Market Dateline PP 7767/09/2010(025354)

RHB Research Institute

RHB Equity 360°

20 September 2010 (SP Setia, Property; Technical: Genting Malaysia, Proton)

Top Story : SP Setia – 3QFY10 results likely to come in within expectations Market Perform
Results Preview
- We expect SP Setia’s 3QFY10 results to come in within our expectations, given its strong unbilled sales of
RM2bn (as at Jul 2010 but before 3QFY10 earnings). In addition, 2H is also typically stronger in a financial
year. To recap, 1HFY10 earnings made up about 47% of our full year net profit estimate of RM188.9m.
- Over the past 9 months of FY10, SP Setia has recorded about RM600m new property sales every quarter,
on track to meet management’s target of RM2bn for the year. New launches are across all regions in Klang
Valley, Penang and Johor. As for Sky Residences, all non-bumi units of 2nd tower have been taken up.
Preview for 3rd tower has started, with a step-up pricing of RM1,050 psf, 30% upped from the ASP of
RM800 psf for the 2nd tower.
- Meanwhile, KL EcoCity is on track to be launched in Dec 2010, for the preview of the en-bloc offices.
Pricing has not been fixed. Considering the market price for the offices in surrounding area, which is going
at RM750-800 psf, we believe SP Setia will set a new benchmark for pricing in that area. KL EcoCity will be
another hotspot in future, as an extension from the Mid Valley City. Currently office blocks in the Mid Valley
City are mostly fully occupied. With the plans for public transport in place, we expect to see strong demand
for the project.
- No change to forecasts. Fair value kept at RM4.66, in line with our RNAV/share estimate.

Sector Call

Property : Latest land deal not reflective of market value Overweight

Sector Update
- Over the past few days, it was widely reported that the latest land deal in Bukit Bintang, KL was transacted
at a record high price of RM7,209 psf. The price is more than 3x higher than the latest transaction price of
RM2,200 psf for a piece of 0.65 ha land in Jalan Perak by Kuok Brothers and FFM Bhd in May.
- The transaction price of RM7,209 psf is a unique case in our view. A premium is paid by the buyer, due to
the value-added advantage and development potential of the land to integrate with the development of
Pavilion KL Mall. While the development plan for the land is not reported, we believe the buyer has various
options to utilise the land: i) enhancing traffic access; ii) providing linkage to Fahrenheit 88; or iii) additional
parking space for Pavilion mall. Hence, the transacted value of RM210m is relatively minimal compared to
the total value of Pavilion mall, which we should view as an entirety. Hence, the price of RM7,209 psf is not
reflective of the market value of the land in KL city centre area.
- We also do not think the recent land deals in KL city area will be a re-rating catalyst for the high-rise
residences in KLCC area, where occupancy is highly dependent on the inflow of expats, which in turn is
tied to the amount of FDIs into Malaysia.
- Maintain Overweight. Top picks remained unchanged: IJM Land (OP, FV = RM3.00), Suncity (OP, FV =
RM5.45) and Mah Sing (OP, FV = RM2.06).

Technical Highlights

Daily Trading Strategy : An opportunity to buy on weakness…

- Last Friday’s weakness was within our expectation, as the index registered a negative candle on Friday
following a “harami cross” candle on Thursday.
- Though the FBM KLCI ended sharply lower on the last-minute bash-down on the core heavyweights to
mark further weakness ahead, any retreat is viewed as a healthy retracement to neutralise the grossly
overbought momentum readings.
- And, with strong backing at the trigger point at 1,450 and the 10-day SMA of 1,449, we remain confident
that the current rally still has upside potential, once the momentum is fully neutralised.
- In fact, given the healthy participation level at between the 800m and 1.0bn shares mark last Friday, added
with the positive market breadth on Friday’s trading, the overall market sentiment should stay robust when
more investors return from their recent holiday break this week.
 - This means even if the blue chips continue to consolidate in the near term, rotational plays on the second-
tier quality stocks and lower liners are likely to attract fresh buying momentum going forward.
- As such, we see an opportunity to buy on weakness for a resumption of the rally towards last Friday’s high
of 1,479.59 and the all-time high level of 1,524.69 soon.

Daily Technical Watch: Genting Malaysia – Uptrend on SMAs provided confidence to the current uptrend …
- 10-day SMA: RM3.068
- 40-day SMA: RM2.925
- Support: IS = RM2.96 S1 = RM2.68 S2 = RM2.4475
- Resistance: IR = RM3.20 R1 = RM3.60 R2 = RM4.06

Weekly Trading Idea : Proton Holdings – Could cut above RM5.00 soon … Bargain Buy
- Strategy: Bargain buy for a further breakout of RM5.00 soon.
- Resistance: IR = RM5.55 R1 = RM6.50 R2 = RM7.05
- Support: IS = RM4.60 S1 = RM4.26 S2 = RM3.80
- Exit: Cut loss if the stock loses the 10-day SMA of RM4.7747.

Commodities & Currencies – Recovery of the US Dollar short-lived …

- Light Sweet Crude Oil futures: Expect slight bargain-hunting support near the UTL, nearby Friday’s closing.
- Crude Palm Oil futures (CPO): To maintain its current trading range at between RM2,500 and RM2,760.
- Ringgit (RM)/US$: Keep to our Head & Shoulders formation’s target at 3.07.
- Japanese Yen (JPY)/US$: We maintain our bullish outlook on the yen.
- Euro Dollar (EUR)/US$: The EUR is likely to strengthen further this week.
- US Dollar Index (DXY): We foresee the index to lose the support level at 81, and head towards a lower
level at 78 in the near term.

Bulletin Board

Co/Sector News Impact Recom

Plantations According to Malaysian Palm Oil Council
(MPOC) chief executive officer Tan Sri Yusof
Basiron, Malaysia’s palm oil exports may expand
by 20% to touch RM60bn this year, thanks to
higher average palm oil prices and improving
global demand. CPO prices are 11% higher yoy
currently, while up to Aug 2010, CPO exports
have risen 6% yoy. (Business Times)
O&G The Government hopes to see an additional
US$24bn (RM74.6bn) contribution to gross
national income (GNI) through the oil, gas and
energy sector in the next decade as one of the
12 National Key Economic Areas. In order to
fund the proposed initiatives, US$100bn of
investment over the 10-year period would be
required. Key milestones are to import LNG by
2012 as a fuel substitute, reduce the energy bill
by 15% by 2014 and to have in place a regional
oil storage and trading hub (proposed to be built
in Pengerang, Johor) with capacity of 10mln
tones by 2017. There are also plans to make
Malaysia the financial hub for oilfield services by
increasing the presence of major oilfield services
players. (Financial Daily)
Positive, but not unexpected. We believe new Neutral
markets have been emerging for CPO, including
countries like Russia and countries in the Middle
East.
Positive on the long-term impact. As O&G is one Neutral
of the 12 National Key Economic Areas (NKEA),
this will ensure capex spending on the sector will
continue and this will ultimately benefit the
Malaysian oil and gas players. In the near-term
we remain neutral on the sector’s prospects
given that some of the projects highlighted are
already known e.g. LNG regassification terminal
to receive imports; and deepwater tank terminal
hub in Pengerang – very likely being built by
Dialog.

Important Dates
 Company Entitlement details Ex-date Payment date
New entitlements
Mudajaya Group Second interim dividend of 1.5 sen single tier 6-Oct-10 20-Oct-10

Going “ex” on 21 Sep

Masterskill Education Group First interim single tier dividend of 7 sen 21-Sep-10 13-Oct-10
Lii Hen Industries Second interim single-tier dividend of 3.0% 21-Sep-10 15-Oct-10
Atlan Holdings Second interim dividend of 5% under single-tier 21-Sep-10 18-Oct-10

...For more details, see individual reports attached

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