PP 7767/09/2010(025354)

1 March 2010

Malaysia Corporate Highlights

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

R e su l ts N o t e
1 March 2010
MARKET DATELINE

Faber Berhad Share Price

Fair Value
:
:
RM1.66
RM3.01
Full-Year Core Earnings Boosted By UAE Contract Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (FAB; Code: 1368) Bloomberg: FAB MK

Net Core Core EPS Core Net
FYE Turnover Profit EPS EPS Growth PER C.EPS P/NTA Gearing ROE GDY
Dec (RMm) (RMm) (sen) (sen) (%) (x) (sen) (x) (%) (%) (%)
2008 507.9 155.7 42.9 16.8 25.4 9.9 - 2.1 0.0 19.9 2.4
2009 682.8 82.7 22.8 22.8 35.3 7.3 17.0 1.7 0.0 23.4 3.0
2010f 890.1 75.4 20.8 20.8 23.0 8.0 20.0 1.6 0.0 19.1 3.6
2011f 1002.1 87.2 24.0 24.0 15.7 6.9 24.0 1.3 0.0 19.0 4.2
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC #Excluding EI * Consensus Based On IBES Estimates

♦ Full-year FY09 core net profit grew 32.8%. 4QFY12/09 net profit of RHBRI Vs. Consensus
RM42.6m (+138.3% yoy) beat our and consensus expectations with full- √ Above √
year net profit of RM82.7 (+32.8% yoy) accounting for 134.9% and In Line
135.6% of our and consensus full-year estimates respectively. We believe Below
the key variance was higher-than-expected revenue from the UAE contract
Issued Capital (m shares) 363.0
arising from new variation orders. This boosted FY09 earnings despite the
Market Cap(RMm) 602.6
drop in property earnings (full-year property’s segment EBIT drop 34.3% Daily Trading Vol (m shs) 0.8
yoy) that was affected by the global recession last year. 52wk Price Range (RM) 0.64-1.76
Major Shareholders: (%)
♦ 4Q revenue grew 66.2% qoq while earnings grew 124.1% qoq.
UEM Group 34.0
Qoq, revenue grew 66.2% qoq on the back of: 1) higher progress billings Universal Trustee 23.4
from its property segment (+17.1% qoq); and 2) increase in IFM segment
(+66.2% qoq) boosted by the UAE contract as highlighted above. Coupled
FYE Dec FY09 FY10F FY11F
with lower effective tax rate of 20.0% (vs. 3Q effective tax rate of 25.4%),
EPS chg (%) 19.4 - -
4Q earnings grew 124.1% qoq.
Var to Cons (%) 34.0 3.8 0.0

♦ Some clarification still needed on the UAE contract. We will still need PE Band Chart
to clarify details of the UAE contract variation orders at the analysts’
briefing on 3 Mar. According to the results announcement, the UAE
PER = 11x
contract accounted for 15% of revenue (i.e. around RM121m or 85% of PER = 7x
PER = 3x
the original RM142.1m contract sum). We understand Faber had already
commenced work in Mar-09 although it only began recognising revenue in
4Q09 after meeting conditions stipulated in the contract in Nov-09. Recall
the one-year contract (with the option for four one-year extensions)
involves the improvement, development, upgrading and maintenance of
infrastructure facilities at Madinat Zayed Zone 1 in Abu Dhabi’s Western Relative Performance To FBM KLCI
Region Municipality. Faber has 75% beneficial interest in the UAE business.

♦ Risks to our view. 1) Failure to secure an extension to the concession

Faber
agreement with the Government; and 2) Delays in property launches and
approvals, which could affect revenues from the property segment.

♦ Forecasts. We have left our FY10 and FY11 earnings forecasts unchanged
FBM KLCI
pending Faber’s analysts’ briefing on 3 Mar.

♦ Investment case. Our fair value has been raised slightly to RM3.01 from
RM2.94 previously, after updating for Faber’s net cash position as at Dec-
09. We continue to like Faber for its resilient earnings derived from Yap Huey Chiang
infrastructure and facilities maintenance (IFM) business as well as its (603) 92802179
ongoing expansion oveseas. We also believe the non-medical hospital yap.huey.chiang@rhb.com.my
support services concession has a strong chance of being renewed before
it expires in Oct-11. We thus reiterate our Outperform call on the stock.

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

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 1 March 2010

Table 2. Faber 3QFY09 Results

qoq yoy yoy
FYE Dec (RMm) 4Q08 3Q09 4Q09 FY08 FY09 Comments
(%) (%) (%)
IFM 129.6 153.3 254.7 66.2 96.5 507.9 682.8 34.4 Yoy and qoq growth due to
increase in both concession
and non-concession segments
as well as the recognition of
revenue from the UAE
contract.
Property 15.6 42.0 49.1 17.1 +>100 153.3 122.5 (20.1) Full-year decline for property
revenue as a result of drop in
progress billings, but 4Q
growth on both qoq and yoy
basis suggest that recovery
has already begun.
Revenue 147.8 153.3 303.9 53.7 +>100 661.2 805.3 21.8

Cost of sales (108.9) (137.9) (207.7) 50.6 90.7 (465.8) (560.7) 20.4
Gross profit 38.8 59.9 96.2 60.7 +>100 195.4 244.6 25.2
Op income 3.4 1.4 2.5 45.6 39.0 13.0 6.9 89.1
Other expenses (5.2) (20.0) (25.4) 21.0 79.5 (65.4) (82.4) (20.6)

EBITDA 37.1 41.2 73.3 78.1 97.8 143.0 169.0 18.2

EBITDA margin 25.1 20.8 24.1 21.6 21.0 Overall margins were barely
(%) affected by the lower property
earnings in the 1H09, as the
bulk of earnings came from
the more stable IFM division.
Depreciation/amort (6.1) (5.4) (5.7) (4.8) 6.7 (23.3) (21.0) (10.9)
EBIT 31.0 35.8 67.7 89.1 +>100 119.6 148.0 23.7
EBIT margin (%) 21.0 18.3 22.3 18.1 18.4

Finance cost (2.2) (1.6) (1.8) 12.4 (15.5) (8.1) (6.7) (17.2) Total debt as at 4Q09 was
RM179.5m against 3Q09 of
RM177.4m and 4Q08 of
RM190.2m
Excep items (0.4) - 0.5 n.m. n.m. 93.2 (0.3) n.m. Exceptional items in FY08
related to the gain on
disposal of Faber’s last hotel
in Vietnam.
Pre-tax profit 28.4 34.1 66.3 94.3 +>100 240.7 140.9 (31.2)
Tax (6.3) (8.7) (13.3) 53.3 +>100 (29.8) (34.8) 16.7
Eff tax rate (%) 22.2 25.4 20.0 14.6 24.7
Minorities (4.2) (6.5) (10.5) 61.9 +>100 (19.2) (23.4) 21.9
Net profit 17.9 19.0 42.6 +>100 +>100 155.7 82.7 (46.9)
Core net profit 18.3 19.0 42.0 +>100 +>100 62.5 83.0 32.8
Source: Company, RHBRI

Table 3. Sum Of Parts Calculation

Valuation basis FV (RMm) Per share (RM)
Concession IFM DCF 581.4 1.60
Non-Concession IFM 14x FY10 earnings 252.4 0.70
Property 4x FY10 earnings 133.6 0.37

Add : Net cash (End-4QFY09) 125.1 0.34

SOP 1,092.6 3.01
Shares (m) 363.0
Source: Company data, RHBRI estimates

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 1 March 2010

Table 4. Earnings Forecasts Table 5. Forecasts Assumptions

FYE Dec (RMm) FY08a FY09a FY10f FY11f FYE Dec (RMm) FY10f FY11f
Turnover 507.9 682.8 890.1 1,002.1 Revenue:
Turnover growth (%) (24.2) 34.4 30.4 12.6 Concession 495.2 470.4
EBITDA 143.0 169.0 170.1 193.7 Non-concession 196.9 254.5
EBITDA margin (%) 28.2 21.0 19.1 19.3 Property 198.0 277.2
Dep & Amort (23.3) (21.0) (23.0) (24.7)
EBIT 119.7 148.0 147.0 169.0
EBIT margin (%) 23.6 18.4 16.5 16.9 EBIT:
Net interest expense (8.1) (6.7) (6.7) (6.7) Concession 75.5 70.6
Associates 93.2 (0.3) 0.0 0.0 Non-concession 25.9 33.7
Pretax Profit 204.8 141.1 140.4 162.4 Property 44.5 63.8
Tax (29.8) (34.8) (40.7) (47.1) Others (1.2) (1.4)
Minorities (19.2) (23.4) (24.3) (28.1)
Net Profit 155.7 82.7 75.4 87.2
Core net profit 62.5 83.0 75.4 87.2
Core Growth (%) 28.3 32.8 (9.3) 15.7
Source: Company Data, RHBRI estimates Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

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

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or
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any liability for any loss or damage arising out of the use of all or any part of this report.

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

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

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

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

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

Stock Ratings

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

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

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

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

Industry/Sector Ratings

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

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

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

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

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

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