam, CEO of Scicom, the company has won several major international industry awards. He has been instrumental in building Scicom as the leader in contact centre outsourcing, BPO, training and CRM consulting solutions in Asia Pacic and is a respected visionary and leader in this rapidly growing industry. Dividend. Among the listed call center providers under our radar screen, Scicom is the only company which pays dividends. As at 31 Dec 2006, it has net cash of RM14.9m.

FYE 30 Jun Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 FY04 FY05 8.7 13.4 (4.7) (6.8) (3.0) 14.9 1.0 21.8 (0.4) 0.6 0.1 (0.5) 0.6 22.0
RECOMMENDATION
Share prices of overseas BPO companies have been increasing and the worldwide sector FY07 PER has expanded from 17.6x in Oct 2006 to more than 20x currently, yet Scicom has lagged, trading at FY07 PER of 12.3x. As Scicom is less transparent in term of nancials and earnings guidance, a discounted FY07 PER of 16.5x (approximately 20% discount to the sector PER) is applied to derive a fair value of RM0.79. Scicom remains as our top pick for the SSO industry. As local share market has seen inux of foreign monies lately, Scicom could potentially attract greater interest from foreign investors.
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Scientex Incorporated
On Expansion Mode
Industrial
Target : RM1.64* Price : RM1.43*
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) SCI MK 70.00 301.00 4.74 | 2.62 174.47 1.09 0.18 2.56 1.04 0.83 4.09
INVESTMENT MERITS
New landbank of 250 acres in the IDR Leading stretch lm producer in the world Expansion drive in packaging and chemical High double digit growth in polymer and chemical High dividend yields of 6%
COMPANY PROFILE
Incepted in 1968 to manufacture polyvinyl chloride (PVC) leather cloth and sheetings, Scientex Incorporated (Scientex) adopted a business strategy in 2001 to focus on four core competencies. The main bulk of earnings are derived from property development and industrial packing packaging products. In addition, Scientex have exposure in industrial polymer/ automotive parts and chemical-related products. The groups agship property project, Taman Scientex, is a 1,100 township located in Pasir Gudang with a GDV of RM1.2bn. A rationalisation exercise in 2004 consolidated the industrial packaging business under 61.4%-owned second board Scientex Packaging Bhd (SciPack). One of the top stretch lm producers in the world, SciPack is also involved in the manufacture of woven and laminated bags, bulk bags, strapping bands and corrugated cartons boxes. Scientex was successfully listed on the Main Board in 1990, and went on to list SciPack in 1996.

Scientex Holdings S/B Scientex Leasing S/B Lim Teck Meng S/B 18.27 9.08 6.81


KEY HIGHLIGHTS
Joining the Iskandar Development Region (IDR) party. Scientex recently purchased a 250 acre of land near Kulai that is gazetted as a secondary promotion area of the IDR. The acquisition is set to beef up the groups land bank in Johor by 25%. Scientex is targeting to develop about 4,000 units of mixed properties worth around RM450m with the rst launch within 12 months from completion of acquisition. Going all rounder. In the pipeline are plans to enter the high-end property market segment via the launch of 200 cluster semi-detached units in Scientex Park. Scientex is expected to launch another three phases in Taman Scientex that will continue to emulate the proven success of previous launches which are affordable and have quick turnaround time.
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Bring on the capacity. Subsidiary Scipack have progressively added a total of ve stretch lm lines since 2004 bringing capacity to 90,000 MT p.a. from 50,000 MT p.a initially. It is expected to recognize the full impact arising from the extra 20,000 MT p.a installed earlier this year. Scipack have also expanded its woven bags and strapping bands capacity by 15% and 24% respectively providing a new wave of growth for the group. Moving into specialty packaging products. Scientex has embarked on an aggressive marketing campaign for higher margin packaging products such as stretch hood and colour/UV lm. We believe this will assist the company in combating the high resin prices and improve EBIT margins. Chemical also on expansion course. The chemical division recently completed a 50% capacity expansion to cater for increasing demand. Scientex captured a 23% market share of polyurethane prepolymer in the SEA region and is the rst urethane prepolymer plant in Asean. The division is gearing to enter the Middle East and other South Asia countries next.
Income Statement (RMm)*

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY07f FY08f 507.6 586.3 734.3 817.7 48.8 15.5 25.2 11.3 38.0 47.6 59.0 61.1 36.0 44.4 55.0 57.1 22.1 28.2 36.7 38.6 13.8 17.7 15.2 15.9 5.0 43.8 28.6 (14.4) 1.5 1.6 1.2 1.4 6.0 8.7 8.3 8.3 4.2 6.0 5.8 5.8 10.4 8.1 9.5 9.0 1.0 0.9 1.1 1.0 (0.4) (0.4) (0.4) (0.4)
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. ROE for FY05 and FY06 were 9.6x and 11.4x respectively. We see this uptrend momentum being sustainable going forward. Management. The baton to manage Scientex has passed to the second generation Lim family since 2001. Managing director Lim Peng Jin together with a dedicated senior management team for each core competencies are responsible for the success of the group. Dividend. Scientex has a policy of paying out 35% of net earnings as dividends. 26 sen dividend was declared in FY06 translating into an attractive 6.0% yield. We forecast dividend yields to be above 6.0% going forward.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 32.4 52.1 93.2 (24.6) (53.1) (75.8) 8.0 (4.8) (12.6) 15.9 (5.8) 4.7 9.8 25.7 19.9 0.0 0.0 0.0 25.7 19.9 24.6
RECOMMENDATION
We arrived at a fair value of RM1.64* based on the sum-of-parts valuation consisting of the RNAV of the property division and Scientexs share of the current market capitalisation of subsidiary SciPack. Coupled with an expected 6% dividend yield, the stock is expected to have a total return of 20.7*%. * Figures based on a 1-into-2 share split and a 1-for-2 bonus issue ex-date 13 April 2007
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SHL Consolidated
Property
Reputable And Protable But Still Undervalued

Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) SHLC MK 242.12 377.71 1.56 | 0.86 92.37 0.67 0.11 1.79 0.44 0.80 1.75
INVESTMENT MERITS
Reputable integrated developer with hands-on management team and close business ties with leading engineering consulting and architect rms Still has an estimated GDV balance of over RM1.9bn with undeveloped landbank of over 900 acres. Higher prot margins due to: the adoption of Build-then-Sell strategy 5-year (FY05-FY08) net prot CAGR of 22.5% Still trading at 43.1% discount to RNAV of RM2.74

Dato Ir. Yap Chong Lee Dato Yap Teiong Choon Yap Chong Lee Holdings S/B 27.6 26.8 25.0
COMPANY PROFILE
SHL has more than 40 years experience in broad-based residential, commercial, civil and infrastructure development and construction activities. It has thus far completed >40K units of properties including JV projects. Listed in 1995, the Group remains relatively low prole but has been a household name among the industry players and homebuyers. SHL has over the years built its credibility since its days with See Hoy Chan S/B (a respectable developer of Bandar Utama township). Additionally, its hands-on and experienced management team coupled with established linkages with leading engineering consulting and architecture rms as well as a its strategic partnership with Marubeni Group for international dimension has positioned SHL well within the pinnacle amongst industry players. As for the homebuyers, the Group is probably well known for its redbrick housing design and also pioneering the concept of resort living. A very good example is its agship project, Bandar Sg. Long, with golf and country club facilities in the heart of the development. At this juncture, all SHLs developments and landbanks are centred in Klang Valley.


KEY HIGHLIGHTS
A reputable integrated developer. SHL is well known in the market for: (i) being an integrated property developer (it owns a construction and building material manufacturing arm); (ii) its hands-on and experienced management team; (iii) close business relationships with leading engineering consulting and architect rms; and (iv) strategic partnership with Marubeni Group for the international dimension. As for the homebuyers, the Group is probably well known for its redbrick housing design and also the pioneer in promoting the concept of resort living. Estimated GDV of over RM1.9bn. The Groups landbanks are located mainly in the Klang Valley (Bandar Sg. Long, Serdang, Kajang, Shah Alam, Sg.
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Choh & Rasah) with total outstanding landbank of over 900 acres of which 709 acres have been earmarked for developments. Currently, the Group is focusing on development projects in Bandar Sungai Long (agship project) and Shah Alam, while the other maiden projects will start kicking-in in year 2010 onwards: Bandar Sg. Long. A self-contained township completed with supporting infrastructure and amenities, Bandar Sg. Long borders the Kajang town and Cheras/Sungai Besi with good accessibility via SILK, South Klang Valley Expressway and Grand Saga Expressway. Of late, the area is getting more attention with the existence of UTAR which has the capacity to accommodate up to 20,000 students. With an outstanding landbank of 135.9 acres, Bandar Sg. Long will continue to underpin the Groups earnings for the next 3 years with an estimated GDV balance of over RM372m. Shah Alam. Launched recently with an estimated GDV of RM400m, the Shah Alam development will continue to underpin earnings over the next 4 years. The development comprises terrace houses, commercial units and low-cost apartments. Higher prot margins. The Group enjoys higher prot margins vs. other developers due to: (i) the adoption of Build-then-Sell strategy of which very few developers are able to successfully implement which enables the Group to control the supply; (ii) low holding costs and high GDV of the Groups landbanks, helping the Group to cushion any unexpected downturns; and (iii) SHLs substantial control over its construction and raw materials through its own construction, bricks manufacturing and quarry arms.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 245.4 53.4 70.2 64.6 45.4 18.7 113.9 1.80 7.8 5.0 8.3 0.9 (0.1) FY06 FY07f FY08f 181.8 225.3 244.8 (25.9) 23.9 8.7 41.1 26.5 55.2 35.3 21.0 49.6 25.6 15.1 35.7 10.6 6.3 14.8 (43.5) (40.9) 135.9 1.84 1.86 1.96 6.0 6.0 6.0 3.8 3.8 3.8 14.8 24.9 10.6 0.8 0.8 0.8 (0.2) (0.3) (0.3)
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 371.8 357.5 399.4 334.0 212.5 288.8 298.1 370.0 (69.6) (114.8) (112.6) (111.3) 22.8 23.4 22.2 22.5 537.5 555.0 607.1 615.2 242.1 242.1 242.1 242.1 160.9 155.2 192.8 202.9 403.0 397.3 435.0 445.1 25.6 66.8 79.6 84.0 108.9 90.9 92.5 86.1 537.5 555.0 607.1 615.2 44.9 77.3 80.9 80.1 9.7 (22.7) (32.3) (52.8)
COMPANY REPORT CARD

ROE. Due to the Groups relatively large landbank, FY06 ROE was low at 5.8% (FY05: 10.9%) but will improve to 7.7% in FY08 and 7.4% in FY09 as SHL slowly unlocks the value of its landbank as the development projects progress. Management. The management consists of hands-on team with close business relationship with leading engineering consulting and architect rms and strategic partnership with Marubeni Group of Japan. Dividend. SHL paid a gross dividend of 6sen in FY06 vs 5sen in FY05 and before. Going forward, we expect SHL to at least maintain a dividend of 6sen.

FYE 31 Mar FY04 Cash Flow from Ops (133.1) Cash Flow from Investing 0.7 Cash Flow from Financing 124.4 (8.0) Net Increase in Cash Cash at Beginning of Year 18.0 Other Changes Cash at End of Year 10.0 FY05 FY06 11.5 (62.4) (1.9) (1.6) 12.0 49.9 21.6 (14.1) 10.0 31.7 0.0 0.0 31.7 17.6
RECOMMENDATION
Greatly undervalued, BUY. Owing to its protable albeit lumpy performance over the years (primarily due to its adoption of Build-then-Sell strategy), the stock has been greatly undervalued and misunderstood by most investors as unexciting. SHL is currently trading at a 43.1% discount to its RNAV of RM2.74. Applying a 30% to RNAV, we arrived at a 12-month target price of RM2.20.
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Supermax Corporation
Getting Bigger and Bigger
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) SUCB MK 226.98 522.06 2.40 | 1.29 714.02 0.21 0.76 2.46 1.11 0.71 1.07
INVESTMENT MERITS
One of the largest rubber glove producers in the world M&A will boost production capacity by more than 50% Effective strategy by creating customer loyalty through brands and aggressive distribution channels Earnings is expected to grow by 28% CAGR for the nest 3 years Trading at PER of between 7x and 9x for FY07 and FY08

Dato Seri Stanley Tai Datin Seri Cheryl Tan Dubai Investment Group 24.0 17.5 11.0
COMPANY PROFILE
Supermax Corporation is the second largest latex glove manufacturer in Malaysia with an annual capacity of 8.3bn pieces of gloves. Running on 64 production lines, it operates from six factories located in Sungai Buloh (3), Klang (2) and Alor Gajah (1). All its products are catered for the export markets, the largest being the US, followed by Europe, Australia, Latin America and Asia Pacic. About 60% of its gloves are sold as powdered gloves and 40% are powder-free. It is mainly an Own-Brand-Manufacturer (OBM), with various brands such as Supermax, Aurelia, Maxter, Supergloves and Medic-Dent.

Month 1m 3m 6m 12m Absolute 15.92 11.48 56.38 24.65 Relative 10.11 (2.98) 20.12 (9.27)

GROWTH CATALYSTS
Acquisition of Seal Polymer. Supermax has proposed a M&A with Seal Polymer by acquiring the remaining 71.3% of Seal Polymers shares which is does not own for RM1.10/share to take it private. The acquisition involves the issuance of 37.9m new Supermax shares (50 sen each) and a cash payment of RM15.9m to minority shareholders of Seal Polymer. Industry is growing strongly. The market for gloves is expected to continue to grow as regulatory standards on occupational safety are becoming more stringent coupled with the increase in world population. The rubber glove industry will remain strong and resilient with global consumption growth per annum of 12% (16bn pieces).
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Increase production capacity. The M&A will result in the consolidation of production capacities of Seal Polymer with about 5bn pieces of gloves into Supermaxs total capacity. On top of that, Supermax is planning to expand its existing line from 8.3bn pieces to 10bn pieces. By end of FY07, the group will be able to produce 14.9bn pieces of gloves per annum and the number will be increased to 18.1bn pieces per annum in FY08. Effective marketing strategies. Different brand names, creative packaging, added avours and textures have all contributed to creating customer loyalty to its gloves. Supermax has also been able to reach its customers effectively be setting up retail distribution networks around the globe.

COMPANY REPORT CARD

ROE. We expect Supermax to generate an ROE of above 15% and 18% for FY07 and FY08, meanwhile earnings are expected to grow at a CAGR of 28% from FY09FY09. Management. Supermax Corporation is the brainchild of Dato Seri Stanley Thai and Datin Seri Cheryl Tan. The promoters have been in the glove manufacturing business for more than 17 years. Dato Seri Stanley Thai is a hands-on man in production as well as marketing. Dividend. We expect Supermax to pay dividend of 4 sen per share for FY07 translating into gross yield of 1.8%.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 101.9 78.0 (48.4) 9.5 141.0 80.0 31.7 111.7 29.3 0.0 141.0 46.9 (16.7) FY04 FY05 FY06 140.7 161.8 173.4 115.9 208.8 219.2 (98.3) (108.2) (126.3) 19.3 102.4 127.3 177.6 364.9 393.6 81.1 89.8 112.3 58.2 114.7 128.5 139.3 204.5 240.8 38.3 160.3 152.8 0.0 0.0 0.0 177.6 364.9 393.6 101.4 200.4 212.7 (85.0) (145.9) (184.1)
RECOMMENDATION
We peg a fair value of RM2.66 by applying a target PE of 12x over FY07 EPS of 22.1 sen.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 29.0 (1.4) 29.1 (34.8) (91.6) (29.8) (7.6) 123.2 (17.3) (13.4) 30.2 (18.0) 29.1 15.8 45.9 0.0 0.0 0.0 15.8 45.9 27.9
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Taliworks
Expanding into China
Others
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) CI MK 373.78 616.74 1.98 | 1.32 623.03 (0.01) (0.46) 9.08 1.12 0.77 0.79
INVESTMENT MERITS
A water concession holder managing a total of 6 water treatment plants with a combined capacity of 1,039 mld in Selangor, Kuala Lumpur and Langkawi as well as Tianjin Panlou Water Transfer Station in China Stable earnings growth from Selangor Sunga Harmoni (SSP1) concession Expanding into Chinas waste water management Consistent dividend payment, at least 50% of its net prot as dividends over the next three years beginning from FY06

Lim Family KPS 54.6 19.2
COMPANY PROFILE
The company manages six water treatment plants with a combined capacity of 1,039 mld in Selangor, Kuala Lumpur and Langkawi. The company has ventured overseas and was recently awarded a 21-year concession rights for the operation and maintenance of Tianjin Panlou Waste Transfer Station in China. Taliworks also undertakes related water facility construction projects although most of the work is subcontracted out. Taliworks currently holds three concessions, two of which are in Malaysia and one in China, namely (i) Selangor Water Treatment (SSP 1), (ii) Langkawi Water Supply and (iii) Tianjin Waste Management.

Month 1m 3m 6m 12m Absolute (7.80) (1.80) (2.37) 28.84 Relative (12.04) (14.16) (24.68) (8.46)

KEY HIGHLIGHTS
O&M operator for Splash and a full concession in Langkawi. SSP 1 is the largest contributor to earnings and is one of the biggest water treatment plants in the country with a nominal capacity of 950 mld. Langkawi water concession operates with 5 plants with a total capacity of 89.5 mld. Stable concession earnings. A major plus point for Taliworks is the consistent earnings from the concession. In terms of earnings contribution, the SSP 1 is the largest contributor to earnings to the group. Furthermore, the company has adjusted its bulk supply rate upwards last year from, RM0.33/ m3 to RM0.35/m3. In addition, Langkawi water is scheduled for a tariff hike beginning Jan. 07, from RM1.70/m3 to RM1.92/m3. Construction works to bolster earnings. The company has secured a RM149m construction work for Kedah Water Board for the design and construction of the water supply system for the Padang Terap Water Supply Scheme. Further upside in earnings is expected for FY07 and FY08 from this project.
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Net cash position. The Groups net cash position has declined from RM104m to RM65.3m, with cash per share at RM0.35/share. The fall in cash was due to investments made in a unit trust amounting to RM79.5m. Consistent dividend. Taliworks announced it will pay at least 50% of its net prot as dividends over the next three years beginning from FY06. The dividend will be paid in the second and fourth quarters as well as a nal interim dividend. Based on our estimate, we expect Taliworks to declare a DPS of about 5.8 sen in FY06, translating to a dividend yield of 4.1%. Expansion into China. Taliworks has two waste water management concessions in China. The rst is a 21-yr Tianjin Waste Management with an expected revenue of around RM8-9m based on estimated waste at least 800m tons/day and at a fee of RMB48/ton. The second concession secured in 2006 is a 30-yr concession for 50mld waste water treatment at Guanghan San Xin Dui via its 70% stake in the JV company. We do not expect contribution from both projects to be signicant in the rst few years of operation.

FYE 31 Dec Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 171.5 196.1 142.9 198.79 27.3 14.3 (27.1) 39.1 37.1 59.1 50.4 65.6 39.4 57.9 50.6 66.47 27.8 43.9 34.9 47.87 7.9 12.5 9.6 12.83 (24.0) 57.9 (20.5) 37.2 0.69 0.78 0.84 0.85 10.5 8.0 10.0 12.0 6.4 4.8 6.1 7.3 20.9 13.2 17.2 12.9 2.39 2.12 1.96 1.95 0.1 0.6 0.6 0.3
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 62.1 142.0 218.6 222.8 (64.1) (114.0) 216.6 249.8 176.1 176.1 40.2 62.0 216.3 238.0 0.3 11.8 216.6 249.8 0.8 39.3 23.6 16.8 FY05 113.9 228.3 (59.2) 282.0 176.1 97.4 273.5 8.5 282.0 12.0 104.7 FY06 132.2 218.7 (32.4) 318.5 186.7 126.1 312.8 4.9 0.8 318.5 7.9 65.3
COMPANY REPORT CARD

ROE. ROE of the company averaged at 17.6% for the past 4 nancial years. Management. The company is founded by the late Dato Lim Ah Bak@Lim Geok Bak. The management of the company is mainly made from key and ex-senior ofcials from Works Ministry and Jabatan Bekalan Air. Dividend. Taliworks announced it will pay at least 50% of its net prot as dividends over the next three years beginning from FY06.
RECOMMENDATION
FY07 earnings will grow, underpinned by the new construction work for Kedah Water Board worth RM149m. However, we have yet to impute the contribution from the latest China venture pending further details. We have a BUY recommendation with a target price at RM2.05 (DCF at 10% hurdle rate). A 10 sen gross dividend was announced with a yield at 7.3%.
FY04 FY05 FY06 12.1 63.6 30.4 (13.2) 32.9 (74.9) 10.2 (38.3) 8.9 9.2 58.2 (35.6) 16.2 25.4 83.5 25.4 83.5 47.9
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Tanjung Offshore
Jacking Up Earnings
Oil & Gas
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TOFF MK 142.57 510.40 3.86 | 1.42 264.62 60.0 1.32 2.21 0.62 1.17 0.80
INVESTMENT MERITS
An integrated upstream oil & gas player offering highly demanded services such as marine support vessels and jack up drilling rigs Set to benet from the development of 25 marginal oil elds through its stakes in Mobile Offshore Production Units Net prot to grow at 43.4% CAGR to 2008 Net gearing has decreased to a reasonable level of 22% from >100% through strong cashows from marine support vessels Fair value of RM4.20 represents a potential upside of 17.3%

Omar bin Khalid Abdullah bin Hashim 44.2 14.8
COMPANY PROFILE
Tanjung Offshore (TOFF) is an integrated oil & gas company, providing services to the upstream oil & gas sector. The Groups activities can be classied into four sectors namely: Provision of engineering equipment and parts to oileld operators in Malaysia, specializing in gas turbines, compressors, pumps and switchgears. Provision of maintenance services on engineering equipment supplied. Provision of drilling and production equipments such as the recent THE 208 jack up drilling rig to Murphy Oil and the MOPU to Cendor marginal oileld. Provision of offshore marine support vessels with a current eet of six vessels. TOFF operates from Kemaman, Labuan and Miri where it supports the local oil & gas industry as well as from Manjung and Pasir Gudang, providing support to the navy and several power plants.


3.80 3.60 3.40 3.20 3.00 2.80 2.60 2.40 2.20 2.00 Oct-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07
KEY HIGHLIGHTS
Increasing activity offshore Malaysia. Petronas has laid out elaborate plans to develop Malaysias oil reserves over the next ve years and oil & gas service players like TOFF are already reaping in the prots. TOFFs services, especially marine vessels and jack up drilling rigs, are one of the most highly demanded in the industry and hence are able to command premium rates. Marine support vessels command peak rates of up to USD1.50 per break horse power (bhp) while jack up drilling rigs are leased at at least US$120,000 per day.
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More jack up drilling rigs. TOFF has quickly replenished the drilling rig segment with the THE 208 jack up drilling rig, which it is chartering out to Murphy Sarawak for RM430m over three years. Although gross margins of 3-5% seemed minimal, the impact on bottom line remains positive. Earnings growth prospects for TOFF also look good with plans to add on another two rigs. The contracts for these jack up drilling rigs work similarly to third party charter for marine support vessels, where TOFF charters the rig from a foreign party, and then re-charters it out to a local player hence earning the charter rate difference. 2nd MOPU to be introduced. TOFF is the rst supplier of a MOPU (Marginal Offshore Production Unit) in Malaysia to the Cendor eld operated by Petrofac. Currently, TOFF has a 20% stake in this MOPU and is expected to have a similar stake in the second MOPU to be introduced by end of the year. The rst contract, worth RM85m, is for two years and has the potential for contract renewal to develop other marginal elds. In Malaysia alone, there are 25 marginal elds to be developed and TOFF is surely to benet from its rst mover advantage in the industry. More vessels, better margins. The Group has since last year moved out of third party chartering and is now focusing on own vessel chartering. Since FY05, TOFFs eet has increased to six vessels and this will help to drive bottom line going forward. Charter rates for AHTS and Supply Vessels are holding strong at USD1.50 per break horse power and at this level the Group is able to earn gross margins of up to 50%. Going forward, TOFF has one more AHTS to be delivered in FY08 and is looking to acquire more vessels.
FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 251.7 263.4 438.1 603.3 12.5 4.6 66.4 37.7 11.6 22.2 43.7 60.1 11.8 19.1 29.4 48.6 16.1 18.6 28.7 47.4 19.1 11.1 17.2 28.4 (16.5) (41.8) 54.7 65.0 0.86 0.76 0.86 0.95 1.8 3.6 3.6 3.6 0.0 0.0 0.0 0.0 18.7 32.2 20.8 12.6 4.2 4.7 4.2 3.8 (0.5) (0.9) (0.6) (0.2)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 FY04 FY05 FY06 - 38.9 130.4 285.0 - 75.3 88.2 85.4 - (40.2) (105.2) (103.5) 0.0 0.0 0.0 - 74.0 113.4 267.0 - 42.0 42.1 83.3 0.0 16.0 31.0 - 56.3 72.6 126.1 - 17.6 40.8 140.8 0.0 0.0 0.0 - 74.0 113.4 267.0 23.6 51.4 151.4 16.0 (40.8) (143.5)
COMPANY REPORT CARD

ROE. ROE should be maintained in the mid-teens level going forward. Margin is expected to jump in 2007 as TOFF adds on two vessels, which command high margins from chartering. Management. The MD and co-founder of the company, En. Omar bin Khalid, has 16 years of experience in the oil & gas industry. Dividend. An annual minimal payout of 3 sen is expected. We identify the company as a growth stock with prots to be reinvested in acquisitions of vessels or to fund stakes in MOPUs.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 - (4.3) (41.0) - (47.1) (84.2) - 53.7 119.8 2.4 (5.4) 0.0 2.4 0.0 0.0 2.4 (3.0)
RECOMMENDATION
We continue to like TOFF for its ability to fully capitalize from the demand for oil and gas equipment and services in Malaysia through its unique product and service mix. While FY07 PEs are looking a little steep at the 20.8x level, FY08 earnings will see signicant growth from the second jack up drilling rig, new MOPU and new vessels, bringing down prospective FY08 PE to 12.6x. Our fair value of RM4.20 is based on FY08 EPS pegging a 15x industry PE and FY08 book value pegging the industrys 3.5x level. To note, there will be an upcoming 2:5 bonus issue and our ex-all fair value would adjust to RM2.90.
OSK
190
Tek Seng Holdings

TS
Industrial
A Leader In Its Own Right
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TEKS MK 240.00 111.60 0.71 | 0.32 1526.25 0.01 0.28 2.50 1.69 1.08 0.33
INVESTMENT MERITS
One of the leading PVC oor covering makers in Malaysia Planning to expand its export sales by tapping into more new markets Production capacity is set to increase by 30% per annum Raw material prices are falling, thus favouring the company Share price has over 35% upside
COMPANY PROFILE
The Group has a track record of more than 30 years in the plastics industry with the late founder, Loh Phah Seng @ Loh Boon Teik heading the company until 1989 when Loh Kok Beng, his eldest son took over the helm of the company. Loh Kok Beng is the current executive chairman of the group with experience of about 20 years. Tek Seng Holdings Berhad was listed on October 2004 with its principle activities in the manufacturing of PVC related products such as oor covering, trading of plastic related products and letting off properties. The PVC oor covering sheets are mainly targeted at low to middle income groups especially in the sub-urban area of Malaysia. Flooring sheets is the main revenue for the company accounting for about 84% of total revenue. Tek Sengs net earnings have been growing at an average of about 10% per annum for the past 6 years.

Loh Kok Beng Loh Kok Cheng Soon Seok Choo 28.4 28.4 5.3

Month 1m 3m 6m 12m Absolute (2.08) 2.04 (0.06) 44.41 Relative (6.78) (13.69) (25.39) (1.51)

GROWTH CATALYSTS
Tek Sengs production plant is located in Bukit Mertajam with 5 calendaring machines, capable of producing about 40,000 tonnes of PVC calendaring products per annum. Due to strong demand the plant is running on 3 shifts and almost at its peak of production capacity. Increasing export sales. The export market currently comprises about 42% of Tek Sengs revenue which includes Indonesia, Middle East, Europe and other SEA regional countries. The company plans to increase its export revenue to 50% in the near future. Tek Seng currently exports about 8% to Indonesia; we believe there is still ample space to grow in that country. Given its huge population of more than 220 million people where most are categorised under the low income group, this would be a great opportunity for the company to expand its market share. Also, management has highlighted that South America has good potential and Tek Seng is planning to break into it.
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Lower material cost. The rising crude oil price over the past 2 years has caused operating margin to decline from 28.9% in FY03 to 18% in FY05. This is because raw materials are made from PVC resin with petroleum products accounting for about 65-70% of the production cost. The current decline in crude oil price will ease the price of polypropylene as they are very closely related. Moreover, Tek Seng has increased its selling price amid the rising crude oil price, and now, the falling crude oil price will provide a stronger buffer for the company. We expect the EBITDA margin will at least stabilise if not increase in the next nancial year. Plant expansion. With current capacity already at the optimal level, the company has plans to increase production capacity to cater for the strong demand. At present, 2 of the 5 calendaring machines do not have (i) raw materials auto feed system, (ii) a Banbury mixer with the feeding into the machines done manually. As such, Tek Seng is planning to upgrade these 2 machines with an auto feed system and Banbury mixers whereby raw materials can then be pumped into the Banbury mixer directly from raw material tanks. The production process will be more efcient and able to increase total capacity by 1,000 tonnes per month. With the upgrades coming on stream, total production capacity will be increased from 40,000 tonnes to 50,000 tonnes per annum. In addition, with enhanced automation the company is able to reduce labour costs.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 33.3 96.0 120.3 128.9 (36.2) 188.6 25.3 7.1 9.2 17.3 20.1 25.3 7.7 13.6 13.8 18.8 5.7 9.9 10.1 13.5 6.3 4.1 4.2 5.6 89.6 (34.8) 2.0 33.8 0.3 0.3 0.4 0.4 3.2 3.2 3.0 3.0 6.9 6.9 6.5 6.5 7.3 11.3 11.0 8.2 1.5 1.4 1.3 1.2 (0.0) (0.1) (0.1) (0.1)
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Funds LT Liabilities Others Total Gross Debt Net Debt FY03 FY04 FY05 FY06 - 62.1 80.6 82.8 - 39.5 41.0 59.0 - (21.2) (28.2) (43.7) 0.0 0.0 0.0 - 80.4 93.4 98.1 - 48.0 48.0 60.0 - 26.8 30.9 23.6 - 74.8 78.9 83.6 5.6 14.5 14.5 0.0 0.0 0.0 - 80.4 93.4 98.1 - 12.8 24.3 36.8 - (11.2) (22.1) (35.1)
COMPANY REPORT CARD

ROE. With production capacity and reducing raw material prices, we expect Tek Seng to register net earnings of RM13.5m for FY07 and ROE should be 15.5%. Management. Mr Loh Kok Beng is the current executive chairman of the group. He has experience in the industry of about 20 years. Dividend. For FY06, the company proposed a 3 sen dividend per share, which translates into a gross yield of 6.5%. We expect the same dividend payout for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 9.1 13.2 7.4 (10.3) (11.1) (14.4) 2.7 (1.5) 1.1 1.5 0.5 (5.9) 0.0 1.5 2.0 0.0 0.0 0.0 1.5 2.0 (3.9)
RECOMMENDATION
We value Tek Seng at RM0.63 by applying the composite average of 11x PER over FY07 EPS of 5.6 sen and P/BV of 1.7x. We maintain our BUY call on the stock.
OSK
192
The Store Corp.

The Biggest is Getting Bigger
Consumer
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) STORE MK 68.50 208.25 3.50 | 2.30 27.76 0.19 0.34 3.05 1.38 0.57 3.73
INVESTMENT MERITS
76 Stores nationwide with dominance in secondary towns Future growth driven by the establishment of at least two stores per annum at strategic locations in Malaysia New chain of stores in Larut Matang Supermarket to boost future prots Trading at PER of 6.2x for FY06 and 5.9x for FY07, well below its other larger peers

Equatorial Century Sdn Bhd Berjaya VTCY Sdn Bhd Surplus-ED Capital Sdn Bhd 21.8 5.2 5.0
COMPANY PROFILE
The Store Corporation is one of the countrys leading operators of supermarkets and departmental stores with 76 outlets throughout the country. It was recognized on 2001 as the Oldest Existing Supermarket cum Departmental Chain in Malaysia, with its operations commencing in 1968. The Store continues to hold these records into 2007.

Month 1m 3m 6m 12m Absolute 6.67 6.67 5.56 13.01 Relative 2.64 (5.96) (17.86) (15.75)
KEY HIGHLIGHTS
With the intention to further strengthen its position, The Store Corp is going ahead with an expansion plan and bringing in new concepts into its chain of stores. New chain of stores. The Store had on October 2006 completed its acquisition of Larut Matang Supermarket Holdings Bhd on 13 October 2006, upon which Larut Matang and its subsidiary Fajar Retail Enterprise S/B became wholly-owned subsidiaries of The Store. Currently, Fajar operates 15 outlets in Peninsular Malaysia. With the 17 new outlets opened in Sabah and 15 Fajar outlets in Peninsular Malaysia upon completion of the acquisition, the total number of The Store outlets increased to 76 outlets.

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Store growth. Growth is underpinned by a buoyant economy, whereby the Malaysia Retailers Association expect retail sales to grow in tandem with GDP in FY07. We expect GDP growth of about 6.2% in 2007, therefore, store growth in FY06 is expected to be around the same region. Outlet expansion. To stay ahead of its competitors, The Store has continuously undertaken network expansion by upgrading existing and opening more outlets. The on-going expansion of outlets in various locations from urban to sub-urban centres is aimed at generating growth opportunities and revenue; providing accessibility and convenience for customers through a wide retail network. The Store plans to open at least 2 outlets every nancial year. Lack of direct competition. The Stores key strength is its wide presence in secondary towns where big foreign players have little presence. It does not face direct competition from other departmental stores such as Jusco, Giant and Parkson.

FYE 30 Sep Turnover Growth (%) EBITDA Pretax Net Earnings EPS Growth (%) NTA/Share Div (Gross) Div (Yield) PER P/NTA Net Cash/ Share FY05 FY06 FY07f FY08f 1992.9 1549.3 1679.7 1784.3 71.2 (22.3) 8.4 6.2 67.4 61.6 68.5 74.0 52.4 41.9 45.6 47.7 36.4 28.9 31.9 33.4 35.4 42.2 46.6 48.7 (10.1) 19.1 10.4 4.6 3.2 3.7 4.1 4.5 6.0 7.0 7.0 7.0 2.0 2.3 2.3 2.3 8.6 7.2 6.5 6.2 0.9 0.8 0.7 0.7 (1.2) (1.3) (1.9) (2.1)
Balance Sheet (RMm)

FYE 30 Sep FY03 FY04 FY05 FY06 Fixed Asset 201.4 214.7 273.0 286.2 Current Asset 236.6 261.3 375.2 431.7 Current Liabilities (261.1) (276.5) (327.2) (322.7) Others 31.3 30.8 37.0 35.3 Total 208.2 230.3 358.2 430.5 Share capital 62.3 68.5 68.5 68.5 Reserve 118.3 136.4 165.9 193.1 Shareholder Funds 180.6 204.9 234.4 261.6 LT Liabilities 27.0 25.0 123.5 168.6 Others 0.6 0.4 0.3 0.3 Total 208.2 230.3 358.2 430.5 Gross Debt 28.7 55.1 172.2 198.2 Net Cash/(Debt) 7.1 26.6 (81.7) (87.6)
COMPANY REPORT CARD

ROE. We expect The Store to register a ROE of at least 11% for FY07-FY08. Balance sheet is manageable with net gearing of 0.3x and interest coverage of 6.5x. Management. The management is moving towards making shopping an enjoyable outing. The Company is spending RM5m to RM10m annually to refurbish the outlets. Dividend. For FY06, the company paid 7 sen dividend per share, which translates into a gross yield of 2.3%. We expect the same dividend payout for FY07.

FYE 30 Sep Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 46.2 (6.3) 38.4 (25.9) (70.7) (41.3) 41.5 80.3 28.5 61.8 3.4 25.6 19.5 81.3 84.6 (0.0) 0.0 0.0 81.3 84.6 110.3
RECOMMENDATION
The share price is currently trading at 6.6x PER on FY06 earnings. We expect The Store to trade between 5x and 6x for FY07 and FY08. We peg a 12 month target price of RM3.26 based on the average of 7x FY07 EPS of 46.6 sen and 0.8x P/BV.
OSK
194
TRC Synergy
The Next Big Thing
Industrial
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TRC MK 133.34 208.01 2.30 | 0.93 726.93 0.24 0.35 2.02 0.57 1.22 1.19
INVESTMENT MERITS
The outstanding order book for the company is at RM902m with an annual replenishment of RM400m Commendable margins from negotiated projects, at around 15% to 20% compared to open tender margins at 5% Expanding into Oil & Gas and privatisation project but development is still at very early stages One of the few Peninsular Malaysian companies that has UPK Class A license for Sarawak, allowing the company to bid for State contract jobs

Kolektif Aman Sdn Bhd TRC Capital Sdn Bhd Dato Sri Sufri B Mohd Zin LTAT 18.2 18.4 13.0 8.4
COMPANY PROFILE
The Company was incorporated as a private limited company in Malaysia under the Companies Act, 1965 on 11 December 1996 under the name TRC Synergy Sdn Bhd. On 8 January 1997, the company changed its status from a private limited company to a public company and assumed the name TRC Synergy Berhad. TRC is principally an investment holding company while the principal activities of its subsidiary companies and associated company are in the eld of general contractors carrying out construction works, hiring and servicing of vehicles, selling construction materials and providing related services. In addition, the group also involved in the property development and manufacturing and dealing in concrete piles and ready-mixed concrete.


KEY HIGHLIGHTS
Proven track record with an expanding order book. Since the mid-1990s, the company has successfully completed projects worth more than RM2.0bn coming from both the government and private clients. Outstanding order book currently stands at RM902m. Commendable margins from negotiated projects. Negotiated projects offer much favourable gross margins at between 15% and 20% compared to open tender margins at 5%. Healthy order book replenishment. We expect the award of two more projects in CY07, with a combined value of RM400m that would push order book beyond the RM1.0bn mark. The annual order book replenishment is expected at RM400m with most of the projects from the 9MP.
195
Expanding into Oil & Gas and privatisation project. Development is still at very early stages with initial move involving submission of proposals for domestic oil & gas projects. The group is also negotiating other BOT and/or BLT project under the PFI mechanism in an attempt to secure a long term concession income. UPK Class A license for Sarawak. TRC is one of the few Peninsular Malaysian companies that hold a UPK Class A license for Sarawak, allowing the company to bid for state contract jobs. Sound nancials. The company has returned to the black with a net prot of RM8.2m from a loss of RM5.2m in FY05 on the back of 59% rise in turnover. Operating margins improved from 6.7% to 13.5% as the company managed to secure more contracts on negotiated basis, which command higher margins.

FYE 31 Dec Turnover Growth (%) EBIT Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 115.7 (48.2) 7.7 8.5 5.3 4.3 (49.9) 1.37 1.1 0.7 36.5 1.14 (112.1) FY05 62.5 (46.0) 2.9 3.0 1.4 1.1 (73.8) 1.31 0.3 0.2 139.1 1.19 (99.3) FY06 226.5 262.2 20.4 13.1 8.2 6.7 495.6 1.40 1.7 1.1 23.3 1.11 (75.4) FY07f 509.5 124.9 51.1 43.7 30.6 24.8 271.3 1.49 6.2 4.0 6.3 1.05 (33.6)
Balance Sheet (RMm)
COMPANY REPORT CARD

ROE. ROE of the company averaged at 17.6% over the past 4 nancial years and is expected to remain at that level. Management. The company is run by Dato Sri Sufri bin Hj. Mohd Zin who has more than 20 years experience in the construction industry. Dividend. The Board of directors has approved a dividend policy of at least 25%.
RECOMMENDATION
Based on FY08 earnings estimates and applying average small cap forward PER at 10x, we arrived at a fair value of RM3.40/share, indicating a potential upside of 118% from the current level. We are optimistic on the prospect of the company under the 9MP and also its impending venture into the oil & gas and concession of privatized projects.
FYE 31 Dec FY03 FY04 FY05 FY06 Fixed Assets 53.0 47.4 39.4 41.1 Current Assets 271.0 260.5 231.8 239.6 Current Liabilities (197.6) (137.6) (105.2) (108.0) Others Total 126.4 170.4 166.0 172.7 Share capital 70.0 92.4 92.4 92.4 Reserves 49.6 34.2 28.9 37.2 Shareholder Fund 119.6 126.6 121.3 129.6 LT Liabilities 6.8 43.7 44.7 43.1 Others - (0.5) Total 126.4 170.4 166.0 172.7 Gross Debt 111.9 115.3 107.2 93.6 Net Cash/ (Debt) (105.2) (112.1) (99.3) (75.4)

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 (21.0) 0.9 15.3 2.6 7.4 2.1 22.2 1.6 14.2 3.8 9.8 31.6 (50.1) (46.3) (36.5) (46.3) (36.5) (4.9)
OSK
196
TSH Resources
All Set To Deliver
Plantations
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TSH MK 369.15 911.81 2.77 | 1.19 972.56 0.92 0.34 2.36 0.84 1.45 1.13
INVESTMENT MERITS
An integrated palm oil player that makes full use of palm oil waste Expanded land bank in Indonesia, improve FFB yield in Sabah estate couple with strong CPO prices to improve plantation and CPO milling contributions Commencements of renery in December 2006 together with the selling of carbon credit are new additions to income from FY07 Biomass division expects to contribute stable prot circa RM7.9m p.a. On-going costs and currency management together with aggressive brand building should improve Ekowoods protability

Tan Soon Hong & Family Lembaga Tabung Haji Eccles Equity Asia Ltd. 44.0 9.2 4.4

COMPANY PROFILE
Mr. Tan Soon Hong whom was initially involved in commodities trading founded TSH in 1962. It then ventured into the marketing and distribution of cocoa in 1979 and subsequently turned into a manufacturer of cocoa products. The company ventured into the oil palm plantation in the mid 1990s by converting their cocoa plantations to oil palms and operated its rst palm oil mill in 1997. TSH was listed on the Second Board on 1 February 1994 and was subsequently transferred to the Main Board on 12 June 2000. Moving forward, TSH will focus on their bio-integration project and continue expanding its conventional plantation and palm oil business.

KEY HIGHLIGHTS
Palm oil miller to rener. TSH currently operates 4 palm oil mills with a total capacity of 1.5m MT p.a. in Sabah and Sumatra, Indonesia. Milling margins are expected to improve in line with the steady CPO prices estimated at @ RM2,150/tonne for CY07. TSH has formed a strategic alliance with Wilmar Edible Oils SB to undertake a palm oil renery and kernel crushing plant that begun operation in Dec 2006, hence a new source of income for TSH. Expansion in Indonesia. Malaysia is currently lacking suitable and reasonably priced landbank for plantations. As such, TSH has embarked on its expansion to both Sumatra and Kalimantan in Indonesia via strategic partnerships. To-date, the companys landbank of approximately 50,000ha, with about 50% unplanted. Now with its substantial planted area in Sabah coming of prime age couple with the successful re-habitation exercises on its Indonesia estates, we expect the company benet from the higher CPO prices going forward.
197
Huge potential in bio-Integration project. Basically this entails turning oil palm wastes into (i) electricity, (ii) industrial steam and (iii) eco-friendly paper. TSHs biomass division expects a stable prot stream circa. RM7.9m p.a. More interestingly, TSH is the 1st in the world from turning oil palm empty fruit bunches (EFB) into 80 gram writing paper. This venture could potentially contribute RM105m in revenue and RM30m in net prot upon optimal utilization of its 30k tonnes capacity based on the current paper price of approximately 800/tonne. TSH also expects to generate industrial steam via palm efuent for internal consumption by its Eko-paper plant. The industry steam and paper plant is expected to commence operation in FY08. Cocoa and carbon credit. TSH has ventured into the cocoa business since 1979. Continue efforts to improve supply chain may optimize its cocoa capacity utilization, thus projected to contribute RM7-8m in net prot per year going forward. On top of that, efforts to optimize palm oil waste has qualify TSH for certied emission reduction (CER) that can be sold as carbon credits under the Kyoto protocol. We expect the CER may contribute income exceeding RM5m from FY07 onwards. Ekowood International. A 65% owned subsidiary manufacturing internationally acclaimed engineered solid hardwood ooring and has won many prestigious awards. Keen competition by new entrants especially from China and Indonesia, weakening as well as surge in petrol chemical base raw material prices and distribution costs have squeezed prot margin for the past 2 years. Nonetheless, with on-going costs and currency (hedging) management coupled with aggressive brand building should improve Ekowoods protability moving forward.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04^ 477.9 18.7 86.3 83.0 72.1 18.9 43.2 1.09 8.4 3.4 13.1 2.3 (0.28) FY05* FY06 FY07f 545.9 641.6 837.5 14.2 17.5 30.5 71.8 92.8 129.1 49.8 65.1 96.9 29.7 50.6 83.0 8.1 13.7 22.5 (56.9) 68.3 64.1 1.05 1.13 1.29 6.9 4.8 7.8 2.8 1.9 3.2 30.3 18.0 11.0 2.4 2.2 1.9 (0.25) (0.46) (0.59)
^ FY04 gures include prot of RM15.3m arising from disposal of Ekowood shares via IPO. * FY05 prot and EPS include additional RM8.9m tax expenses arising from mandatory reversal.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 254.9 110.2 (56.5) 14.9 323.5 88.7 126.8 215.5 100.8 7.3 323.5 90.0 (83.3) FY04 311.0 145.6 (63.3) 15.0 408.3 97.6 170.6 268.2 125.1 15.0 408.3 92.0 (70.7) FY05 FY06 379.1 431.0 223.7 288.8 (94.9) (125.8) 12.6 12.6 520.6 606.6 100.0 182.4 239.6 212.9 339.6 395.3 122.5 147.5 58.4 63.8 520.6 606.6 97.4 117.0 (84.1) (92.2)
COMPANY REPORT CARD

ROE. Albeit a small hiccup in FY05, TSH made an instant recovery and posted a ROE of 12.3% in FY06. As all divisions are set to make a comeback, we projected TSHs ROE to stand at 18.1% for FY07. Management. The company is currently under the helm of the second generation of the Tan family whom are dynamic and forward looking. The management is always looking ahead to enhance existing business and ventures into other synergetic business. Dividend. TSH has imposed payout policy of between 20 to 30% of prot which translates into decent dividend yield of 3.2% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 60.6 36.0 39.4 (62.8) (49.3) (77.4) 17.5 7.8 33.0 15.4 (5.5) (4.9) 5.0 20.6 11.4 0.2 (3.6) 4.0 20.6 11.4 10.5
RECOMMENDATION
Prevailing positive catalysts on all division have prompted us to maintain a BUY recommendation on TSH with a 12-month target price of RM3.00 or 21.6% upside. The fair value is derived from a sum of parts valuation methodology on FY07 gures. Coupled with dividend yield of 3.2% for FY07, the stock may potentially deliver a return of 24.8%.
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198
TSR Capital
Getting Busier by the Day
Construction
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) TSRC MK 103.00 190.55 2.20 | 1.33 105.08 (0.07) (0.24) 9.48 0.36 1.01 1.44
INVESTMENT MERITS
A construction company with strong exposure in government contracts Also involved in property development and rental of land for iron ore mining Strong potential from its newly launched Medical City at Enstek Park in Nilai Construction order book could breach RM1.0b in 2007 BUY with prospect buoyed by the 9MP projects with undemanding valuation with target price at RM2.25 based on 12x FY07 earnings

Segi Satia Sdn Bhd PNB 35.0 7.3

Month 1m 3m 6m 12m Absolute (0.54) (4.17) (0.54) 38.23 Relative (4.04) (15.29) (22.40) 1.88
COMPANY PROFILE
TSR Capital Berhad is engaged in construction, civil engineering and geotechnical works, as well as the manufacturing, trading and marketing of pre-cast concrete products. The Company comprises of four main business segments (i) construction, which is engaged foundation engineering, soil improvement, construction and civil engineering works, (ii) manufacturing, which is engaged in the manufacture and marketing of pre-cast concrete products, (iii) property development, and (iv) investment holding.

KEY HIGHLIGHTS
Build up in order book. The groups outstanding order book is at RM420m consisting of government-related works under the 9MP initiative. We expect order book to breach the RM1.0b mark this year with the roll out of new projects, namely (i) Penang Prison Complex (RM250m) under the 9MP, (ii) RM98m ECE Phase 2 (Package 12) project, (iii) TM R&D Department, Cyberjaya for RM40m and (iv) Shah Alam Police HQ (RM50m). Large scale project. Another project in the pipeline is the development of the Medical City at Enstek Park, Nilai. We have yet to impute the impact of the Medical City as we await for further details. The total value for the project is estimated to be at RM3.0b and will take about 8-10 years to complete. Phase 1 is worth RM1.1b. Iron ore mining has yet to show result. An iron ore reserve estimated at 4.0m metric tonnes was found in TSRs work site of a property development project in Gurun, Kedah. The company is waiting for the approval to mine the iron ore as environmental impact assessment is still being carried out.
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Kedah water privatisation. The company plans to participate in the Kedah state water privatisation program, which involve the construction of treatment plants and replacement of pipes. So far, there is no decision on this exercise. Promising prospect. Government-related jobs dominates TSRs order book and we expect the company would participate in projects under the 9MP e.g. constructing schools and hospitals. Nonetheless, focus in the near term will likely be on the construction and development of Medical City at Enstek Park. Earnings improvement. The company performed strongly in FY06, posting a 135% rise in revenue, underpinned by the strong replenishment of order book in FY05/06. Subsequently, its net prot rose 6-fold from RM0.9m to RM7.2m.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 115.7 (48.2) 7.7 8.5 4.0 3.9 (47.1) 1.47 5.0 2.7 47.7 1.3 32.8 FY05 FY06 FY07f 62.5 147.3 292.8 (46.0) 135.6 98.7 2.9 18.6 38.1 3.0 11.0 29.6 1.4 7.2 19.4 1.3 7.0 18.8 (65.4) 420.8 169.5 1.44 1.50 1.66 2.0 3.0 3.0 1.1 1.6 1.6 137.9 26.5 9.8 1.3 1.2 1.1 29.3 30.3 31.4
COMPANY REPORT CARD

ROE. ROE for the past 3 years averaged at 3.2%. Improvement in the upcoming FYs is expected with the estimated four-fold increase in net prot. Management. Y.M. Tengku Datuk Mustapha bin Tengku Mohamed is the Managing Director of the company and is also the largest shareholder via Segi Satria Sdn Bhd. Dividend. The company paid 5.5 sen gross dividend last year and we can expect similar payout this year.
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 18.6 184.0 (47.4) 155.2 103.0 49.4 152.4 2.8 155.2 1.1 62.1 FY04 15.3 170.1 (32.0) 153.3 103.0 48.5 151.5 1.8 153.3 0.6 32.8 FY05 15.9 156.9 (22.4) 150.4 103.0 45.7 148.7 1.7 150.4 1.2 29.3 FY06 16.9 160.2 (23.0) 154.1 103.0 50.8 153.8 0.7 154.5 1.2 30.3
RECOMMENDATION
A stronger performance for FY07 is anticipated as new projects commenced and higher billings from ongoing construction works. We value the company at RM2.25 based on 12x FY07 earnings.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY03 22.7 0.1 31.7 54.5 8.7 63.2 FY04 FY05 2.4 27.0 (2.7) 460.0 (4.3) (3.9) (0.0) 0.5 36.9 36.9 36.9 37.4
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UAC
Slow And Steady
Building Materials
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) UAC MK 74.34 321.14 4.90 | 3.86 91.23 0.34 (0.59) 6.84 0.99 0.60 4.05
INVESTMENT MERITS
A key manufacturer of asbestos-free bre cement boards 9th Malaysia Plan to boost domestic sales together with stronger replacement market Exports contribution to be more signicant up via extensive market penetration strategy Enthusiastic and experienced staff force driving the company forward Solid net cash of RM2.38 per share with generous payout ratio of 60%

Boustead Holdings Bhd Valuecap SB 38.5 4.3
COMPANY PROFILE
UAC was founded in August 1963 by a group of prominent international rms within the bre cement industry under the name Turner Asbestos Cement Pipes Ltd and was subsequently listed in 1966. The company was the rst in Asia to produce asbestos-free cement sheets in 1982 and today UAC product applications are not limited to only ceiling board but also fascia, wall partitioning, substrate for ooring re and insulation, roong as well as others decorative or innovative applications. The company also ventured into producing polyethylene pipes and steel roof truss systems which were synergetic to its existing product to broaden its product base. With more than four decades in business, the company remains protable during the various phases of economic cycles. The company is also actively seeking new overseas markets to elevate its exports contribution.

Month 1m 3m 6m 12m Absolute 4.85 8.54 3.36 (4.27) Relative (2.06) (4.57) (21.87) (33.67)

KEY HIGHLIGHTS
9th Malaysia Plan (9MP). We are certainly excited with the 31% increase in development expenditure under Budget 2007 to RM46.5bn for the development of schools, universities and housing that would boost UACs sales. Meanwhile, the robust commodity prices namely rubber and crude palm oil have contribute to higher disposable income amongst the rural folks hence lifted renovation activities within the rural areas translating to higher sales for replacement market. Exports to expand. Having raked in bulk of the local cement board market, UAC is now focusing on its export markets to improve overall performance. The company exported 33.8% of its product overseas in FY06 with main markets include Korea, Europe, USA, China and other South East Asia countries. UAC is condent that export contributions going forward to expand further and presently is focusing to breaking into South Africas bre cement board market.
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However, continue strengthening of the Ringgit may hamper its strategy but impact is partly mitigated by the lower cost of import materials. Day light, nally Over the years, the sluggish construction sector and stiff competition have negatively affected both the polyethylene pipes and steel roof truss divisions. In December 2006, UAC transferred its production facilities of its wholly owned subsidiary, UAC Pipes SB to the holding company to improve efciencies. Apart from that, we also expect a turnaround in its steel roof trusses division given the positive outlook for the construction industry and stabilized steel prices. Rental income soon The construction of Menara UAC in Mutiara Damansara is progressing well. UAC is expected to occupy 10% of the building with the rest of building rented out. In view of Menara UACs strategic location, we are optimistic that the rental yield to exceed 8% p.a. The building is schedule for completion by 4QFY07, and we expect net prot contribution of approximately RM2m from FY08 onward. Continuous improvement to eradicate cost pressure. Costs reduction has always been top of UACs list and to alleviate such pressure, hence the company continues to improve on its production efciency and quality. The company also put in extra effort in its R&D to introduce new products with better prot margin. Apart from that, the de-bottlenecking exercises over the years have progressively improve production capacity to cater for higher demand.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 185.7 180.1 183.0 199.0 6.2 (3.0) 1.6 8.7 46.4 36.3 33.3 44.3 48.9 40.4 40.8 44.3 35.4 28.3 30.9 32.5 48.3 38.2 41.6 43.7 5.4 (20.9) 8.7 5.1 3.72 3.87 4.05 4.23 37.3 32.3 34.3 36.4 8.6 7.5 7.9 8.4 8.9 11.3 10.4 9.9 1.2 1.1 1.1 1.0 2.10 2.28 2.38 2.34
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. UAC has registered double digit ROE for the past few years. Based on future growth catalyst, we are projecting attractive ROE of 10.6% and 10.8% for FY07 and FY08 respectively. Management. The company has been professionally run by a team of experience cum dedicated personnel whom have grown simultaneously with UAC over the years. Dividend. Its solid balance sheet with net cash position of RM176.7m as at 31 December 2006 has enabled the company to pay generous dividends for the past years. Based on a 60% payout ratio committed under the companys KPI, we have projected a decent gross dividend yield of 8.4% for FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 29.1 37.4 31.7 (4.9) (8.0) (8.1) (16.9) (14.7) (15.6) 7.3 14.7 8.0 146.6 154.0 168.7 0.0 0.0 0.0 154.0 168.7 176.7
RECOMMENDATION
Excluding the net cash per share of RM2.38, UAC is only trading at 4.4x FY07 EPS which was at a deep discount against its close competitor, Hume Industry Bhd. Given the consistent and generous dividend policy, we value UAC based on the Gordon Growth Model with conservative terminal growth rate of 2.5% and derived a fair value of RM4.65 or 7.6% upside. Coupled with the decent dividend yield of 8.4% for FY07, the stock may potentially deliver a 12-month total return of 16%.
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VADS
It Gets Better
Technology
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) VADS MK 1246.87 436.6 7.30 | 4.06 47.8 0.6 (0.1) 4.03 2.6 0.89 2.02
INVESTMENT MERITS
Top pick for small caps ICT exposure Uninterrupted revenue and prot track record since inception in 1991 Margins set to strengthen further with rising take-up of valueadded services High visibility from recurring sales of bread and butter managed network services (MNS) KPI revenue and net prot targets are conservative given healthy pipelines Valuations remain compelling at 9.9x FY07 and 9x FY08 EPS vs. 2 year EPS CAGR of 21%

Telekom Malaysia Public Small Cap Fund 66.8 4.8

COMPANY PROFILE
VADS started-out as a JV between Telekom Malaysia (TM) and IBM in 1991 to provide MNS to local and overseas customers. Its core business has since expanded to include managed e-services (SIS), systems integration (SIS) and contact center services (CCS). The company has an entrenched base of over 250 MNS customer including blue-chip names such as AT&T, Concert, SingTel and MCI. VADS listing status was transferred to the Main Board in Mar05 (from the Second Board) following a 1-for-2 bonus issue and after having met the prot track requirement, raising stock prole and visibility. TM remains the largest shareholder with a 68.2% stake.

KEY HIGHLIGHTS
Recurring order-book of RM350m. VADS has annuity contracts totaling RM320m as at end-Jan07 (comprising RM160m recurring revenue from MNS, RM160m- CCS and RM30m for SIS). Together with continuing healthy pipelines for both MNS and SIS, our FY07 forecast revenue growth of 17%which is above managements KPI target of 14% - is not unachievable. CCS will continue to be its key earnings driver underpinned by the maiden full year contribution for the RM250m TM Retail (TMR) contract. This should bump CCS revenue contribution to 35% for FY07 from 29% and 25% in FY06 and FY05 respectively. Win-win partnership with TM bearing fruit. The partnership with TM for MNS has shown positive results with VADS bagging 33 new contracts for its Premier suite in FY06, valued at RM66m- a new record. FY07 will see the full impact of progressive billings of these contracts, driving the projected 19% increase in MNS revenue. There is further upside from new MNS spin-offs such as data center services, and where VADS is also expected to capitalize
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on the setting-up of the Malaysian Internet Exchange (MIX). SIS to focus on e-infrastructure and messaging. Management has identied these segments as having the greatest upside given rm demand and growth prospects, and is condent of securing few new contracts. On top of annuity revenues of RM30m, we understand some RM47m worth of e-infrastructure projects have been secured recently. The SIS segment posted a contraction in FY06 revenue (-16% yoy) due to the high base effect in FY05, and where earnings were impacted by a one-off provision of doubtful debts of a TM customer amounting to RM4.5m. Good dividend paymaster. Management has guided for a payout of 4060% of earnings going forward to reect the guidance provided by its parent. We project DPS of 30sen/share for FY07/08, translating into net payout averaging 41% and decent gross yields exceeding 4%. The quantum of payout is unmatched by some of its larger Main Board peers such as Mesiniaga, HeiTech and CSA. CCS will continue to be the fastest growing segment. While the bulk of CCS business continues to come from the TM Group (>90% of CCS revenues), this has provided stability and good earnings visibility for VADS. Management is not resting on its laurels and is eyeing several private-sector and off-shore contracts that are at least RM50m in value. We understand as many as 7 such projects are in the pipeline with 3 off-shore awards to be secured soon.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 194.3 266.3 368.1 436.2 28.4 37.1 38.2 18.5 23.8 31.0 45.7 63.2 16.3 21.2 34.5 49.7 12.1 18.3 32.4 42.2 20.2 30.5 54.0 70.4 14.8 50.7 77.0 30.4 2.09 1.59 1.92 2.52 12.0 14.0 25.0 30.0 1.7 2.0 3.6 4.3 34.6 21.4 13.5 9.9 3.3 4.4 3.6 2.8 0.5 0.3 0.3 0.3
Balance Sheet (RMm)

FYE 31 Dec Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY04 22.5 134.3 68.6 88.2 40.0 43.7 83.7 0.0 4.5 88.2 0.0 0.5 FY05 28.6 177.6 105.4 100.8 60.2 35.5 95.7 0.0 5.2 100.8 5.1 0.3 FY06 31.2 222.6 126.0 127.8 62.1 63.1 125.2 0.0 3.9 129.2 10.0 0.3 FY07f 40.6 259.2 137.5 162.3 62.1 96.3 158.4 0.0 3.9 162.3 10.0 1.0
COMPANY REPORT CARD

ROE. VADS is expected to register ROEs in excess of 20%, thanks to its robust growth prospects and asset light balance sheet (little major infrastructure investment required). FY07-08 capex is not expected to exceed RM15m (< 5% of revenues). Management. Despite being majority-owned by TM, day to day operations are run by a team of professional managers led by CEO, Dennis Koh. Management execution is solid and employee efciency is high with a permanent headcount of only 300 (excluding staff transitioned from TMR). Dividend. Dividend payout has been on the rising trend since listing, providing good returns on top of spectacular capital gains. We think there is scope for capital management given the strong balance sheet and where options to improve share liquidity are being explored.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 14.1 19.7 20.5 (10.3) (15.8) (13.2) (5.0) (1.0) (0.6) (1.3) 2.9 6.7 20.8 2.9 6.7 19.5 22.3 29.1 14.1 19.7 20.5
RECOMMENDATION
BUY. We continue to like VADS for its solid earnings prole, management execution and superior ROEs- attributes unrivalled by even some of its larger Main Board peers. Earnings quality is second to none and underpinned by a healthy and growing order-book of RM350m (two-thirds are recurring in nature). Our target price of RM9.00 is based on unchanged 12x P/E on FY08 EPS. Catalysts for further share price re-rating are (i) rising margins and (ii) potential capital management.
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Yi-Lai
Efciency That Counts
Building Materials
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) YLAI MK 160.00 195.20 1.50 | 1.12 237.22 0.05 (0.30) 5.79 1.74 1.00 1.00
INVESTMENT MERITS
A smallish but efcient ceramic tiles producer with margins much superior than its competitors Proxy to the construction theme under the 9th Malaysia Plan and South Johor Economic Region New production lines to increase volume, improve quality and better product range tailored to customer needs Solid balance sheet prole supporting its generous dividend policy

Lim Oon Kok Zabibi Bin Md Zain 20.7 10.3
COMPANY PROFILE
Yi-Lai is principally involved in the manufacturing of ceramic and homogeneous tiles under the trademark Alpha Tiles. The company commenced operations in 1990 with the installation of a single Italian production line with 1.4m square meters capacity in Kulai, Johor. Over the years, Yi-Lai growth has been tremendous from gradual increase in production capacity and installing of a homogenous production line that commands more lucrative margins. The company managed to record unbroken protability since inception including during the currency turmoil in 1997 and this paved the way for Yi-Lai to list on the Main Board of Bursa Malaysia in 2002. Presently, the company is ranked 5th in the country with approximately 10% market share in the domestic ceramic tiles industry.


KEY HIGHLIGHTS
Yi-Lai is among the smallest ceramic tiles manufacturer in Malaysia, nonetheless size is not a constraint as the company has proven to be the most efcient producer in the country. Most efcient ceramic tiles producer. Yi-Lai has exhibited a superior track record against its peers in terms of prot margin and return on equity (ROE). Despite intense competition over the years, Yi-Lai managed to maintain EBITDA margins close to 30% which reinforces our belief on the companys ability to maintain its protability. Cost control is a vital aspect in a highly competitive industry compounded by excessive capacity in the industry.
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Beneciary from the 9th Malaysia Plan (9MP). We are positive on the lter through impact from the implementation of the 9MP. Nevertheless, we feel the effects to the ceramic tiles industry may not be immediate as the installation of ceramic tiles would only become apparent at the end of each construction project. This has led us to believe that the boost in sales should only take effect by the later part of 2007 onwards, in our opinion. Apart from that, government efforts in promoting the Southern Johor Economic Region is all set to boost the property market in Johor, hence potentially lift demand for ceramic tiles. More products launch and production. Yi-Lais existing production lines have been consistently running at about 90% capacity for the past years, thus the company had invested in a new production line in FY05 that expanded capacity by 2.4m sqm. Presently, Yi-Lai is utilizing its old line to conduct real production testing for the new products introduced by its R&D division tailored made to customer needs and to help in penetrating into new markets. Given the increasing sales volumes and wider product range in the previous year, the company is now carrying out de-bottlenecking exercise involving a RM10m investment in new machineries to alleviate production congestion in and is scheduled for completion by 2HFY07.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 133.9 119.7 132.7 135.0 1.7 15.7 (10.6) 10.8 47.7 40.9 38.5 40.5 39.9 33.7 32.1 34.3 29.0 27.7 23.9 24.7 18.1 17.3 14.9 15.4 13.1 (4.3) (13.8) 3.3 0.92 1.00 1.17 1.20 21.0 15.0 13.0 12.9 17.2 12.3 10.7 10.5 6.7 7.0 8.2 7.9 1.3 1.2 1.0 1.0 0.48 0.30 0.39 0.69
Balance Sheet (RMm)

COMPANY REPORT CARD

ROE. Given the anticipated improvement in the demand under the 9MP, we believe ROE will stay attractive moving forward. Management. Being the most protable ceramic tiles producer in Malaysia, management has continuously improve its business operations without compromising on product quality. Dividend. The company has been maintaining a generous dividend policy since listing with payout ratio around 35.8% to 83.5%. Therefore, we expect a decent gross dividend yield of 10.5% in FY07.

FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 40.3 23.3 35.5 (3.8) (27.0) (6.2) (22.5) (24.2) (15.0) 14.1 (27.9) 14.4 62.0 76.2 48.2 0.2 (0.1) 0.1 76.2 48.2 62.7
RECOMMENDATION
Given the efforts by the government in executing the 9MP projects, we believe Yi-Lais share price had bottomed. We maintain our Trading Buy recommendation with a 12- month target price at RM1.42 or 16.4% upside. The fair value is derived from a composition of peer PER, 5 year average peer PEBD and GGM on FY07 gures.
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YLI Holdings
Good News Begin To Emerge
Water
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) YLI MK 98.56 215.85 2.45 | 1.77 165.41 0.29 (0.25) 8.11 0.61 1.22 1.82
INVESTMENT MERITS
Key producer of ductile iron (DI) pipes in the region and a denite contender for water pipe projects RM2bn allocation for water pipes replacement under the 9MP, a boost to YLI performance going forward Huge potential from possible massive 45,745 km Asbestos Cement (AC) pipes replacement Export sales to further improve from aggressive marketing Experienced management, consistency in product quality and prompt delivery, have all contributed to YLIs unbroken prot record since in 1990

Fuji Fusion SB Employees Provident Fund Board Lembaga Tabung Haji 40.1 11.3 5.0
COMPANY PROFILE
YLI Holdings history dates back to 1966 after the establishment of Yew Lean Foundry at Lebuh Bakau, Penang that was principally involved in the manufacturing of cast iron products. In 1976, Yew Lean Foundry & Co SB was set up producing products comprising of cast iron ttings, manhole covers and cast iron joints, mainly to cater for water and sewerage works. Never to rest on its laurels, YLI in the 1980s conducted extensive research & development on Ductile Iron (DI) pipes as the company saw bright prospect for such products. In 1993, the company became the rst producer of DI pipes in Malaysia. The company was listed on the Second Board of Bursa Malaysia on 7 August 1997 and then subsequently transferred to the Main Board on 10 January 2001.

Month 1m 3m 6m 12m Absolute 6.83 15.26 14.37 5.81 Relative (0.21) 1.34 (13.98) (25.34)

KEY HIGHLIGHTS
Water pipes replacement under the 9MP. Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik recently announced that the water regulatory body, the National Water Services Commission (Span), will begin operations on March 2007. Apart from that, he also conrmed that RM2bn has been allocated specically to replace old pipes during the 9MP. We projected approximately 80% of RM600m capital spending by Syabas in Klang Valley water sector over the next 3 years earmarked for water pipes replacement in order to reduce non revenue water (NRW). Given the improved spending on water pipes, YLI stands a good chance to benet from the projects.
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Ductile iron pipe preferred. Our preliminary survey with most pipe laying players within the Klang Valley conrms that the government and concessionaires at present favour ductile iron (DI) pipe given its durability despite the slight premium in its pricing. Therefore, we reckon being a leading DI player, YLI stands a good chance to be the main benecially. On top of that, YLI have started producing lighter water pipes under the K40 class which are more affordable as the selling price is 10% to 15% lower. The introduction of this class has certainly made pricing of DI pipes comparable to MS pipes. On top of that, the installation of DI pipes does not required traditional welding and saves the installation time and extends the lifespan against corrosion. More demand from abroad and domestic market. YLI presently exports its product to Singapore and Brunei. To become a key regional player, the company has embarked on an aggressive plan to penetrate into the rest of the regional markets and the potential could be enormous. Apart from that, approximately 50% of the 91,246 km water pipes installed in Malaysia as at 2002 are using AC pipes which is the main reason for water leakages and may potentially cause a health hazard to users. Therefore, the RM2bn allocation under 9MP is still insufcient to totally resolve the outstanding problem, in our opinion. Hence, the government has pledged to resolve the issue and regularize other water matters via SPAN thus more improvements may be in the ofng. Nonetheless, we believe full implementation might take a while given few unresolved issues.

FYE 31 Mar Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY05 FY06 FY07f FY08f 98.8 100.1 128.2 142.8 (3.4) 1.3 28.1 11.4 24.5 23.6 28.3 31.6 19.5 16.6 20.9 24.4 14.8 12.9 15.0 17.5 15.0 13.1 15.3 17.8 (30.4) (13.1) 16.8 16.8 1.74 1.82 1.92 2.06 7.0 7.0 8.5 9.9 3.2 3.2 3.9 4.5 14.6 16.8 14.4 12.3 1.3 1.2 1.1 1.1 0.44 0.45 0.42 0.54
Balance Sheet (RMm)

FYE 31 Mar Fixed Assets Current Assets Current Liabilities Others Total Share capital Reserves Shareholder Fund LT Liabilities Others Total Gross Debt Net Cash/ (Debt) FY03 72.7 77.5 (10.9) 0.0 139.3 62.7 71.1 133.8 5.5 0.0 139.3 1.0 44.7 FY04 74.8 98.8 (6.3) 0.0 167.2 98.0 62.4 160.3 6.9 0.0 167.2 1.0 42.3 FY05 81.1 106.8 (8.0) 0.0 179.9 98.6 73.1 171.7 8.2 0.0 179.9 0.2 43.3 FY06 80.5 116.6 (8.5) 0.0 188.5 98.6 81.2 179.7 8.8 0.0 188.5 0.0 44.6
COMPANY REPORT CARD

ROE. The protracted issues on the implementation of the water projects have affected the companys ROE over the years. However with better news ow, we believe YLIs ROE is set to improve going forward. Management. YLI is led by a strong management team that has an extensive knowledge and experience in the water pipes business. Dividend. The company has practiced a satisfactory dividend policy. Given its net cash position, we estimate a dividend yield of 3.9% and 4.5% for FY07 and FY08 respectively.

FYE 31 Mar Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 FY05 FY06 6.1 18.5 13.9 (9.0) (12.0) (7.0) 0.1 (6.2) (8.8) (2.9) 0.3 (1.9) 45.7 42.8 43.0 (0.0) (0.1) (0.0) 42.8 43.0 41.1
RECOMMENDATION
With the brighter outlook for water pipe makers, we have a BUY recommendation on YLI with a 12 month target price of RM2.53. The fair value is derived from a blended valuation of peer PER, EV/EBITDA and 5 year average PEBD on CY07 gures. Coupled with the decent dividend yield of 4.4% for CY07, the stock may potentially deriver a 12-month total return of 19.9%.
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YNH Property
Exciting Times Ahead
Property
Bloomberg Ticker Issued Share Capital (m) Market Capitalisation (RMm) 52 week H | L Price (RM) Average Volume (3m) 000 YTD Returns (%) Net gearing (x) Altman Z-Score ROCE/WACC Beta (x) Book Value/share (RM) YNHB MK 355.70 803.88 2.50 | 1.20 2801.80 0.19 0.21 2.60 0.99 0.92 1.20
INVESTMENT MERITS
Growth to be spurred by its 5 niche developments in the Golden Triangle and Mont Kiara worth a total GDV of >RM2.4bn Strong unbilled sales of RM350m (1.3x of FY06 turnover) Earnings further supported by its Manjung Point development with a niche market catchment there 3-year (FY05-FY08) net prot CAGR of 33.1% Still trading at 17.0% discount to RNAV

The Yu family EPF Lembaga Tabung Haji 24.5 8.9 4.9
COMPANY PROFILE
YNH Property (YNHP) was listed on the Main Board of Bursa Malaysia on 9 December 2003 via the reverse takeover of Techno Asia Holdings. YNH is headed by Dato Dr Yu Kuan Chon, who together with his family owns a 40% controlling stake. The companys property development business started in Sitiawan, Perak back in 1982 and has since delivered more than 8,000 units of property with a GDV of RM750m. YNH has strong foothold in the Manjung district (comprising Sitiawan, Lumit and Sri Manjung). Armed with prots made over 22 years, YNH expanded into the Klang Valley, buying 4 parcels of land in prime locations including two in the Golden Triangle. Even by just concentrating on affordable housing in Manjung, YNH has achieved impressive gross margins of >30% through stringent cost control and by playing the role of the main contractor. In a nutshell, YNHs business model resembles Johor-based KSL Holdings but with additional icing in the form of high-end development in the Golden Triangle.

Month 1m 3m 6m 12m Absolute (0.88) 9.18 80.38 95.22 Relative (2.72) (4.01) 36.25 35.45

KEY HIGHLIGHTS
163 Suites and strong unbilled sales. Located on a 1.04-acre site along Jalan Perak (next to Wisma Hong Leong) comprising 310 units of service apartments, a retail arcade and an ofce tower, the 163 Suites is currently enjoying strong take-up of about 90%. With completion rate thus far of only 30%, the unbilled sales from 163 Suites alone currently accounts for RM170.5m of the total RM350m (1.3x of FY06 turnover). GDV of 163 suites has risen from RM218m previously to RM280m due to an increase in lettable ofce space to about 100,000 sq ft. YNHP aims to put the ofce block for en-bloc sale. Radiant Kiara, Mont Kiara. Sited on a prime 3.06-acre land in Mont Kiara, the project comprising of 238 units of high-end condominiums will be launched sometime later this year. GDV is expected to RM160m vs. RM140m previously after revising its selling price fro an average price of RM300psf to RM360psf. Bought at RM66psf vs the most recent transaction of RM215psf and located
209
opposite the Garden International School, Radiant Kiara will bring about another biggest boost to YNHPs earnings. Wisma YNH. Sited on another 3.0-acre prime land in the Golden Triangle, located next to Shangri-La Hotel, KL along Jalan Sultan Ismail in Bukit Bintang, the development is a 60:40 joint venture with CapitaLand of Singapore. The iconic project, with 1.2m sq ft of Grade A ofce and retail space, has an expected GDV of RM1bn. Construction works are expected to begin in 2H07 and expected to be completed by year 2011. Acquired at just RM480psf (vs. average selling price >RM800psf), the road frontage also makes the development very attractive. More pime landbanks. Measuring about 2 acres behind Renaissance KL along Jln Sultan Ismail, the land parcel is earmarked for development of condos and service apartments. Details are rather sketchy at this juncture and the development will only be launched in year 2009. Acquired in a JV, YNHP is to share 10% of the estimated GDV of RM200m with the landowner. Further on, YNHP has more parcels of land in Mont Kiara measuring in total of about 18 acres, the developments are earmarked for service apartments and condos. Again, details are extremely sketchy at this juncture. The projects are expected to be launched from year 2009 onwards. Acquired in a JV, YNHP is to share 10% of the estimated GDV of RM800 with the landowner. Earnings further supported by development in Manjung Point, Perak. With an estimated GDV of RM2.3bn which will be developed over the next 20 years, more than 60% of buyers are civil servants, primarily the navy personnel at the nearby Lumut Naval Base. Annual output is about 500 residential houses and commercial units with respective average selling prices of RM100,000 and RM350,000 per unit. Despite the affordable type of housing, YNHP is able to churn out margins of 30% from the project, partly due to land price appreciation as it started buying land in the area more than a decade back.

FYE 31 Dec Turnover Growth (%) EBITDA Pretax Net Earnings EPS (sen) Growth (%) NTA/Share (RM) Gross Div (sen) Div Yield (%) PER (x) P/NTA (x) Net Cash/Share FY04 FY05 FY06 FY07f 122.0 168.7 265.3 347.6 23.8 38.3 57.3 31.0 52.3 77.0 99.9 156.8 51.0 75.0 98.7 153.4 38.3 53.6 71.8 94.5 10.5 14.7 19.8 26.0 - 39.7 34.1 31.5 1.16 1.25 1.39 1.59 10.5 11.0 11.0 11.0 4.6 4.9 4.9 4.9 21.4 15.3 11.4 8.7 1.9 1.8 1.6 1.4 (0.2) (0.2) (0.2) (0.2)
Balance Sheet (RMm)


FYE 31 Dec Cash Flow from Ops Cash Flow from Investing Cash Flow from Financing Net Increase in Cash Cash at Beginning of Year Other Changes Cash at End of Year FY04 (13.1) 4.3 (23.4) (32.1) (1.4) 0.0 (33.5) FY05 FY06 (30.1) 26.9 (73.7) (3.5) 115.4 5.2 11.7 28.6 (33.5) (21.9) 0.0 0.0 (21.9) 6.7
COMPANY REPORT CARD

ROE. YNHPs ROE has been improving since its listing. FY06 ROE was 15.4% (FY05: 14.4%). Going forward, we expect its ROE to improve to 17.9% in FY07 and beyond. Management. The company is driven by the Dato Dr Yu Kuan Chon, who has displayed remarkable skills in land acquisition. Dividend. YNHP has an ofcial dividend policy of paying out 30% of its net prot. Going forward, we expect YNHP to maintain a dividend payment of at least 11sen.
RECOMMENDATION
YNHP is still trading at a 17.0% discount to its RNAV estimate of RM2.72. Given an upside of 20.5%, we rate YNHP a BUY.
OSK
210
APPENDICES
Appendix 1
Ranking based on Market Cap & FY07 ROE (%)
Ranking Company Mkt Cap (RMm) 1185.7 1113.6 1060.0 984.9 945.0 910.6 830.4 798.8 780.2 776.4 760.0 755.2 730.7 695.0 650.6 635.2 620.4 613.0 542.5 531.2 528.2 527.5 501.4 453.9 451.1 439.8 414.6 403.9 399.5 396.5 385.8 355.1 327.1 318.9 316.3 315.9 312.1 312.0 307.2 300.0 299.5 296.6 288.5 270.0 259.7 256.3 247.3 235.9 233.4 229.4 ROE (%) 21.3 17.1 16.9 7.6 17.9 19.8 10.7 11.8 24.7 13.1 12.1 36.9 14.0 21.5 18.9 22.7 20.1 7.2 5.6 9.6 10.8 35.5 4.6 21.1 12.9 32.4 25.0 16.0 3.2 1.3 35.0 7.4 10.4 8.6 18.4 6.9 10.2 24.6 15.1 9.3 21.3 12.5 15.4 18.6 22.0 6.9 11.2 6.2 14.1 9.6 Page Ranking Company Mkt Cap (RMm) 226.3 208.3 208.3 201.9 201.5 198.4 190.8 182.9 175.8 171.1 167.5 163.2 155.7 153.7 151.8 150.1 138.0 135.6 135.0 132.0 130.9 129.2 127.1 126.4 126.2 123.1 122.3 120.5 120.1 118.4 115.6 114.3 111.6 110.5 107.1 98.4 96.4 87.1 85.3 84.5 79.6 77.5 73.0 63.0 59.1 58.4 53.0 52.1 44.3 40.9 ROE (%) 19.2 9.5 11.8 4.8 12.6 12.8 19.4 19.8 16.6 13.1 21.5 9.2 9.6 32.1 13.7 32.0 24.1 17.1 9.2 13.9 18.1 10.3 9.9 17.1 17.9 13.1 14.9 14.3 41.6 24.0 18.1 16.5 15.5 17.6 14.9 16.3 11.6 18.5 15.6 12.1 16.1 14.8 25.6 86.3 11.3 8.6 32.6 1.1 6.2 50.6 Page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
KENCANA PETROLEUM BHD INDUSTRIAL CONCRETE PRODUCTS NAIM CENDERA HOLDINGS BHD IJM PLANTATIONS BHD TSH RESOURCES BHD YNH PROPERTY BHD MUHIBBAH ENGINEERING (M) BHD COASTAL CONTRACTS BHD KOSSAN RUBBER INDUSTRIES RANHILL BHD KINSTEEL BHD DUTCH LADY MILK INDS BHD MBM RESOURCES BERHAD RANHILL UTILITIES BHD ALAM MARITIM RESOURCES BHD HIAP TECK VENTURE BHD QL RESOURCES BHD TALIWORKS CORP BHD UNITED MALAYAN LAND BHD SUPERMAX CORP BHD ORNASTEEL HOLDINGS BHD TANJUNG OFFSHORE BHD KIAN JOO CAN FACTORY BHD MEMS TECHNOLOGY BHD HOCK SENG LEE BERHAD VADS BHD TONG HERR RESOURCES BERHAD MUDAJAYA GROUP BHD SHL CONSOLIDATED BHD ACP INDUSTRIES BHD JOBSTREET CORP BHD PLENITUDE BHD UAC BERHAD EASTERN PACIFIC INDUS CORP HOVID BHD KIM LOONG RESOURCES BHD LEADER UNIVERSAL HOLDINGS PANTECH GROUP HOLDINGS BHD RAMUNIA HOLDINGS BHD PROTASCO BHD NTPM HOLDINGS BHD METRO KAJANG HOLDINGS BHD HUNZA PROPERTIES BHD PUTRAJAYA PERDANA BHD HEXAGON HOLDINGS BHD YLI HOLDINGS BHD CHOO BEE METAL INDUS BHD CRESCENDO CORPORATION BHD TRC SYNERGY BHD JOHOR LAND BERHAD
101 89 141 85 197 209 173 45 107 171 105 57 129 173 13 19 167 187 29 185 147 189 103 131 79 203 27 23 183 33 93 155 201 59 81 21 113 149 169 163 145 133 83 165 77 207 43 49 195 95
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
ENG KAH CORP BHD FAVELLE FAVCO BHD STORE CORP BHD/THE TSR CAPITAL BHD LEWEKO RESOURCES BHD YI-LAI BHD GUAN CHONG BHD AHMAD ZAKI RESOURCES BERHAD METROD (MALAYSIA) BHD ACOUSTECH BHD TMC LIFE SCIENCES BHD LOH & LOH CORPORATION BHD MYCRON STEEL BHD SCIENTEX INCORPORATED BHD NEW HOONG FATT HOLDINGS BHD SCICOM (MSC) BHD EFFICIENT E-SOLUTIONS BHD HAI-O ENTERPRISE BHD PRESTAR RESOURCES BHD COCOALAND HOLDINGS BHD BP PLASTICS HOLDING BHD MALAYSIAN AE MODELS HOLDINGS MAXTRAL INDUSTRY BHD IMASPRO CORP BHD CREST BUILDER HOLDINGS BHD LONDON BISCUITS BHD CYMAO HOLDINGS BHD LATITUDE TREE HOLDINGS BHD BCT TECHNOLOGY BHD PROGRESSIVE IMPACT CORP BHD ROHAS-EUCO INDUSTRIES BERHAD EONMETALL GROUP BHD TEK SENG HOLDINGS BHD PINTARAS JAYA BHD PRINSIPTEK CORPORATION BHD CHEETAH HOLDINGS BHD FITTERS HOLDINGS BHD DPS RESOURCES BHD DOMINANT ENTERPRISE BERHAD AJIYA BHD KAWAN FOOD BHD FREIGHT MANAGEMENT HOLDINGS LCL CORP BHD I-POWER BHD EURO HOLDINGS BHD PELANGI PUBLISHING GROUP BHD LNG RESOURCES BHD JOHORE TIN BHD LTKM BHD SANICHI TECHNOLOGY BHD
63 69 193 199 115 205 75 11 135 31 25 119 139 181 143 179 61 17 157 47 39 125 127 87 51 121 15 109 37 161 175 65 191 153 159 41 71 55 53 35 99 73 111 91 67 151 117 97 123 177
Appendix 2
Ranking Based on FY07 Gross Dividend Yield (%) & FY07 Gross DPS (sen)
Ranking Company Gross Div. Yld. (%) 14.5 13.1 13.0 11.5 11.3 10.6 10.5 10.4 9.1 8.8 8.8 8.7 8.4 8.4 8.3 8.0 7.8 7.7 7.5 7.3 7.1 7.1 7.0 6.9 6.9 6.6 6.5 6.4 6.3 6.3 6.2 6.1 6.1 6.0 5.9 5.9 5.8 5.5 5.3 5.1 5.0 4.9 4.7 4.5 4.3 4.3 4.3 4.3 4.2 4.2 Gross DPS (sen) 11.0 10.0 6.0 11.0 3.6 12.9 16.7 45.4 8.8 6.9 6.0 11.0 36.4 17.0 3.5 14.8 14.5 13.0 7.6 12.0 8.4 4.2 14.0 8.6 3.2 77.7 7.0 4.5 18.5 3.0 4.0 6.9 23.0 18.0 15.0 4.0 10.0 9.0 5.0 4.4 4.5 11.0 5.0 9.6 8.3 30.0 17.3 17.0 9.0 14.0 Page Ranking Company Gross Div. Yld. (%) 4.2 4.1 4.0 4.0 3.9 3.9 3.8 3.7 3.7 3.6 3.5 3.4 3.4 3.4 3.3 3.3 3.2 3.2 3.1 3.0 2.9 2.9 2.9 2.9 2.9 2.3 2.2 2.0 2.0 2.0 1.8 1.6 1.6 1.5 1.5 1.2 1.1 1.0 1.0 0.9 0.6 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Gross DPS (sen) 7.0 7.0 12.1 6.2 6.0 8.5 6.0 7.0 5.0 4.2 1.4 8.0 7.5 9.5 6.7 5.0 7.5 7.8 2.0 5.0 6.5 3.0 2.3 5.5 2.5 7.0 4.0 3.5 10.0 6.0 1.5 3.0 2.0 1.8 3.0 1.5 2.0 1.0 3.6 5.0 1.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
PRESTAR RESOURCES BHD FITTERS HOLDINGS BHD EFFICIENT E-SOLUTIONS BHD ACOUSTECH BHD LNG RESOURCES BHD YI-LAI BHD CYMAO HOLDINGS BHD TONG HERR RESOURCES BERHAD PROTASCO BHD JOHORE TIN BHD PELANGI PUBLISHING GROUP BHD ORNASTEEL HOLDINGS BHD UAC BERHAD HAI-O ENTERPRISE BHD HOVID BHD LATITUDE TREE HOLDINGS BHD LCL CORP BHD LONDON BISCUITS BHD CREST BUILDER HOLDINGS BHD TALIWORKS CORP BHD AJIYA BHD SCICOM (MSC) BHD NEW HOONG FATT HOLDINGS BHD PROGRESSIVE IMPACT CORP BHD TEK SENG HOLDINGS BHD DUTCH LADY MILK INDS BHD LTKM BHD EONMETALL GROUP BHD METROD (MALAYSIA) BHD NTPM HOLDINGS BHD DOMINANT ENTERPRISE BERHAD KIAN JOO CAN FACTORY BHD ENG KAH CORP BHD MBM RESOURCES BERHAD AHMAD ZAKI RESOURCES BERHAD EURO HOLDINGS BHD KIM LOONG RESOURCES BHD LEWEKO RESOURCES BHD COCOALAND HOLDINGS BHD MYCRON STEEL BHD FREIGHT MANAGEMENT HOLDINGS YNH PROPERTY BHD BP PLASTICS HOLDING BHD CHOO BEE METAL INDUS BHD SCIENTEX INCORPORATED BHD VADS BHD KINSTEEL BHD NAIM CENDERA HOLDINGS BHD UNITED MALAYAN LAND BHD HOCK SENG LEE BERHAD
157 71 61 31 117 205 15 27 163 97 151 147 201 17 81 190 111 121 51 187 35 179 143 161 191 57 123 165 135 145 53 103 63 129 11 67 21 115 47 139 73 209 39 43 181 203 105 141 29 79
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
CRESCENDO CORPORATION BHD EASTERN PACIFIC INDUS CORP INDUSTRIAL CONCRETE PRODUCTS TRC SYNERGY BHD IMASPRO CORP BHD YLI HOLDINGS BHD SHL CONSOLIDATED BHD JOHOR LAND BERHAD PINTARAS JAYA BHD CHEETAH HOLDINGS BHD SANICHI TECHNOLOGY BHD LOH & LOH CORPORATION BHD HUNZA PROPERTIES BHD QL RESOURCES BHD PUTRAJAYA PERDANA BHD METRO KAJANG HOLDINGS BHD SUPERMAX CORP BHD TSH RESOURCES BHD LEADER UNIVERSAL HOLDINGS ROHAS-EUCO INDUSTRIES BERHAD PLENITUDE BHD KAWAN FOOD BHD GUAN CHONG BHD HIAP TECK VENTURE BHD PRINSIPTEK CORPORATION BHD STORE CORP BHD/THE TSR CAPITAL BHD IJM PLANTATIONS BHD KOSSAN RUBBER INDUSTRIES MUDAJAYA GROUP BHD BCT TECHNOLOGY BHD JOBSTREET CORP BHD MALAYSIAN AE MODELS HOLDINGS FAVELLE FAVCO BHD PANTECH GROUP HOLDINGS BHD RANHILL BHD ACP INDUSTRIES BHD TMC LIFE SCIENCES BHD TANJUNG OFFSHORE BHD MUHIBBAH ENGINEERING (M) BHD COASTAL CONTRACTS BHD I-POWER BHD MEMS TECHNOLOGY BHD KENCANA PETROLEUM BHD DPS RESOURCES BHD MAXTRAL INDUSTRY BHD RAMUNIA HOLDINGS BHD ALAM MARITIM RESOURCES BHD HEXAGON HOLDINGS BHD RANHILL UTILITIES BHD
49 59 89 195 87 207 183 95 153 41 177 119 83 167 165 133 185 197 113 175 155 99 75 19 159 193 199 85 107 23 37 93 125 69 149 171 33 27 189 137 45 91 131 101 55 127 169 13 77 173
Appendix 3
Ranking based on FY07 PER (x) & FY07 EPS (sen)
Ranking Company PER (x) 3.1 3.9 4.2 4.4 4.5 4.5 4.6 4.6 5.0 5.0 5.1 5.2 5.4 5.9 6.0 6.0 6.0 6.0 6.2 6.3 6.4 6.5 6.5 6.5 6.6 6.7 6.7 6.8 7.2 7.3 7.3 7.3 7.4 7.5 7.5 7.6 7.6 7.8 8.0 8.0 8.0 8.0 8.1 8.1 8.2 8.2 8.2 8.3 8.5 8.5 EPS (sen) 74.7 47.9 46.3 35.8 30.3 36.9 22.2 18.7 13.9 23.5 57.0 35.5 28.2 42.9 5.4 73.3 6.6 21.1 6.5 17.0 10.9 33.1 30.7 46.6 9.8 18.9 8.7 12.7 56.1 26.2 9.1 17.3 40.8 27.0 17.3 9.0 20.3 21.6 20.7 27.5 10.6 15.2 15.4 27.9 9.3 26.7 5.6 12.9 5.4 23.8 Page Ranking Company PER (x) 8.6 8.7 8.8 8.9 9.0 9.4 9.7 9.9 10.0 10.1 10.2 10.3 10.4 10.4 10.8 11.2 11.2 11.3 11.4 11.5 11.6 11.6 12.2 12.3 12.5 12.8 12.8 13.4 13.7 13.7 13.9 14.3 15.2 15.3 15.5 15.8 16.0 16.3 17.1 17.2 17.4 17.6 21.4 21.5 23.1 23.5 26.4 28.0 36.3 79.5 EPS (sen) 10.4 13.3 11.6 8.5 10.7 5.1 7.0 8.0 9.6 42.9 9.3 22.7 22.3 67.2 15.7 18.9 29.6 24.7 21.7 34.8 17.5 13.4 9.3 4.8 28.7 12.9 13.1 28.4 3.1 13.8 12.4 6.9 32.5 24.4 11.8 19.0 34.4 72.5 12.8 11.1 6.9 30.1 8.0 14.1 5.5 3.1 5.9 6.6 2.2 2.2 Page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
RANHILL UTILITIES BHD LCL CORP BHD SCIENTEX INCORPORATED BHD CYMAO HOLDINGS BHD PINTARAS JAYA BHD ROHAS-EUCO INDUSTRIES BERHAD CREST BUILDER HOLDINGS BHD PRINSIPTEK CORPORATION BHD DPS RESOURCES BHD AJIYA BHD METROD (MALAYSIA) BHD LATITUDE TREE HOLDINGS BHD METRO KAJANG HOLDINGS BHD AHMAD ZAKI RESOURCES BERHAD LNG RESOURCES BHD TONG HERR RESOURCES BERHAD SANICHI TECHNOLOGY BHD RANHILL BHD I-POWER BHD BP PLASTICS HOLDING BHD EONMETALL GROUP BHD CHOO BEE METAL INDUS BHD NEW HOONG FATT HOLDINGS BHD STORE CORP BHD/THE DOMINANT ENTERPRISE BERHAD ORNASTEEL HOLDINGS BHD MAXTRAL INDUSTRY BHD MYCRON STEEL BHD KINSTEEL BHD HIAP TECK VENTURE BHD LEADER UNIVERSAL HOLDINGS MALAYSIAN AE MODELS HOLDINGS MBM RESOURCES BERHAD PUTRAJAYA PERDANA BHD RAMUNIA HOLDINGS BHD EURO HOLDINGS BHD TRC SYNERGY BHD LONDON BISCUITS BHD LEWEKO RESOURCES BHD HUNZA PROPERTIES BHD BCT TECHNOLOGY BHD YI-LAI BHD PROGRESSIVE IMPACT CORP BHD YNH PROPERTY BHD FITTERS HOLDINGS BHD PLENITUDE BHD TEK SENG HOLDINGS BHD LTKM BHD EFFICIENT E-SOLUTIONS BHD HAI-O ENTERPRISE BHD
173 111 181 15 153 175 51 159 55 35 135 109 133 11 117 27 177 171 91 39 65 43 143 193 53 147 127 139 105 69 113 125 129 165 169 67 195 121 115 83 37 205 161 209 71 155 191 123 61 17
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
FREIGHT MANAGEMENT HOLDINGS CHEETAH HOLDINGS BHD KAWAN FOOD BHD PRESTAR RESOURCES BHD ACOUSTECH BHD NTPM HOLDINGS BHD PELANGI PUBLISHING GROUP BHD GUAN CHONG BHD PROTASCO BHD UAC BERHAD COCOALAND HOLDINGS BHD LOH & LOH CORPORATION BHD SUPERMAX CORP BHD VADS BHD EASTERN PACIFIC INDUS CORP UNITED MALAYAN LAND BHD HOCK SENG LEE BERHAD QL RESOURCES BHD TSH RESOURCES BHD NAIM CENDERA HOLDINGS BHD PANTECH GROUP HOLDINGS BHD IMASPRO CORP BHD KIAN JOO CAN FACTORY BHD SCICOM (MSC) BHD TANJUNG OFFSHORE BHD TALIWORKS CORP BHD CRESCENDO CORPORATION BHD ENG KAH CORP BHD HOVID BHD JOHOR LAND BERHAD KIM LOONG RESOURCES BHD TMC LIFE SCIENCES BHD KOSSAN RUBBER INDUSTRIES ALAM MARITIM RESOURCES BHD JOBSTREET CORP BHD MUDAJAYA GROUP BHD HEXAGON HOLDINGS BHD DUTCH LADY MILK INDS BHD YLI HOLDINGS BHD COASTAL CONTRACTS BHD FAVELLE FAVCO BHD MUHIBBAH ENGINEERING (M) BHD IJM PLANTATIONS BHD INDUSTRIAL CONCRETE PRODUCTS KENCANA PETROLEUM BHD MEMS TECHNOLOGY BHD SHL CONSOLIDATED BHD TSR CAPITAL BHD JOHORE TIN BHD ACP INDUSTRIES BHD
73 41 99 157 31 145 151 75 163 201 47 119 185 203 59 29 79 167 197 141 149 87 103 179 189 187 49 63 81 95 21 25 107 13 93 23 77 57 207 45 69 137 85 89 101 131 183 199 97 33
Appendix 4
Ranking based on FY07 PBV (x) & FY07 BPS (sen)
Ranking Company PBV (x) 0.41 0.51 0.58 0.59 0.59 0.61 0.62 0.63 0.65 0.65 0.66 0.70 0.70 0.72 0.72 0.72 0.72 0.75 0.75 0.76 0.77 0.78 0.78 0.80 0.80 0.81 0.82 0.83 0.83 0.83 0.84 0.86 0.91 0.91 0.92 0.92 0.92 0.94 0.94 0.96 0.98 0.98 0.98 1.00 1.02 1.02 1.02 1.04 1.04 1.10 BPS (sen) 0.10 0.15 0.16 0.18 0.19 0.25 0.25 0.26 0.29 0.30 0.35 0.38 0.40 0.44 0.67 0.69 0.70 0.70 0.74 0.76 0.76 0.79 0.80 0.81 0.82 0.83 0.83 0.85 0.86 0.87 0.93 0.94 0.97 0.99 1.03 1.03 1.04 1.07 1.20 1.25 1.25 1.27 1.28 1.29 1.32 1.34 1.36 1.37 1.40 1.44 Page Ranking Company PBV (x) 1.14 1.14 1.16 1.22 1.22 1.25 1.29 1.31 1.32 1.33 1.34 1.35 1.37 1.38 1.39 1.50 1.50 1.52 1.55 1.58 1.60 1.68 1.71 1.80 1.80 1.84 1.85 1.86 1.90 1.91 1.91 2.13 2.31 2.40 2.48 2.56 2.57 2.80 2.83 3.06 3.13 3.42 3.55 3.69 4.00 4.16 4.41 4.63 4.80 5.81 BPS (sen) 1.44 1.44 1.45 1.46 1.46 1.49 1.51 1.53 1.53 1.66 1.72 1.73 1.76 1.76 1.79 1.80 1.81 1.81 1.83 1.86 1.92 1.92 1.93 2.01 2.03 2.03 2.09 2.12 2.16 2.23 2.29 2.32 2.36 2.39 2.40 2.40 2.53 2.55 2.60 3.05 3.05 3.10 3.19 3.49 3.64 3.75 3.80 4.23 4.23 4.90 Page
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
JOHORE TIN BHD LTKM BHD AJIYA BHD PLENITUDE BHD MAXTRAL INDUSTRY BHD UNITED MALAYAN LAND BHD RANHILL UTILITIES BHD MYCRON STEEL BHD METRO KAJANG HOLDINGS BHD PRINSIPTEK CORPORATION BHD CYMAO HOLDINGS BHD ORNASTEEL HOLDINGS BHD CHOO BEE METAL INDUS BHD LEADER UNIVERSAL HOLDINGS LATITUDE TREE HOLDINGS BHD STORE CORP BHD/THE MALAYSIAN AE MODELS HOLDINGS CREST BUILDER HOLDINGS BHD ROHAS-EUCO INDUSTRIES BERHAD PINTARAS JAYA BHD RANHILL BHD KIAN JOO CAN FACTORY BHD PRESTAR RESOURCES BHD METROD (MALAYSIA) BHD CRESCENDO CORPORATION BHD FITTERS HOLDINGS BHD KINSTEEL BHD PELANGI PUBLISHING GROUP BHD EURO HOLDINGS BHD NEW HOONG FATT HOLDINGS BHD SHL CONSOLIDATED BHD DPS RESOURCES BHD LOH & LOH CORPORATION BHD SUPERMAX CORP BHD TALIWORKS CORP BHD PROTASCO BHD LCL CORP BHD EASTERN PACIFIC INDUS CORP KIM LOONG RESOURCES BHD LEWEKO RESOURCES BHD DOMINANT ENTERPRISE BERHAD LONDON BISCUITS BHD MBM RESOURCES BERHAD EONMETALL GROUP BHD RAMUNIA HOLDINGS BHD YI-LAI BHD UAC BERHAD TRC SYNERGY BHD BP PLASTICS HOLDING BHD AHMAD ZAKI RESOURCES BERHAD
97 123 35 155 127 29 173 139 133 159 15 147 43 113 109 193 125 51 175 153 171 103 157 135 49 71 105 151 67 143 183 55 119 185 187 163 111 59 21 115 53 121 129 65 169 205 201 195 39 11
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
HUNZA PROPERTIES BHD YLI HOLDINGS BHD ACOUSTECH BHD TEK SENG HOLDINGS BHD FREIGHT MANAGEMENT HOLDINGS ACP INDUSTRIES BHD TSR CAPITAL BHD JOHOR LAND BERHAD PUTRAJAYA PERDANA BHD CHEETAH HOLDINGS BHD KAWAN FOOD BHD COCOALAND HOLDINGS BHD TONG HERR RESOURCES BERHAD HAI-O ENTERPRISE BHD HOCK SENG LEE BERHAD YNH PROPERTY BHD HIAP TECK VENTURE BHD SANICHI TECHNOLOGY BHD SCIENTEX INCORPORATED BHD FAVELLE FAVCO BHD IJM PLANTATIONS BHD LNG RESOURCES BHD MUHIBBAH ENGINEERING (M) BHD GUAN CHONG BHD PROGRESSIVE IMPACT CORP BHD EFFICIENT E-SOLUTIONS BHD NAIM CENDERA HOLDINGS BHD COASTAL CONTRACTS BHD NTPM HOLDINGS BHD TSH RESOURCES BHD IMASPRO CORP BHD QL RESOURCES BHD HOVID BHD MUDAJAYA GROUP BHD ENG KAH CORP BHD PANTECH GROUP HOLDINGS BHD ALAM MARITIM RESOURCES BHD TMC LIFE SCIENCES BHD BCT TECHNOLOGY BHD VADS BHD HEXAGON HOLDINGS BHD KOSSAN RUBBER INDUSTRIES INDUSTRIAL CONCRETE PRODUCTS SCICOM (MSC) BHD I-POWER BHD TANJUNG OFFSHORE BHD KENCANA PETROLEUM BHD JOBSTREET CORP BHD MEMS TECHNOLOGY BHD DUTCH LADY MILK INDS BHD
83 207 31 191 73 33 199 95 165 41 99 47 27 17 79 209 19 177 181 69 85 117 137 75 161 61 141 45 145 197 87 167 81 23 63 149 13 25 37 203 77 107 89 179 91 189 101 93 131 57

OSK - Small Caps Top 100 Jewels - 2007 Edition - Final Consolidated

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OSK - Small Caps Top 100 Jewels - 2007 Edition - Final Consolidated

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TOP MALAYSIAN SMALL CAP COMPANIES

100 JEWELS 2007 Edition

Listing of Companies By Alphabetical Order

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A Preview on Small Caps

Ranking Based On Forward FY07 PER (x)

Ranking Based On Forward FY07 P/BV (x)

Ranking Based On Highest FY07 Gross Dividend Yield (%)

Ranking Based On Highest FY07 ROE (%)

Ranking Based On Highest 3-Year CAGR (FY04-FY07) (%)

Ranking Based On Lowest PEG (x)

Our Top Sector Picks

Note : Share prices as at March 30, 2007

Our Top Ten List

Top Ten List

Oil & Gas

Ahmad Zaki Resources

Kim Loong Resources

TMC Life Sciences

Note : Share prices as at March 30, 2007

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Guide To Report Format - Page 1

Guide To Report Format - Page 2

Ahmad Zaki Resources

Target : RM3.48 Price : RM2.54

Major Shareholders (%)

Share Performance (%)

Share Price Performance

Income Statement (RMm)

Balance Sheet (RMm)

COMPANY REPORT CARD

Cash Flow Statement (RMm)

Alam Maritim Resources

Target : RM4.40 Price : RM3.74

Major Shareholders (%)

Share Performance (%)

Share Price Performance

Income Statement (RMm)

Balance Sheet (RMm)

COMPANY REPORT CARD

Cash Flow Statement (RMm)

Target : RM2.60 Price : RM1.59

Major Shareholders (%)

Share Performance (%)

Share Price Performance

Income Statement (RMm)

COMPANY REPORT CARD

Balance Sheet (RMm)

Cash Flow Statement (RMm)

Target : RM2.33 Price : RM2.02

Healthy Growth With Health Care Products

Major Shareholders (%)

Share Performance (%)

Share Price Performance

Income Statement (RMm)

Balance Sheet (RMm)

COMPANY REPORT CARD

Cash Flow Statement (RMm)

Hiap Teck Venture

Target : RM3.10 Price : RM1.91

Major Shareholders (%)

Share Performance (%)