Market Dateline PP 7767/09/2010(025354)

RHB Research Institute

RHB Equity 360°

8 June 2010 (Gamuda, Banks; Technical: Faber)

Top Story : Gamuda – Field report: Tan Thang looking to sell like “hot pho” Underperform
Visit Note
- We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. This
dense population base translates to ready buyers for the Tan Thang project.
- Previously farm land, the land is flat and just a little lower than the road level that means it does not need
extensive ground treatment other than some filling to raise the elevation. Most importantly, the land is
100% cleared of squatters.
- Our conversation with consultants from the HCMC office of an international property consulting firm gave
us the comfort that Gamuda’s RM10bn Yenso Park in Hanoi should do well too.
- Fair value raised from RM2.05 to RM2.74, having imputed in for the first time a value of RM1,231m to
Gamuda’s two property projects in Vietnam. Underperform remains as upside in share price has already
been exhausted.

Sector Call

Banks : BNM “rejects” Affin’s application to commence negotiations with EON Cap Overweight
Sector News Update
Affin : Fair value of RM3.58 Trading Buy
EON Cap : Fair value of RM8.07, downgrade call after outperformance Market Perform (down from OP)
- Affin announced yesterday that BNM was unable to consider Affin’s application to commence negotiation
with EON Cap and its major shareholders. No further details were mentioned.
- Possibly, a spanner to the proposal was whether Affin’s financials would have been able to digest the
acquisition, in our view.
- Despite this “setback”, fundamentally, our view on Affin is unchanged. Valuations appear cheap despite the
recent 1Q results that beat our and consensus expectations. Furthermore, asset quality appears intact
notwithstanding the implementation of FRS139. Pending Affin’s analyst briefing later today, our fair value of
RM3.58 (13x FY10 EPS) and Trading Buy recommendation remain unchanged.
- With the latest development, focus would now turn back to EON Cap’s EGM, which is reportedly set to take
place sometime next month. That aside, EON Cap’s 1QFY10 results have helped to reinforce our view that
its fundamentals are improving.
- Our fair value of RM8.07 (15x FY10 EPS) is unchanged. However, EON Cap’s share price performance
has done rather well of late which means that the stock now offers a potential return that is roughly in line
with our expected market return. Thus, we downgraded our call to Market Perform from outperform.

Technical Highlights

Daily Trading Strategy : Index’s direction is expected to stay negative…

- Despite bouncing from an early sell off, the FBM KLCI registered a candlestick pattern that still points to a
volatile trading day ahead.
- In fact, the market is still overwhelmed by the poor trading sentiment from the recent fallout.
- Given further weakness on the short-term momentum indicators, the index’s trading direction is expected to
stay negative.
- The poor level of participation yesterday was also in line with our expectation that investors at current
stage, would prefer to stay sideline ahead of Thursday’s FIFA 2010 World Cup kick-off.
- Immediate level is at the 10-day SMA of 1.276. Losing it will refresh selling activities, hence retest the
1,250 support level and the recent low of 1,243.86.
- We maintain a medium-term retracement target at between the 23.6% Fibonacci Retracement (FR) level at
1,229 and the 38.2% FR level at 1,154.

Daily Technical Watch: Faber Group – Continuous buying momentum if it sustains at above RM2.60…
- 10-day SMA: RM2.371
- 40-day SMA: RM2.305
- Support: IS = RM2.60 S1 = RM2.29 S2 = RM1.98
- Resistance: IR = RM2.80 R1 = RM3.04 R2 = RM3.40

Bulletin Board

Co/Sector News Impact Recom

Power Minister of Energy, Green Technology and Water The cost estimate is broadly consistent with what OW
revealed yesterday that the rough estimate of a TNB had mentioned previously, i.e. US$3-
proposed nuclear plant is between US$2.5-4bn 4m/MW. We believe nuclear is only one of the
(1,000MW plant). However, while the starting options to address long-term concerns on power
cost was high, operating cost was lower. generation capacity and the country’s over-
(Financial Daily) reliance on gas and coal for fuel, and especially
given the cancellation of the Bakun undersea
cables project. The other options are: 1)
renewable energy (which underscores the
importance of the proposed Renewable Energy
Act which appears to have been delayed to 2011
for tabling to parliament); and 2) electricity
demand management.
Gaming PM stated that the Government has yet to issue While this may be perceived as negative for OW
a sports betting licence to Ascot Sports as Berjaya Corp which is proposing to buy 70% of
B-Toto discussions on the licensing terms and conditions Ascot Sports, we believe the Government has B-Toto:
are being finalised with the company. The not shut the door yet on the re-issue of the sports OP, FV =
Government is also getting feedback and views betting licence. In any case, this news is neutral RM4.95
from various quarters on the proposal. (Star) for B-Toto as we estimate the sports betting
licence would have minimal impact to net profits
of +1.4% for FY04/11 and +1.9% for FY04/12.
O&G Exxon Mobil is reportedly expecting to spend Long-term positive. Although crude oil price of OW
around US$1bn for the enhanced oil recovery US$70-80 appears to be a comfortable level for
project in Tapis field beginning 2013. Recall that investment in shallow-water exploration project,
Petronas signed a Production Sharing Contract we highlight that Petronas and PSCs are still
(PSC) in June 2009 between its wholly-owned cautious on pushing ahead with unproven
Petronas Carigali and ExxonMobil Exploration greenfield development projects in a major way
and Production Inc. (Exxon) to further develop given still-high exploration and development
seven oil fields offshore Peninsular Malaysia. costs. While Petronas’ 1HFY10 E&P spending
The Tapis oil field, discovered in 1969, is located increased by 9.8% yoy to RM13.7bn, this was
in the South China Sea- 209 km off the east mainly driven by reservoir management as well
coast of peninsular Malaysia in water depths of as enhanced oil recovery (EOR) activities for the
64 metres. (Starbiz) current brownfield blocks i.e. to boost current
output level.
CIMB CIMB’s plan to list on the Stock Exchange of Neutral. Management had previously highlighted OP, FV =
Thailand will be delayed for a few months from in its 1QFY10 analyst briefing the possibility of a RM8.12
Jun due to the current environment there as well delay given the current situation there.
as the requirement for more time to study legal
issues. (StarBiz)
Digi.Com Digi, which embarked on a cost-saving initiative Neutral, as we expect its ongoing cost-saving OP, FV =
to withstand challenges in the competitive measures would help cushion the impact of RM25.70
industry, is on track to achieve RM100m savings higher handset subsidies and price pressures,
this year. (Starbiz) keeping FY10 EBITDA margin flat. However,
these measures could be positive for margins if
the cost savings turn out to be higher-than-
expected.
KPJ The Health Director General said that the Neutral. Only consultants’ fees are regulated by OP, FV =
Government will review the fees charged by the Government, while other hospital charges are RM3.50
private hospitals and clinics. (Financial Daily) not. In addition, KPJ only shares 5-10% of
consultants’ fees. Nevertheless, we believe the
 Government is trying to shift the attention away
from PEMANDU’s proposal to raise the nominal
out-patient fees charged by public hospitals from
RM1 to RM3, and for in-patient fees to double to
between RM6 and RM160.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Muda Holdings First and final dividend of 2.5 sen tax exempt 28-Jun-10 15-Jul-10
Dufu Technology First and final tax exempt dividend of 1 sen 28-Jun-10 29-Jul-10
Oriental Holdings Final dividend of 5 sen less 25% tax 12-Jul-10 30-Jul-10

Going “ex” on 9 Jun

Pelangi Publishing Group Bonus issue on the basis of 1-for-4 9-Jun-10 -
Tong Herr Resources Tax exempt final dividend of 5 Sen 9-Jun-10 22-Jun-10
Jerneh Asia Final dividend of 5 sen less 25% tax 9-Jun-10 22-Jun-10
Muar Ban Lee Group Final dividend of 1.5 sen single tier tax exempt 9-Jun-10 23-Jun-10
MPI Second interim dividend of 15 sen tax exempt 9-Jun-10 25-Jun-10
CCM Duopharma Biotech Final gross div of 7 sen less 25% tax + final tax exempt div of 5 sen 9-Jun-10 25-Jun-10
Eng Teknologi Holdings Final tax exempt dividend of 6 sen 9-Jun-10 28-Jun-10
Hunza Properties Special interim single tier dividend of 2.5 sen 9-Jun-10 28-Jun-10
Hong Leong Industries Second interim dividend of 10 sen tax exempt 9-Jun-10 28-Jun-10
Willowglen MSC Final div of 2 sen tax-exempt + Special div of 1 sen tax-exempt 9-Jun-10 30-Jun-10
Tomypak Holdings Tax exempt interim dividend of 3.5 sen 9-Jun-10 2-Jul-10
Mudajaya Final single tier dividend of 2 sen 9-Jun-10 6-Jul-10

...For more details, see individual reports attached

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