UOBKayHian

PP 14100/06/2010(024886)
Malaysia Daily
Monday, August 30, 2010

Key Indices
KEY HIGHLIGHTS
Index Chg Chg (%)
Banking Page 2 FBMKLCI 1,411.05 3.0 0.2
Loan growth weakens to 11.9% in July due to business loan redemptions.
Bursa Emas 9,418.48 2.3 0.0
Consumer loans still growing strong. Maintain OVERWEIGHT.
Industrial 2,705.83 22.3 0.8
Ind Product 102.51 (0.4) (0.4)
KLCC Property (BUY/RM3.32/Target: RM3.80) Page 4
Finance 12,701.69 (41.1) (0.3)
1QFY11: Better outlook for hotel segment.
Trading Services 177.12 0.6 0.3
UEM Land (BUY/RM1.64/Target: RM1.82) Page 7 Consumer 422.84 (0.2) (0.0)
1H10: Expect a stronger 2H10, underpinned by higher land sales. Construction 245.08 (0.2) (0.1)
Properties 839.57 (4.1) (0.5)
Plantations 6,553.13 (0.3) (0.0)
AT A GLANCE Mining 338.42 0.0 0.0
Corporate Page 10 Technology 19.48 (0.3) (1.4)
AirAsia: Associates' debt may be turned into equity.
IOI: To ride on China's strong palm oil demand. Top Volume
MTD Capital: Buys back all its shares. Price Chg Volume
Proton: In talks with Hindustan Motors. (RM) (%) ('000)
Axiata Group 4.45 (0.4) 20,813
Sector Page 10 CIMB Group 7.74 (2.3) 17,145
Banking: Bank Negara mulls cap on mortgages. JCY Int'l 1.01 (6.5) 16,587
Banking: Retirement at aged 60. Sime Darby 8.10 2.8 15,831
O&G: Terengganu may get RM1.6b oil royalty. Maybank 8.26 0.5 15,715
O&G: MMHE, Kencana in the running for up to US$1b jobs.
Power: Sarawak Energy may again seek lower tariffs. Top Gainers
Property: More Singapore investments expected in Iskandar. Price Chg Volume
(RM) (%) ('000)
Bintulu Port 6.86 3.9 1
Economics Page 10 Malaysian Pacific
CPI: Headline inflation hit 1.9% in July. Ind 5.99 2.9 20
Sime Darby 8.10 2.8 15,831
Politics Page 10 AirAsia 1.64 1.9 5,054
General: Zero racism. Hap Seng Consol 2.83 1.4 66

Top Losers
Price Chg Volume
(RM) (%) ('000)
JCY Int'l 1.01 (6.5) 16,587
Wah Seong Corp 2.00 (4.8) 2,665
JT International 5.78 (4.3) 56
Berjaya Corp 0.96 (3.0) 8,145
Mudajaya Group 4.06 (2.6) 2,562

Key Statistics
Chg Chg (%)
RM/USD 3.14 0.0 0.1
(RM/tonne)
CPO Sep 10 2,688 20.0 0.7
CPO Oct 10 2,600 27.0 1.0
CPO Nov 10 2,543 13.0 0.5
Top volume, gainers and losers are based on
FBM100 component stocks
Refer to last page for important disclosures Page 1 of 11
 Malaysia Daily
Monday, August 30, 2010

Banking – Malaysia OVERWEIGHT

(Maintained)

Banks back in price war Sector Update

What’s New
Top Sector Picks
• Loan growth fell from 12.5% in June to 11.9% in July due to higher
Company Rec Target Share
repayment by the real estate and finance sectors. Consumer loans Price Price
remained the driver on resilient demand for big-ticket items (RM) (RM)
HLFG BUY 11.70 8.50
• Average lending rate (ALR) inched up to 5.19% in July (June: 5.05%) due Hong Leong Bank BUY 10.00 8.95
to another 25bp hike in Overnight Policy Night on 8 July. CIMB Group BUY 9.70 7.74
Maybank BUY 9.28 8.26
• The banking system’s capitalisation remained strong with risk-weighted
Source: UOB Kay Hian
capital ratio (RWCR) and core capital ratio sustained at 15.1% and 13.2%
respectively. Bank Stocks Outperformed FBMKLCI
• The level of non-performing loans (NPLs) including impaired loans Company Price
MoM YoY Ytd
remained stable, accounting for 2.1% of net loans. Loan loss coverage Chg Chg Chg
(RM) (%) (%) (%)
was stable at above 90%.
AMMB 5.56 7.3 33.7 11.2
Maybank 8.26 7.1 26.9 20.4
Action CIMB 7.74 4.6 48.6 20.6
• Maintain OVERWEIGHT, supported by stronger credit growth with RHB Capital 6.62 3.4 42.7 24.9
improving net interest margins and low default rate. AFG 3.05 3.4 27.1 12.5
HL Bank 8.95 1.0 49.2 10.1
• We like CIMB Group (BUY/Target: RM9.70) and Maybank (BUY/Target: Affin 3.04 1.0 64.3 20.6
RM9.28), which have large banking networks to capture the improving HLFG 8.50 0.0 55.7 13.9
EON Capital 6.90 (0.6) 34.2 0.9
economic activities and domestic spending. For mid-sized bank, we like Public Bank 12.10 (0.8) 22.0 7.5
Hong Leong Bank (BUY/Target: RM10.00) as income is set to deliver
improving growth momentum from its regional expansion and to benefit FBMKLCI 1,411 4.3 19.9 10.9
from the domestic rising interest rate cycle. Source: Bloomberg

Sector Catalysts
• Earnings upgrade from stronger-than-expected economic growth. Analyst
Assumption Changes Malaysia Research Team
+603 2143 1180
• None. research@uobkayhian.com

Essentials
• Price war will add pressure to NIM. Banks net interest margin (NIM) is
expected to trend up again after BNM made another 25bp hike to OPR on
8 Jul 10. However, the impact might be offset by the new round of price
war among the banks for consumer loans. This is a surprise to the market
after a mutual understanding was reached earlier at minimum BLR-1.9%.
The new mortgage rate is now down to BRL-2.2% since end-Jul 10 and
some banks has start offering BLR-2.3%. Price war also spillover to credit
card by absorbing government annual services tax (which previously
borne by card holders).
• Domestic project to spur business loan demand. The start of
government infrastructure projects and robust property launches will drive
business loan demand in 2H10, in time to mitigate the impact from slower
external trade. Business loan is now 44.7% of total loans as at end-Jul 10.

Risks
• Stiff competition might squeeze banks’ interest margins.
• Interest upcycle might weaken credit demand.
Peer Comparison
Price Target Market Cap ------------PE (x)------------- ROE P/BV Div Div Yield
Company Ticker Rec 27 Aug 10 Price (US$m) 2010F 2011F 2012F (%) (x) (sen) (%)
AFG AFG MK HOLD 3.05 3.20 1,518 11.4 10.0 8.6 10.6 1.5 9.0 3.0
AMMB AMM MK BUY 5.56 6.10 5,389 12.4 11.5 10.2 11.6 1.7 16.0 2.9
CIMB CIMB MK BUY 7.74 9.70 17,579 15.6 13.4 11.4 15.0 2.6 9.3 1.2
HLFG HLFG MK BUY 8.50 11.70 2,877 10.6 9.4 8.2 17.5 1.7 23.0 2.7
HL Bank HLBK MK BUY 8.95 10.00 4,547 14.3 12.3 10.8 16.3 2.0 24.0 2.7
Maybank MAY MK BUY 8.26 9.28 18,799 15.3 13.8 12.4 14.5 2.1 30.0 3.6
Public Bank PBKF MK HOLD 12.10 12.40 13,742 14.3 12.2 10.5 24.5 3.5 45.5 3.8
RHB Capital RHBC MK HOLD 6.62 7.40 4,584 11.1 10.8 10.2 16.2 1.5 12.5 1.9
Sector 69,035 14.1 12.5 11.0 2.3 2.7
Source: Bloomberg, UOB Kay Hian
Refer to last page for important disclosures Page 2 of 11
 Malaysia Daily
Monday, August 30, 2010

Summary Of July Data

Jul 10 ---------- yoy % chg -------- Remarks
(RMm) May 10 Jun 10 Jul 10
Total Loans 841.7 11.7 12.5 11.9 Weakened due to business loan redemptions
- Non Household 376.1 10.8 12.0 10.2 Redemption by real estates and finance sectors
- Household 465.6 12.5 12.9 13.2 Strong auto and property sales supported consumer credit
Total Deposit 1,086 9.0 9.0 8.7
Net NPL (%) 2.2 2.2 2.1 Inclusion of impaired loans, loan loss coverage above 90%
RWCR (%) 15.0 14.8 15.1 Well capitalised
Source: BNM

Loan Growth Still Strong Loan Approvals Still Showing Strong Loan Pipeline

Banking System: Total Loans (Yoy % Chg - I-yr MA) (Yoy % Chg - 3-mth MA)
(RMb) (%) 80 13
870 14 70 12
820 13 60 Loan Approved
11
12 50 Total Loan (RHS)
770 10
11 40
720 Growth (RHS) 10 30 9
670 9 20 8
8 10
620 7
7 -
6
570 6 (10)
(20) 5
520 5
(30) 4
Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Source: BNM Source: BNM

Rising Alr Might Not Be Long As Price War Starts Ample Liquidity

Slight uptick in business loans since 1Q10 due mainly to the

Source: BNM Source: BNM

Early Spike In NPL Due To Adoption Of FRS 139 Healthy Capital Base

Source: BNM Source: BNM

Refer to last page for important disclosures Page 3 of 11

 Malaysia Daily
Monday, August 30, 2010

BUY
KLCC Property – Malaysia (Maintained)

1QFY11: Better outlook for hotel segment Company Results

Share Price RM3.32
1QFY11 Results Target Price RM3.80
Year to 31 Mar 1QFY11 qoq yoy Remarks
Upside +14.5%
(RMm) % chg % chg
Turnover 227.0 0.6 4.6
Property Investment 175.0 (1.1) 4.3 Increased due to rental revisions for Company Description
Dayabumi Property Investment.
36.4 2.5 3.1 Improved occupancy rate and higher F&B
Hotel Operations
contributions
Provision of 17.8 25.4 18.7 Higher revenue from car park
Management management
Services Stock Data
Operating Profit 166.8 2.1 2.8 GICS sector Financials
Property Investment 154.4 1.2 3.6
Bloomberg ticker: KLCC MK
8.1 5.2 6.6 Lower operating costs at Mandarin
Hotel Operations Shares issued (m): 934.1
Oriental Hotel
Provision of 6.7 13.6 8.1 Market cap (RMm): 3,101.1
Management Market cap (US$m): 985.0
Services
3-mth avg daily t'over (US$m): 1.3
Pre-tax Profit 140.0 3.1 6.8
Core Net Profit 63.7 3.9 5.5
Source: KLCC Property, UOB Kay Hian Price Performance (%)
52-week high/low RM3.53/RM2.75
Results
1mth 3mth 6mth 1yr YTD
• KLCC Property’s core net profit (ex-fair value adjustment of RM342.6m)
4.4 14.5 1.5 0.9 (3.5)
for 1QFY11 came in at RM63.7m (up 3.9% qoq and 5.5% yoy) and in
line with our and market expectations.
Major Shareholders %
• The Group saw higher rental income from offices, in particular, KLCC Holdings 31.7
Dayabumi and Suria KLCC retail mall, and increased revenue from Petroliam Nasional 20.9
hotel operations. Besides higher revenue, the better yoy results were EPF 13.2
also attributable to the lower operating costs at Mandarin Oriental Hotel
and the Group’s lower financing cost.
FY11 NAV/Share (RM) 5.16

Stock Impact FY11 Net Debt/Share (RM) 1.44

• Continued steady earnings growth. We expect KLCC Property’s
FY11 net profit to be driven by higher rental income from offices and the Price Chart
retail mall coupled with a rebound in occupancy rates for its hotel. (lcy) KLCC PROPERTY HOLDINGS BHD Klcc Property Holdings Bhd/FBMKLCI Index (%)
Dayabumi will be undergoing refurbishment and we expect an upward 3.80 120

rental revision for its anchor tenant, MISC (renewal of a three-year lease 3.60
110
which expired in Jun 10), to RM5psf. Meanwhile, the Lot C retail podium 3.40

will be completed by end-10 and tenants can move in early-11 and we 3.20
100

can expect partial earnings to be booked in FY11. 3.00 90

2.80
80
2.60

2.40 70
30
Volume (m)
20
Key Financials 10
Year to 31 Mar (RMm) 2009 2010 2011F 2012F 2013F 0
Net turnover 866.5 881.3 941.0 1,017.3 1,124.1 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 Jun 10
EBITDA 660.1 681.1 732.6 795.2 891.5
Operating profit 627.5 646.9 692.5 748.3 838.1 Source: Bloomberg
Net profit (rep./act.) 535.7 647.6 257.6 303.7 359.7
Net profit (adj.) 224.0 233.0 257.6 303.7 359.7
EPS (sen) 17.9 18.5 20.4 24.0 28.3 Analyst
P/E (x) 18.6 17.9 16.2 13.8 11.7 Malaysia Research Team
P/BV (x) 0.8 0.7 0.6 0.6 0.6 +603 2143 2843
Dividend yield (%) 4.2 4.4 4.6 5.0 5.4 research@uobkayhian.com
Net margin (%) 61.8 73.5 27.4 29.9 32.0
Net debt/(cash) to equity (%) 33.1 27.3 24.4 20.1 16.5
Interest cover (x) 4.7 5.2 6.0 7.2 9.2
ROE (%) 11.8 12.9 4.8 5.4 6.5
Consensus net profit - - 242.2 261.1 285.4
UOBKH/Consensus (x) - - 1.06 1.16 1.26
Source: KLCC Property Holdings Bhd, Bloomberg, UOB Kay Hian
Refer to last page for important disclosures Page 4 of 11
 Malaysia Daily
Monday, August 30, 2010

• Cautiously optimistic on hotel segment. We expect occupancy rate RNAV

BV MV Surplus
for Mandarin Oriental Hotel to rebound to 65% in FY11 (FY10: 57%) with (RMm) (RMm) (RMm)
the rising number of business travellers. The Group will maintain its Office
current average rental at RM636/room. We saw the lower operating costs Menara Exxon Mobil 417.0 493.7 76.7
for its hotel segment this quarter pursuant to the Group’s continued Kompleks Dayabumi 400.0 405.1 5.1
Petronas Twin Towers 5,100.0 5,749.9 328.2
efforts to contain costs by reducing manpower and utilities costs. Also, Menara Maxis 650.0 686.2 11.9
the hotel revenue will be further strengthened by its food and beverage Lot C (Office) 650.0 1.512.0 862.0
section with the launching of new restaurants, such as Mandarin Oriental Shopping Mall
Bar and Mandarin Grill. Suria KLCC 2,950.0 3,022.5 43.5
Lot C (Retail) 140.0 420.0 280.0
Hotel
Earnings Revision/Risk Mandarin Oriental 552.6 771.6 164.3
• No change to our earnings forecasts. Lot D1 (Land) 800.0 1,500.0 700.0
Total 2,471.7
Valuation/Recommendation NTA 4,074.8
RNAV 6,546.5
• Maintain BUY with revised target price of RM3.80 (previous: RM3.54) FD RNAV/share 5.06
by reducing our discount to RNAV/share of RM5.06 from 30% to 25%. Source: UOB Kay Hian
We like KLCC Property because of its resilient rental income and its
valued assets in the Kuala Lumpur prime area. In addition, we expect a Golden Triangle’s Grade A+ Office
more exciting earnings growth path with Lot C coming onstream from Rentals Far Ahead Of Others
FY12 onwards.
(RMpsf/month)
10
Share Price Catalyst
9
• There is an increasing likelihood of the Group raising its dividend Go lden Triangle (P rime A +)
8
payout over time although management has not stated any dividend
7
payout policy as capex could fall (no plans yet for KLCC Property to Go lden Triangle
6
develop the Lot D1 landbank), and debt/equity ratio continued to fall to Damansara
5 Heights
0.2x from the current level of 0.3x.
4 Central B usiness District
3
1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10

Source: Knight Frank, UOB Kay Hian

Golden Triangle’s Grade A+ Office

Occupancy Rate Still Resilient
%
100

Golden Triangle
95 (Prime A+)

Golden Triangle Damansara

Heights
90
Central Business District

85
1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10

Source: Knight Frank, UOB Kay Hian

Refer to last page for important disclosures Page 5 of 11

 Malaysia Daily
Monday, August 30, 2010

Profit & Loss Balance Sheet

Year to 31 Mar (RMm) 2010 2011F 2012F 2013F Year to 31 Mar (RMm) 2010 2011F 2012F 2013F
Net turnover 881.3 941.0 1,017.3 1,124.1 Fixed assets 1,020.7 1,213.2 1,399.0 1,578.1
EBITDA 681.1 732.6 795.2 891.5 Other LT assets 9,864.0 9,875.2 9,886.5 9,899.3
Deprec. & amort. 34.2 40.1 46.9 53.5 Cash/ST investment 598.5 544.8 571.8 676.7
EBIT 646.9 692.5 748.3 838.1 Other current assets 66.9 117.5 125.3 138.4
Associate contributions 16.4 11.2 11.3 12.8 Total assets 11,550.1 11,750.7 11,982.6 12,292.5
Net interest income/(expense) (129.8) (121.6) (110.5) (97.2) ST debt 216.1 216.1 216.1 216.1
Pre-tax profit 1,291.5 582.1 649.1 753.6 Other current liabilities 204.1 182.6 197.4 218.2
Tax (173.4) (145.5) (162.3) (188.4) LT debt 1,834.8 1,671.3 1,507.8 1,344.3
Minorities (470.5) (179.0) (183.1) (205.5) Other LT liabilities 821.1 871.0 872.4 1,564.4
Net profit 647.6 257.6 303.7 359.7 Shareholders' equity 5,312.3 5,507.4 5,744.5 5,344.0
Net profit (adj.) 233.0 257.6 303.7 359.7 Minority interest 3,161.7 3,302.3 3,444.4 3,605.5
Total liabilities & equity 11,550.1 11,750.7 11,982.6 12,292.5

Cash Flow Key Metrics

Year to 31 Mar (RMm) 2010 2011F 2012F 2013F Year to 31 Mar (%) 2010 2011F 2012F 2013F
Operating 578.2 581.2 657.2 732.6 Profitability
Pre-tax profit 1,291.5 582.1 649.1 753.6 EBITDA margin 77.3 77.9 78.2 79.3
Tax (173.4) (145.5) (162.3) (188.4) Pre-tax margin 146.5 61.9 63.8 67.0
Deprec. & amort. 34.2 40.1 46.9 53.5 Net margin 73.5 27.4 29.9 32.0
Associates 0.0 0.0 0.0 0.0 ROA 5.8 2.2 2.6 3.0
Working capital changes 19.3 (22.2) 8.4 11.7 ROE 12.9 4.8 5.4 6.5
Other operating cashflows (593.4) 126.6 115.0 102.2
Investing (155.1) (232.7) (232.7) (232.7) Growth
Capex (growth) (155.1) (232.7) (232.7) (232.7) Turnover 1.7 6.8 8.1 10.5
Investments 0.0 0.0 0.0 0.0 EBITDA 3.2 7.6 8.5 12.1
Others 0.0 0.0 0.0 0.0 Pre-tax profit 25.1 (54.9) 11.5 16.1
Financing (398.7) (402.2) (397.5) (395.0) Net profit 20.9 (60.2) 17.9 18.5
Dividend payments (96.4) (100.9) (107.6) (116.6) Net profit (adj.) 4.0 10.6 17.9 18.5
Issue of shares 0.0 0.0 0.0 0.0 EPS 3.9 10.2 17.4 18.0
Proceeds from borrowings 0.0 0.0 0.0 0.0
Loan repayment (163.5) (163.5) (163.5) (163.5) Leverage
Others/interest paid (138.8) (137.8) (126.4) (115.0) Debt to total capital 24.2 21.4 18.8 17.4
Net cash inflow (outflow) 24.4 (53.7) 27.0 104.9 Debt to equity 38.6 34.3 30.0 29.2
Beginning cash & cash equivalent 574.1 598.5 544.8 571.8 Net debt/(cash) to equity 27.3 24.4 20.1 16.5

Ending cash & cash equivalent 598.5 544.8 571.8 676.7 Interest cover (x) 5.2 6.0 7.2 9.2

Refer to last page for important disclosures Page 6 of 11

 Malaysia Daily
Monday, August 30, 2010

UEM Land – Malaysia BUY

(Maintained)

1H10: Expect stronger 2H10, underpinned by higher land sales Company Results
Share Price RM1.64
1H10 Results Target Price RM1.82
Year to 31 Dec 2Q10 yoy qoq 1H10 yoy Remarks
(RMm) % chg % chg (RMm) % chg Upside +11.0%
Turnover 88.0 28.1 121.7 127.7 2.0 Higher strategic land sales
Operating Profit 13.9 113.8 595.0 15.9 42.0 Company Description
Associates & JV 4.3 72.0 (12.2) 9.2 187.5 yoy increase due to higher
sales at Horizon Hills Real estate development and investment.
Pre-tax Profit 41.3 364.0 932.5 45.3 235.6 Disposal gain of RM25.6m for
its 20% stake in TnG to PLUS.
Net Profit 40.3 583.1 1,200.0 43.4 356.8
Core Net Profit 14.7 149.2 374.2 17.8 201.7
Stock Data
Source: UEM Land, UOB Kay Hian
GICS sector Financials
Results Bloomberg ticker: ULHB MK
• UEM Land’s 2Q10 core net profit (excluding one-off gain of RM25.6m Shares issued (m): 3,642.3
from the disposal of its 20% stake in TnG) increased 149.2% yoy and Market cap (RMm): 5,973.3
374.2% qoq to RM14.7m. But 1H10 core net profit of RM17.8m was Market cap (US$m): 1,897.4
below our estimate. However, we expect the Group to achieve higher 3-mth avg daily t'over (US$m): 2.4
strategic land sales in its Southern Industrial Logistics Clusters (SiLC)
and Puteri Harbour in 2H10. Price Performance (%)
52-week high/low RM1.76/RM1.15
• The better qoq and yoy results performance were mainly due to higher
1mth 3mth 6mth 1yr YTD
revenue from land sales in SiLC and Puteri Harbour, and residential
sales in Nusa Idaman. (4.1) 19.7 40.1 25.9 33.5

• For 1H10, the Group achieved RM39m of industrial land sales in SiLC Major Shareholders %
with average selling price of RM28psf, and RM26m of commercial land Khazanah 77.1
sales in Puteri Harbour to Encorp with average selling price of
RM180psf. Meanwhile, residential sales in Nusajaya contributed about FY10 NAV/Share (RM) 0.43
RM55m from its three projects- Nusa Idaman, East Ledang and Ledang
FY10 Net Debt/Share (RM) 0.21
Heights. However, the better 1H10 performance was partially offset by
completion of Kota Iskandar Phase 1 in 2009.
Price Chart
Stock Impact
(lcy) UEM LAND HO LDINGS BHD Uem Land Holdings Bhd/FBMKLCI Index (%)
• More land sales in 2H10. Going forward, the Group targets RM70m- 1.80 140

80m land sales consisting of: a) RM30m-40m land sales in SiLC, and b) 1.60
130

120
RM40m land sales in Puteri Harbour in 2H10. UEM Land is in the midst
1.40 110
of negotiating with some parties on few parcels of lands. 100
1.20 90

80
1.00
70

0.80 60
30
Key Financials Volume (m)
20
Year to 31 Dec (RMm) 2008 2009 2010F 2011F 2012F 10
Net turnover 511.6 403.1 396.8 503.5 617.0 0
EBITDA 72.8 403.1 98.3 130.0 170.1 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 Jun 10

Operating profit 70.9 403.1 92.2 120.2 165.2

Net profit (rep./act.) 74.2 409.2 72.2 93.7 123.2 Source: Bloomberg
Net profit (adj.) 74.2 409.2 72.2 93.7 123.2
EPS (sen) 2.0 11.2 2.0 2.6 3.4
Analyst
P/E (x) 80.5 14.6 82.7 63.7 48.5
Malaysia Research Team
P/BV (x) 4.8 3.9 3.8 3.6 3.4
Dividend yield (%) 0.0 0.0 0.3 0.3 0.3 +603 2143 2843
Net margin (%) 14.5 101.5 18.2 18.6 20.0 research@uobkayhian.com
Net debt/(cash) to equity (%) 46.0 37.0 48.1 47.5 45.2
Interest cover (x) 11.4 53.7 9.7 10.7 11.7
ROE (%) 6.1 29.5 4.6 5.8 7.2
Consensus net profit - - 82.4 102.4 130.0
UOBKH/Consensus (x) - - 0.88 0.92 0.95
Source: UEM Land Holdings Berhad, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures Page 7 of 11

 Malaysia Daily
Monday, August 30, 2010

• More residential launches in the pipeline. UEM Land will capitalise on Sensitivity Analysis Of Land Prices To
current strong property demand to launch more new and existing projects RNAV
% increase in land prices RNAV/share (RM)
with an estimated GDV of RM500m in 2H10 to further enhance its 0% (base case of RM20psf) 2.02
earnings visibility in 2011-12. The Group achieved 30% take-up rate 10% (RM22psf) 2.23
within one week for its maiden Klang Valley project, Symphony Hills, in 20% (RM24psf) 2.44
30% (RM26psf) 2.66
Cyberjaya, in early-Aug 10. To-date, the Group has an estimated unbilled
Source: UOB Kay Hian
sales of RM260m, which provides earnings visibility through to end-10.

Residential Launches In 2H10 RNAV

Project Type of GDV Indicative Launched Date of launch Landbank MV Value
Development (RMm) Average Pricing Units (acre) (RMpsf) (RMm)
Nusa Bayu Mass market terrace 150 RM200k-300k 480 Sep 10 Puteri Harbour 519 70.0 1,582.5
house SiLC 1,135 26.0 1,285.5
Nusa Idaman Mass market terrace RM200k-300k n.a. New phases East Ledang 365 50.0 795.0
house Horizon Hills 655 50.0 1,426.6
East Ledang Superlink house >RM500k 64 New phases Afiat Healthpark 63 40.0 109.8
Nusa Idaman 188 24.0 196.5
Puteri Harbour Serviced apartment 350 RM400-500psf 300 Nov 10
Nusajaya Cemerlang 246 24.0 257.2
Source: UEM Land, UOB Kay Hian NIP 17 24.0 17.8
Symphony Hills, Cyberjaya98.0 60.0 256.1
Others 5,740 8.0 2,000.3
Earnings Revision/Risk Total 7,927.2
• We maintain our net profit estimates as we expect more strategic land Less: Net Debt 557.1
sales to be booked in 2H10. Our estimates have factored in land sales RNAV 7,370.1
RNAV/share (RM) 2.02
for 2010-12 amounting to about 50% of Group’s revenue. Average land price
In Nusajaya 8,928 20.0
Valuation/Recommendation Source: UOB Kay Hian
• Maintain BUY with target price of RM1.82. Our target price is based
on a 10% discount to our RNAV of RM2.02/share (assuming average
value of RM20psf for the Nusajaya land).
• Accumulate on weakness. There will be more event catalysts in 4Q10
of announcements relating to Malaysia-Singapore joint iconic projects in
Iskandar Malaysia, and land swap between the two countries with
reference to the earlier relocation of Tanjong Pagar KTM land. However,
we understand that the impending issue between the two nations were
the earlier land pricing differences.

Share Price Catalyst

• An accord on the decade-long issue of Malaysia’s railway land in
Singapore, which will hasten the development of joint iconic projects,
promising a brighter future for Iskandar Malaysia.

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 Malaysia Daily
Monday, August 30, 2010

Profit & Loss Balance Sheet

Year to 31 Dec (RMm) 2009 2010F 2011F 2012F Year to 31 Dec (RMm) 2009 2010F 2011F 2012F
Net turnover 403.1 396.8 503.5 617.0 Fixed assets 57.0 58.5 60.0 72.0
EBITDA 403.1 98.3 130.0 170.1 Other LT assets 2,107.2 2,089.6 2,100.8 2,112.0
Deprec. & amort. 0.0 6.0 9.7 4.9 Cash/ST investment 135.8 49.5 129.9 228.8
EBIT 403.1 92.2 120.2 165.2 Other current assets 1,233.0 1,432.6 1,558.2 1,720.5
Associate contributions 28.6 11.2 11.2 11.2 Total assets 3,533.0 3,630.2 3,848.8 4,133.3
Net interest income/(expense) (7.5) (10.1) (12.1) (14.5) ST debt 9.1 9.1 9.1 9.1
Pre-tax profit 424.2 93.4 119.3 161.9 Other current liabilities 680.0 610.8 643.6 710.4
Tax (14.0) (23.3) (29.8) (40.5) LT debt 691.0 801.0 911.0 1,021.0
Minorities (1.0) 2.2 4.2 1.8 Other LT liabilities 175.3 175.3 175.3 175.3
Net profit 409.2 72.2 93.7 123.2 Shareholders' equity 1,524.3 1,582.9 1,662.9 1,772.5
Net profit (adj.) 409.2 72.2 93.7 123.2 Minority interest 453.3 451.1 446.9 445.1
Total liabilities & equity 3,533.0 3,630.2 3,848.8 4,133.3

Cash Flow Key Metrics

Year to 31 Dec (RMm) 2009 2010F 2011F 2012F Year to 31 Dec (%) 2009 2010F 2011F 2012F
Operating (21.6) (66.5) 105.9 132.5 Profitability
Pre-tax profit 424.2 93.4 119.3 161.9 EBITDA margin 100.0 24.8 25.8 27.6
Tax (14.0) (23.3) (29.8) (40.5) Pre-tax margin 105.2 23.5 23.7 26.2
Deprec. & amort. 0.0 6.0 9.7 4.9 Net margin 101.5 18.2 18.6 20.0
Associates (20.0) (61.5) (61.5) (61.5) ROA 12.4 2.0 2.5 3.1
Working capital changes (271.9) (198.9) (51.7) (54.6) ROE 29.5 4.6 5.8 7.2
Other operating cashflows (139.9) 117.9 119.9 122.4
Investing (39.5) (106.0) (109.8) (115.4) Growth
Capex (growth) (11.2) (7.5) (11.3) (16.9) Turnover (21.2) (1.6) 26.9 22.5
Investments (31.6) (112.5) (112.5) (112.5) EBITDA 453.7 (75.6) 32.2 30.9
Proceeds from sale of assets 0.0 0.0 0.0 0.0 Pre-tax profit 460.4 (78.0) 27.8 35.6
Others 3.3 14.0 14.0 14.0 Net profit 451.5 (82.4) 29.8 31.5
Financing 171.2 86.3 84.2 81.8 Net profit (adj.) 451.5 (82.4) 29.8 31.5
Dividend payments 0.0 (13.7) (13.7) (13.7) EPS 451.5 (82.4) 29.8 31.5
Issue of shares 0.0 0.0 0.0 0.0
Proceeds from borrowings 66.2 210.0 210.0 210.0 Leverage
Loan repayment (8.9) (100.0) (100.0) (100.0) Debt to total capital 35.4 39.8 43.6 46.5
Others/interest paid 113.9 (10.1) (12.1) (14.5) Debt to equity 45.9 51.2 55.3 58.1
Net cash inflow (outflow) 110.1 (86.2) 80.3 99.0 Net debt/(cash) to equity 37.0 48.1 47.5 45.2
Beginning cash & cash equivalent 24.8 135.8 49.5 129.9 Interest cover (x) 53.7 9.7 10.7 11.7

Changes due to forex impact 0.9 0.0 0.0 0.0

Ending cash & cash equivalent 135.8 49.5 129.9 228.8

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 Malaysia Daily
Monday, August 30, 2010

Corporate
AirAsia: Associates' debt may be turned into equity. Low-cost carrier AirAsia Bhd may convert debt owed by
its associates into equity when they seek listing, its chief said. Group chief executive officer Datuk Seri Dr Tony
Fernandes said that AirAsia's current shareholding of 49% each in Thai AirAsia and Indonesia AirAsia would be diluted
once they are listed on their respective exchanges. (Source: Business Times)
IOI: To ride on China's strong palm oil demand. China is one of IOI Corp Bhd's (1961) top five palm oil markets
and executive chairman Tan Sri Lee Shin Cheng sees stronger demand in the years ahead. China, with 1.3b people, is
the largest vegetable oil consumer in the world. Last year, China imported 6.6m tonnes of palm oil. "Naturally, we see
very good potential in increasing our sales volume further," Lee said in an interview. (Source: Business Times)
MTD Capital: Buys back all its shares. MTD Capital has made the rate move of buying all of the allocated shares
under a buyback scheme. It is believed to have spent some RM138m this year to buy the maximum 10% of its own
shares in the open market. (Source: Business Times)
Proton: In talks with Hindustan Motors. Proton Holdings is understood to have commenced talks with India’s
Hindustan Motors in an effort to penetrate the Indian market, sources say. It is believed that a delegation from Proton
met up with top brass at Hindustan Motors about a week ago to firm up negotiations. (Source: The Edge)
Sector
Banking: Bank Negara mulls cap on mortgages. Bank Negara Malaysia has written to financial institutions to
get their feedback on the possibility of capping the loan-to-value ratio for mortgages at 80%, say sources. Should this
happen, banks would only be able to lend up to 80% of the value of a property. (Source: The Edge)
Banking: Retirement at aged 60. Local banks and the National Union of Bank Employees (NUBE) have agreed to
raise the retirement age for employees from the current 55 years to 60. (Source: The New Straits Times)
O&G: Terengganu may get RM1.6b oil royalty. The Terengganu government expects to receive RM1.6b in oil
royalty annually after an agreement is reached with Petronas. Menteri Besar Datuk Seri Ahmad Said, however, said it
was only an estimate as the amount depends on the price of oil. (Source: The Malaysian Reserve)
O&G: MMHE, Kencana in the running for up to US$1b jobs. Jobs valued at US$500m to US$1b for the
marginal Cendor Phase 2 oil field are likely to be rolled out soon, international oil & gas publications reported last week.
MISC Bhd is said to be in talks with services and engineering outfit Petrofac Ltd to convert the latter’s tanker into a
floating production, storage and offloading (FPSO) vessel, to be used for jobs in the oil field. MISC’s wholly-owned unit,
MMHE is likely to get the job to convert the tanker, built in 1990, into an FPSO. Upstream Online also reported that
Kencana Petroleum has emerged as the front-runner to bag a contract to build two wellhead platforms for the second
phase of the Cendor Oilfield, to be used for drilling 29 new wells. (Source: The Edge)
Power: Sarawak Energy may again seek lower tariffs. Sarawak Energy, the state utility firm that will buy power
from the Bakun dam, is expected to put in a fresh proposal for lower tariffs during the ramp-up period between 2011 to
2015, sources said. (Source: The Star)
Property: More Singapore investments expected in Iskandar. Iskandar Malaysia can expect more
investments from Singapore in the economic growth corridor with the improvement in bilateral ties between Malaysia
and Singapore. Iskandar Regional Development Authority CEO Ismail Ibrahim said there was now a feel-good factor on
both sides of the causeway following the positive diplomatic relations. (Source: The Star)
Economics
CPI: Headline inflation hit 1.9% in July. Headlien inflation as measured by the consumer price index was 1.9%
higher in July, compared with a year ago due to price increases in the food and non-alcoholic beverages as well as
transport categories. (Source: The Star)
Politics
General; Zero racism. Prime Minister Datuk Seri Najib Tun Razak has warned the people against spreading “half
truths” on racial issues and said the government has zero tolerance of racist remarks. He emphasised that action would
be taken against those who made remarks that were racist in nature and unlawful, and also against those who
vandalised places of worship such as churches or surau. (Source: The Star)

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 Malaysia Daily
Monday, August 30, 2010

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