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

RHB Research Institute

RHB Equity 360°

28 July 2010 (Genting Plantation, MYEG; Technical: Measat Global)

Top Story : Genting Plantation – Indonesian estates to start “fruiting” soon Underperform
Visit Note
- GP’s FFB production growth has recovered from the weakness seen in 1H09, to post an 11.7% yoy growth
in YTD June 2010. Going forward however, management expects this yoy growth to slow in 2H10, given
the recovery in FFB production which was seen in 2H09.
- For the whole of 2H10, management expects FFB production to be relatively flat yoy, which would bring
FY10 FFB production growth to approximately 6-7% yoy. Contributions from GP’s Indonesian plantations
should already start contributing in FY11, albeit very minimally, but we expect a larger impact from
Indonesia from FY12, contributing about 11% to total production. We believe more exciting prospects await
once GP’s Chelsea Premium Outlets and the surrounding area in Kulai start to be developed, given that the
land is within the Iskandar economic zone and is located at the intersection between the Second Link to
Singapore and the North-South Expressway.
- We tweaked our forecasts by -2.0% for FY10, +2.9% for FY11 and +9.1% for FY12. Post-earnings revision,
we raise our fair value to RM6.70 (from RM6.50), based on an unchanged 14.5x CY11 target PER.
- Maintain Underperform as we believe valuations remain stretched at current levels. Catalysts would include
a spike in CPO prices, given GP’s sensitivity to CPO prices, as well as foreseeable contributions from its
integrated property project in Kulai.

Corporate Highlights

MYEG : More to come Not Rated

Visit Note
- Management highlighted it would be expanding its revenue base by launching several new services as well
as providing online services for other government agencies in coming quarters.
- By end of 2010, MYEG plans to start its pilot project for online service tax monitoring via its 40%-owned
SPV. The project entails the installation of network devices into cashiers of 2,000 selected outlets in Klang
Valley, essentially designed to capture “under-declared” service taxes by operators. We highlight that the
SPV is entitled to 20% of the incremental tax revenue collected by the Government, potentially boosting the
company’s earnings. Further out, we understand that the tax monitoring system would likely serve as a
platform for the eventual implementation of GST.
- We forecast net profit of 40.7% to driven by: 1) growing adoption for e-government; 2) higher market share
for government services; and 3) additional revenue stream stemming from the roll-out of new services.
Furthermore, we highlight there could potentially be upside to our FY11-12 forecasts driven by higher-than-
expected market share gain and higher incremental tax revenue.
- While FY11 PER of 15.3x suggests that medium-term earnings growth has been priced in, our sensitivity
analysis suggests significant upside to our estimates and DCF fair value (from RM0.96 currently to RM1.12
on more aggressive assumptions). On the flipside, the customs tax monitoring project accounts for RM0.14
of our DCF, and this represents the downside risk to our fair value estimate.

Technical Highlights

Daily Trading Strategy : Likely to take a breather …

- Despite the previous “hangman-like” candle, the FBM KLCI managed to neutralise the early profit-taking
pressure by closing at above the major 1,350 technical level for a second day.
- But with a “doji-like” candle which paints uncertainties ahead, coupled with the weak market breadth as well
as shrinking daily volume to below the 800m shares mark yesterday, it seems that most of the investors
may have turned cautious after the recent rally.
- Moreover, without any strong convincing confirmation signal on the recent technical breakout from 1,350 so
far, the FBM KLCI’s medium-term outlook remains unclear.
- Therefore, unless the FBM KLCI can extend a further upside from 1,350 with stronger volume at between
800m and 1.0bn shares in the immediate term, we believe profit-taking leg could kick in at anytime soon.
- Once profit-taking activities set in, this will lead to a revisit of key resistance-turned-support level of 1,350.
 After that, lower supports near a technical gap at 1,345.68 and 10-day SMA of 1,341 will be tested. Still, the
supportive 10-day SMA is expected to buffer selling pressure in order to protect the current uptrend.
- On the upside, 1,390 remains as a key resistance target.

Daily Technical Watch: Measat Global – Further confirmation signal is needed before major breakout rally …
- 10-day SMA: RM3.476
- 40-day SMA: RM3.189
- Support: IS = RM3.00 S1 = RM2.40 S2 = RM2.15
- Resistance: IR = RM4.50

Bulletin Board

Co/Sector News Impact Recom

Timber Sarawak exported RM2.5bn (+33% yoy) of Positive, as this shows that timber export N
timber and timber products in the first four volumes are beginning to pick up more
months of 2010, according to the Sarawak substantially now, while prices recover at a more
Timber Industry Development Corp (STIDC). gradual pace. We expect a stronger recovery is
Export of logs rose 50%, sawn timber 19%, likely to take place from 2011 onwards.
plywood 37%; and moulding 58%. Particle board
exports were up 241%, fibreboard 17%,
laminated board/flooring 83% and woodchips
15%. India was again the biggest buyer of logs,
importing 33% more yoy. While there were also
big increases in log exports to China, Taiwan,
Japan, South Korea and Thailand. Japan was the
top buyer of plywood, importing 46% of the total
plywood exports. (Bernama)
Plantations Soyoil’s premium over CPO is expected to rise in Positive for CPO, if there is a shortage of soyoil N
2H2010 as food and fuel demand run down crop in the US, as demand would flow over to
supplies of soy crop and fears that a prolonged CPO.
spell of hot weather caused by La Nina in the US
may hurt the soy crop. In addition, strong buying
from China and India for the festive season
starting in August is swallowing up bumper soy
crops in Argentina and Brazil faster than usual.
(Reuters)
Plantations The Malaysian Agricultural Producers’ Positive if the government does consider aborting N
Association (MAPA) has asked the government the proposed increase in foreign workers levy
to review policies on foreign workers’ recruitment, payment, given the current shortage in foreign
especially the proposal to increase the levy workers in the industry.
payment incrementally between 2011 and 2015.
(Bernama)
Sime Darby Sime Darby Healthcare is expected to invest Neutral, as this is in line with our expectations. UP, FV =
RM250m in the 220-bed Sime Darby Medical Healthcare contributes less than 3% of revenue RM8.15
Centre in Ara Damansara, which is anticipated to and profits of Sime.
be opened next year. (Bernama)

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
UPA Corporation Bonus issue on the basis of 1-for-5 6-Aug-10 -
Aluminium Company of Msia Interim dividend of 7.5 sen less 25% tax 12-Aug-10 23-Aug-10
Hua Yang First and final dividend of 3 sen less 25% tax 1-Sep-10 28-Sep-10
Scanwolf Corporation Final dividend of 1.5 sen tax exempt 13-Sep-10 27-Sep-10
 Weida First and final dividend of 4 sen less tax 2-Nov-10 23-Nov-10

Going “ex” on 29 Jul

Bursa Malaysia Interim dividend of 9.5 sen single-tier 29-Jul-10 13-Aug-10
Bonia Corporation Interim tax exempt dividend of 2.5 sen 29-Jul-10 18-Aug-10
Mitrajaya Holdings First and final single tier dividend of 10 sen 29-Jul-10 25-Aug-10

...For more details, see individual reports attached

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