P K Basu - xinhua08.comupload.xinhua08.com/2012/1204/1354596987321.pdf · Thai Vegetable Oil TVO TB 23.20 35.50 53.02 ... Genting Malaysia GENM MK 3.46 4.05 17.05 ... Cathay Pacific

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

4 December 2012

Regional

Daily

Top Views COMPANY UPDATE Mcap US8.4b ADTV USD6.3m SG: Olam International (OLAM SP) James KOH P5 Commodities | May Win The Battle But Lose The War | SELL | Downside 11% ‐ Olam announced a capital raising exercise of up to USD1.25b (USD750m

bonds) in a rights exercise fully under‐written by substantial shareholders Temasek.

‐ Following Muddy Waters’ allegations, Olam’s bond yields have spiked up to 10‐14% which may be unsustainable. We believe management’s intention is thus to 1) Relieve pressure on having to refinance debt due in next 12 months and 2) Set a lower 8% benchmark yield for the debt market

‐ This is a swift and decisive move which will likely relieve debt pressure, but may come at a price of eroding minority shareholders’ confidence in the longer‐term. We downgrade our recommendation to a SELL with a TP of SGD1.42 (1x P/B)

COMPANY UPDATE Mcap USD1.5b ADTV USD1.3m IN: Mphasis (MPHL IN) Urmil Shah 6 Tech | Acquisition Does Not Address Concerns | SELL | Downside 24% ‐ Mphasis (MPHL) plans to acquire US‐based Digital Risk (Digital) LLC for

US$202m in an all‐cash deal. Digital provides risk, compliance, and transaction management solutions to the mortgage sector in the US. MPHL will fund the acquisition using surplus cash and it expects to complete the acquisition by end‐January 2013.

‐ We believe that although the acquisition is a strategic move towards reducing dependence on HP and creating independent revenue streams, we are not sanguine about the acquisition because: 1) Digital is a small company operating in a niche area that is growing in the US; 2) although the acquisition will add to revenue, margin would remain a concern (Digital’s EBITDA margin is 12.2% vs. MPHL’s 18.8%) 3) MPHL has no plans of offshoring existing work to India; so the scope for reducing costs and improving margins is limited.

‐ We believe the acquisition is expensive at EV/EBITDA of 13x and PER of 23x CY12F. We maintain SELL with TP of Rs304/sh based on PER of 8x FY13F.

P K Basu [email protected] (65) 6432 1821 ONG Seng Yeow [email protected] (65) 6432 1832 Benjamin Ho [email protected] (852)22680643

Top Buys… Company Ticker Spot Target Upside(%) Thai Vegetable Oil TVO TB 23.20 35.50 53.02 SapuraKencana SAKP MK 2.81 4.10 45.91 SembMarine SMM SP 4.46 5.90 32.29 Neptune Orient Lines NOL SP 1.11 1.46 32.13 B. Armada BAB MK 3.80 4.88 28.42 LICHF LICHF IN 264.75 332.00 25.40 Telekom T MK 5 6.61 21.06 Genting Malaysia GENM MK 3.46 4.05 17.05

Maybank-KE Events Date Corporate Roadshows Location 5 Dec Vanke HK

Date Analyst Roadshows Location 5-6 Dec China Property | Karen Kwan HK 10-11 Dec Thai Strategy | Andrew Stotz HK 10-11 Dec China Property | Karen Kwan SP

mailto:[email protected]


4 December 2012

Regional Daily

Company Update Mcap US8.4b ADTV USD6.3m MK: Malaysian Airline System Wong Chew Hann 7 Industrials | Update Post Luncheon with Management | BUY | Upside 23% ‐ MAS management presented their business plan and strategies to turn

around MAS at a recent lunch Maybank Kim Eng hosted. On the base of it, they have completely reset their organisational methodology, and restructured it to be simple, nimble and cost effective. Whatever doesn't fit in has been terminated.

‐ ‐ Management asserts that for the first time, they have new aircraft and product and services on par with the industry leaders such as Singapore Airlines, Cathay Pacific and Emirates. Previously, they were handicapped with very old aircraft and outdated products. Nobody saw any value flying with them, but now they are recapturing a lot of returning business.

‐ ‐ Rights issue necessary to finance its MYR7.9b capex over the next two years. The Company opted for a rights issue as it is the cheapest form of capital. An all debt approach was possible, but very expensive as loans are at 7% levels.

‐ ‐ Target price of MYR1.02/share after imputing 3‐for‐2 rights issue assuming 20% discount and pegging it to Asia Pacific average 2014 PER of 9.8x. Reiterate BUY, though expect sideways trading until rights issue completed in April 2013

MK: Market Strategy Wong Chew Hann 8 3Q12 Results Review: More Misses

- We maintain our 2012 YE KLCI target at 1,620 and introduce 2013 YE target of 1,710, pegged to 13.5x 12M forward earnings, 1SD below mean as we continue to price in a still cautious outlook on the external front, compounded by jitterness ahead of Malaysia’s 13GE.

- 3Q12 corporate results largely disappointed with just 49% of our research universe having reported earnings which met our expectations. Earnings misses far outpaced positive surprises at a ratio of 42%:9%.

- Our 2012‐13 KLCI earnings forecasts are consequently shaved by 1%/2.6%. We now expect KLCI core earnings to grow by a slower 10.8% this year (+11.9% previously) and 8.0% in 2013 (+9.8% previously).

- We expect the market to weaken further ahead of the 13GE. Beyond the 13GE, we advocate accumulating the big cap, defensive and apolitical names. We upgrade the banking sector to Overweight as it also offers value, and downgrade telco and power to Neutral.

- Among our top stock picks, we have taken off KLCCP and Telekom and introduce RHB Cap and WCT. Public Bank, Hong Leong Bank, Genting Malaysia, SapuraKencana, Bumi Armada and Top Glove remains.

4 December 2012

Regional Daily

Company Notes SP: Land Transport Update Bernard CHIN 9 The Long and Short of it all - Our pair trade call since April this year has been doing well, and looks

set to stage a revival as the differential of 15% between a Long‐ComfortDelGro (CDG), Short‐SMRT strategy has been maintained since our last update. Since our call, CDG now counts BlackRock, the world’s largest asset manager, as a new significant shareholder.

- Top of the news recently were reports on SMRT’s mainland‐Chinese bus drivers staging a sit‐in protest on an alleged pay dispute. This fallout has also resulted in SMRT’s CEO Mr Desmond Kuek recognising ‘deep‐seated issues’ that need addressing within the company.

- CDG remains our pick of the sector for its diversified land transport business across international borders. Not only does this present steady growth opportunities, it also shields the company from country‐specific concerns such as those currently being experienced in Singapore.

Company Update Mcap USD8.8b ADTV USD5.7m IJ: Indocement (INTP.IJ) Anthony Yunus 10 Cement | Firm Growth to Continue | HOLD | Upside 8.2% ‐ Indocement (INTP) booked a 9M12 earnings of IDR3.4t, up 30% YoY.

Revenue saw a 26% YoY increase to IDR12.4t (9M11: IDR9.8t), buoyed by strong domestic sales and a higher ASP. The results were within our expectations.

‐ We forecast INTP to book earnings growth of 15% YoY in FY13F on ASP hike of 4% and sales volume growth of 11%. Combined with the decline in average energy costs, we expect margins to also expand in FY13F by 1‐2ppts.

‐ We raise our TP to IDR25,000, from IDR23,000, as we roll over our valuation basis to FY13. Our new TP, pegged at 18.5x FY13F PER, implies 8.2% upside from the current level. Reiterate HOLD.

3Q12 RESULTS REVIEW Mcap USD1.6b ADTV USD3.9m PM: Megaworld Corp (MEG PM) Kenneth Nerecina 11 Property | Higher TP on gaming, lower NAV discount | HOLD | Downside 0.8% ‐ Net income of Megaworld Corp (MEG) is forecast to grow 12.7% YoY to

PHP7.8b from our revised 2012 profit estimate of PHP6.96b, but because of increased number of shares resulting from the conversion of warrants, EPS is seen to decline about 1.2% to PHP0.26.

‐ We are now looking at a NAV of PHP106.7b, almost 9% higher than our previous estimate. The most notable increase came from the upward adjustment in Travellers International.

‐ We also attach a lower discount to NAV, now at 30% versus 40% previously. We figure the discount to NAV should be lower than other property counters with less significant rental income than MEG’s and without the lucrative gaming play from Travellers. Maintain HOLD

4 December 2012

Regional Daily

Economics RG: 2013 Export Outlook Still Good, But Cloudier P.K. Basu 12 US Fiscal Cliff Risks Set to Rise ‐ ISM’s manufacturing PMI slumped to 49.5 in November (after two

strong months well above 50), likely reflecting rising risks of the US going over the fiscal cliff. Obama seems inclined to push the Republicans to accept a tax increase on the top‐2% of income earners – and to temporarily go over the cliff if that is the only way to ensure such a tax increase. Mild stimulus measures would still be likely later in January 2013 to avert recession.

‐ ISM manufacturing new orders (an excellent 6‐month leading indicator of US demand for Asia’s exports) moderated to 50.3 in November 2012, suggesting that Asia’s exports to the US will decelerate to 8‐9% YoY growth in May 2013 (from 12‐13% YoY in March‐April 2013), although this would still be a lot better than the performance in recent months (3‐5% YoY growth for Asia’s exports to the US).

‐ The OECD CLI also suggests a turnaround in 1Q 2013, and with Grexit risk removed in late‐November, OECD demand indicators should improve further. Additionally, China’s official PMI rose to 50.6 (with new orders rising to 51.2) in November 2012 – providing further evidence of a cyclical acceleration. India’s infrastructure sector grew 6.5% YoY in October, the fastest in 8 months, and Brazil and Mexico are set to strengthen into 1Q 2013 too – ensuring stronger intra‐EM demand in 1H 2013, ensuring a clear acceleration in Asia’s exports relative to the sluggishness in 2H 2012.

IJ: Nov inflation and Oct trade accounts Luz Lorenzo 15 Preparing for policy changes ‐ Merchandise exports declined 7.6% YoY in October while imports

jumped 10.8% resulting in a reversal to a trade deficit for the month. ‐ Lowering of fuel subsidies is likely in 2013 after a two‐year delay. As a

result, we forecast inflation will rise to 5.3% from around 4.5% this year. ‐ With stable inflation and weak exports, there’s no reason for the central

bank to change its policy rate in the next meeting. In 2013, if fuel and electricity subsidy cuts we have factored into our inflation forecasts materialize, it is likely the next move on the policy rate will be up. We have not yet factored the impact of the recent minimum wage hike as business groups are challenging the rule and government has delayed implementation for some and exempted others.


Company Update 4 December 2012

Singapore

Co. Reg No: 198700034E MICA (P) : 099/03/2012

Olam International May win the battle but lose the war

Temasek comes to the rescue again. Olam announced a capital raising exercise of up to US1.25b, which will be fully underwritten by substantial shareholders, Temasek. This is a very swift and decisive action, which will ease pressure on the company’s financial health, following the rising debt yields on the back of Muddy Water’s allegations. However, we think this may come at a price of eroding minority shareholders’ confidence in the longer-term.

Rights issue of bonds and warrants. For each 1,000 Olam shares, existing shareholders will have the right to subscribe for 313 Bonds (Par value USD1, issue price USD0.95, coupon 6.75%), which will come stapled with 162 free warrants to subscribe for Olam shares at current price of SGD1.575 within the next 3-5 years. The effective yield on the bonds is therefore 8%, with a free warrant sweetener.

To combat rising debt yields. Following Muddy Waters’ allegations, Olam’s share price is down 9.5%, but more importantly bond yields spiked to 10-14% which implies a much higher and arguably unsustainable cost of borrowing going forward for the company. We believe management’s intention is to combat this by 1) Relieving pressure on having to refinance debt within next 12 months 2) Set 8% as a lower benchmark yield for the debt market.

Other terms. The warrants will have a tenor of 5 years, but non-exercisable for 3 years. Upon full exercise, the 387 million shares represent 16% of existing share capital or 14% of enlarged. The legal department will see whether there is a need for an EGM, which would require a simple majority of shareholdings ex-Temasek and the exercise is expected to be completed around Feb 2013. Temasek’s share would go up to 28-29% assuming they take up all warrants.

Downgrade to SELL. This exercise may also hurt short-sellers, as script lenders will have to call for borrowed stock in order to participate. However, management’s earlier stance that it could easily survive 12-18 months even in a credit market seizure may now sound hollow and minority shareholder confidence may be eroded. Given the uncertainty, we downgrade our recommendation from a HOLD to a SELL with a TP of SGD1.42 (1x P/B).

Olam International – Summary Earnings Table FYE Jun (SGD m) 2011 2012 2013F 2014F 2015F Revenue 15826.8 17129.8 21057.7 25084.7 30052.5 EBITDA 824.8 899.8 1147.3 1381.7 1342.6 Recurring Net Profit 372.8 355.5 424.4 540.8 723.9 Recurring EPS (SG cents) 16.7 14.9 17.8 22.6 30.3 DPS (SG cents) 5.0 4.0 4.4 5.7 7.6 PER (x) 9.4 10.6 8.9 7.0 5.2 EV/EBITDA (x) 11.6 10.7 9.0 8.5 9.3 Div Yield (%) 3.2 2.5 2.8 3.6 4.8 P/BV (x) 1.6 1.1 1.1 1.0 1.0 ROE (%) 19.1 10.9 11.4 13.1 18.3 ROA (%) 3.4 2.7 2.7 3.1 4.0 Consensus Net Profit 411.1 527.0 672.0 Source: Company, Maybank KE estimates

SELL (from HOLD) Share price: SGD1.575 Target price: SGD1.42 (from SGD1.75) James KOH [email protected] (65) 6432 1431 Stock Information Description: An integrated supplier of both raw and processed agricultural commodities. Also sources, processes, stores, transports, ships and markets agricultural products. Ticker: OLAM SP Shares issued (m) 2,390.2 Market Cap (USD m) 3,089.3 3-mth Avg Daily Turnover (USD m): 27.1 STI Index 3,065.7 Free float (%): 55.7 Major Shareholders: % Kewalram Chanrai 23.1 Temasek Holdings 13.8 Management 11.0 Key Indicators ROE (%) 19.1 Adjusted net gearing (%) 57 NAV/shr (SGD): 1.42 Interest cover (x): 2.1

Historical Chart

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Performance: 52-week High/Low SGD2.76/SGD1.465 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) -19.2 -16.4 2.9 -34.4 -26.1 Relative (%) -19.9 -17.9 -9.4 -40.6 -36.2


COMPANY UPDATE 4 December 2012

India

Mphasis (MPHL) Acquisition Does Not Address Concerns

Mphasis (MPHL) plans to acquire US-based Digital Risk (Digital) LLC for US$202m in an all-cash deal. Digital provides risk, compliance, and transaction management solutions to the mortgage sector in the US. MPHL will fund the acquisition using surplus cash and it expects to complete the acquisition by end-January 2013. We believe that although the acquisition is a strategic move towards reducing dependence on HP and creating independent revenue streams, we are not sanguine about the acquisition because: 1) Digital is a small company operating in a niche area that is growing in the US; 2) although the acquisition will add to revenue, margin would remain a concern (Digital’s EBITDA margin is 12.2% vs. MPHL’s 18.8%) 3) MPHL has no plans of offshoring existing work to India; so the scope for reducing costs and improving margins is limited. We believe the acquisition is expensive at EV/EBITDA of 13x and PER of 23x CY12F. We maintain SELL with TP of Rs304/sh based on PER of 8x FY13F. Financials of the parent continue to be a concern. HP is in dire straits, having had to write down US$8.8bn owing to accounting issues in its acquisition of Autonomy. MPHL continues to depend on HP for 50% of revenue and the acquisition will not change this in a hurry. Hence, near-term outlook for MPHL remains shrouded in uncertainty Acquisition to be marginally earnings accretive only in FY14F. Cash outflow of US$202m would impact MPHL’s treasury income. Moreover, MPHL will have to pay tax (effective tax rate of 25-30%) on the earnings of Digital since the latter is a limited liability company. Underperformance to continue. MPHL will announce its 4Q results on 5 Dec. We expect revenue of Rs13.5bn, unchanged QoQ and +3% YoY. We expect EPS of Rs10.3, +3.6% QoQ and +18% YoY. We believe that any disappointment would push the stock downwards. Needs a balanced approach. MPHL needs to balance organic growth with acquisition-led growth to establish evidence of growth momentum. Thus, although PER of 10x FY13F is not expensive, more such acquisitions would establish the company’s strategic intention and create a scenario for re-rating of the stock. Management commentary does not point to such a trend. In such a scenario, we prefer peers with FY13F earnings growth of 20%+ whose stocks are trading at similar levels.

MPHLL – Summary Earnings Table FY October 31 (Rs m) FY10 FY11 FY12F FY13F FY14F Revenue 50,365 50,980 54,039 66,944 78,535 EBITDA 12,498 9,854 10,164 11,686 13,262 Recurring Net Profit 10,908 8,217 7,966 8,361 9,161 Recurring Basic EPS (Rs) 52.0 39.1 38.0 39.8 43.6 EPS growth (%) 19.9 -24.7 -3.1 4.9 9.6 DPS (Rs) 4.2 5.0 6.0 7.0 8.0 PER (x) 7.5 9.9 10.2 9.7 8.9 EV/EBITDA (x) 4.7 6.0 5.8 5.1 4.5 Div Yield (%) 1.1 1.3 1.6 1.8 2.1 P/BV(x) 2.5 2.1 1.8 1.6 1.4 Net Debt/Equity (%) -48.3 -45.5 -47.7 -42.5 -51.4 ROE (%) 38.6 22.8 18.8 17.0 16.3 ROA (%) 27.0 17.7 14.9 15.2 14.1 Consensus Net Profit (Rs bn) - - 7,878 8,071 8,526

Source: Company data, Bloomberg, KESI estimates

SELL (Unchanged)

Share price: Rs403/sh Target price: Rs304/sh (Unchanged) Urmil Shah [email protected] (91) 22 66232606

Stock Information Description: MPHL, 61% owned by HP is a software services, IT infrastructure and BPO services exporter to large corporate clients Ticker: MPHL IN Shares Issued (m): 211 Market Cap (US$ bn): 1.5 6-mth Avg Daily Turnover (US$m): 1.3 SENSEX: 19,305 Free float (%): 39 Major Shareholders: % Hewlett Packard (HP) 61

Key Indicators (FY12F) ROE (%) 18.8 Net Cash (Rs bn): 21.8 Interest cover (x): n.a.

Historical Chart

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Performance: 52-week High/Low Rs440 / 295 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 3.5 5.5 10.1 24.1 33.8 Relative (%) 0.5 -5.6 -10.7 9.2 8.6



Malaysian Airline System Update Post Luncheon with Management

Maintain BUY. We hosted MAS at a luncheon last Thursday 29 Nov 2012. Management asserts that the business revamp initiatives and product offering upgrades to match the industry’s best are starting to show positive results. Gone are the days when MAS was handicapped by outdated product offerings. We are bullish on the outlook for MAS, with 3Q12’s operating profit underpinning its successful turnaround. Maintain BUY with a lower target price of MYR1.02/share (previously MYR1.20/share) after adjusting for the 2 for 3 rights issue with a 20% discount assumption, and netting off its interest cost savings.

Getting the basics right. The key takeaway of the luncheon was that management had reset how everything was done, and restructured the business accordingly to ensure things make fundamental sense. Many initiatives appear basic and pragmatic, and we take comfort that there are no grandiose execution strategies. Simplicity is the best, every time.

Rights issue to address capital needs. The rights issue will enable MAS to embark on a fleet acquisition programme in the next two years that would cost MYR7.9b. This is the favoured funding option, as it is not only cheaper, but will ensure that net gearing is at comfortable level of 1.8x; an all-debt approach would have resulted in gearing spiking to 4.0x. The issue would also provide MAS with a solid capital base.

Outcome of the luncheon. Our conclusion is that attendees left the meeting feeling more positive than before. However, we do not expect them to be rushing to buy just yet due to the rights issue overhang. Furthermore, there is still a deep-rooted skepticism on MAS. Why is it different now? What can this management do that previous ones could not? These are questions that linger in the minds of investors. The stock’s biggest challenge is to overturn investor fatigue, and there is no better medication than consistent profits to douse the hangover.

Expect sideways trading until completion of the rights issue. We raise our 2012-14 earnings forecast by 3% / 18% / 7% respectively after imputing lower interest cost. Despite our bullish view, we think the stock will trade sideways until the rights issue is completed in Apr 2013. Malaysian Airline System – Summary Earnings Table FYE Dec (MYR m) 2010A 2011A 2012F 2013F 2014F Revenue 12,978.

14,095.

13,112.

13,674.

14,134.

EBITDAR 1,790.0 694.3 1,649.0 2,616.8 3,111.4 Recurring Net Profit (314.7) (1,260.

(566.1) 388.3 840.9

Recurring Basic EPS (cents) (9.4) (37.7) (16.9) 4.8 10.4 PER n/a n/a n/a 21.3 9.8 EV/EBITDAR (x) 11.2 29.0 12.6 9.4 7.7 P/BV(x) 1.0 3.2 1.6 1.5 1.3 Net Gearing (%) 0.4 4.3 3.4 1.4 1.2 ROE (%) 11.1 n/a n/a 10.3 14.5 ROA (%) 2.3 n/a n/a 2.1 3.9 Earnings revision (%) n/a n/a +2.7 +17.5 +7.2 Consensus Net Profit (MYR m) n/a n/a (707.0) (21.6) 288.9 Source: Maybank KE

BUY (Maintain) Share price: MYR0.830 Target price: MYR1.02 (from RM1.20) Wong Chew Hann [email protected] (03) 2297 8692

Stock Information Description: National airline for Malaysia, flying to over 100 destinations across six continents. Ticker: MAS MK Shares Issued (m): 3,342.2 Market Cap (MYR m): 2,774.0 3-mth Avg Daily Turnover (USD m): 1.66 KLCI: 1,607.35 Free float (%): 22.8 Major Shareholders: % KHAZANAH 69.4 EPF 7.8 Key Indicators Net cash / (debt) (MYR m): (6,634.7) NTA/shr (MYR): 0.62 Net gearing (x): 3.1

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Performance: 52-week High/Low MYR1.74/MYR0.8 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) (19.4) (21.0) (23.9) (37.6) (36.2) Relative (%) (16.5) (18.6) (27.2) (45.5) (41.2)


Market Strategy 4 December 2012

PP16832/01/2013 (031128)

Malaysia

Strategy Note 3Q12 Results Review: More Misses

Maintaining 2012 YE KLCI target, introducing 2013 YE target. We maintain our 2012 year-end KLCI target at 1,620 and introduce our 2013 year-end target of 1,710. Our valuation basis is unchanged at 13.5x 12M forward earnings, one standard deviation below the index’s mean PER. This reflects a still-cautious outlook on the external front, compounded by investor jitters ahead of Malaysia’s 13th general election, which looks likely to be held in 1Q 2013.

More misses. 3Q12 results came in in line for just 49% of our research universe, while misses far outpaced earnings beats. 42% of companies under our coverage reported earnings shortfalls this quarter vs. the 9% which beat forecasts, the poorest performance since 3Q08. Plantations disappointed for the third consecutive quarter due to lower CPO ASP and higher production costs at some companies. Petrochemicals also disappointed, as did a number of big caps in the telco, casino and transport sectors. The banks however provided some consolation, as results positively surprised for the second straight quarter.

Market earnings grew, but not enough. The 3Q12 core net profit of our research universe expanded 2% QoQ and 6% YoY, but the pace of growth trails our expectations. Plantation earnings were flattish QoQ but down 12% YoY. On a positive note, core net profit of the key banking sector climbed a healthy 5% QoQ and 17% YoY. Other sectors like gloves, auto and power reported strong double-digit QoQ/YoY growth.

Market earnings downgraded. Post the 3Q12 reporting season, our 2012-13 KLCI earnings forecasts are shaved by 1%/2.6%. We now expect KLCI core earnings to grow by a slower 10.8% this year (+11.9% previously) and 8.0% in 2013 (+9.8% previously). For our coverage universe which makes up 75% of the Malaysian bourse’s total market capitalisation (of MYR1.41tr), our 2012-13 revised combined core earnings growth is +8.6%/+11.6%.

Market direction. Though the policy safety nets put in place by the US’ QE3 and ECB’s OMT programmes will help to place a floor on the decline in economic activities, equity markets are likely to stay volatile in 2013 as investors weigh the impact of rising excess liquidity against a still-weak economy. Back home, the 13GE looks likely to be called in 1Q13. Ahead of the 13GE, investors will price in political risks. As such, we reiterate our view that the KLCI will weaken further in 1Q13.

Strategy: Defensives. We maintain a defensive strategy. We advocate accumulating big cap, defensive and apolitical names especially in banking and gaming. We upgrade the banking sector to Overweight as it also offers value relative to the other big caps, and downgrade telco and power to Neutral. We remove KLCCP and Telekom and introduce RHB Cap and WCT into our top stock picks, the former for its re-rating potential and with both stocks supported by low valuations relative to their peers amidst their growth prospects.

NEUTRAL (Unchanged) Current KLCI: 1,611 (30 Nov 2012) YE KLCI target: 2012 1,620 (unchanged) 2013 1,710 (new) Wong Chew Hann [email protected] (03) 2297 8686 Table of Content Page 3Q12 Results Round-up 2 - Analysis of Sectors 7 Market Valuation 12 Market Strategy 15 Appendix 1: Foreign Shareholding of Selected Stocks

19

Appendix 2: Dividend Stocks 20 Research Stock Universe 21 KLCI @ 1,611 2012E 2013E 2014E PER (x) 14.9 13.5 12.8 Earnings growth (%) 10.8% 8.0% 7.6% P/B (x) 2.2 2.1 1.8 ROE (%) 14.5% 15.6% 13.3% Sector weights OW Banking, Construction, Gaming, Gloves, Oil & gas N Consumer, Media, Plantations, Property – deveopers,

REITs, Power, Telco, Petrochem, Transport UW Steel, Technology Top Stock Picks Stock Name Ticker Shr Price

@ 30 Nov TP

Public Bank PBK MK 15.52 16.70 Hong Leong Bank HLBK MK 14.66 16.40 Genting Malaysia GENM MK 3.42 4.18 RHB Capital RHBC MK 7.50 8.70 SapuraKencana SAKP MK 2.83 4.10 Bumi Armada BAB MK 3.70 4.40 WCT WCT MK 2.75 3.30 Top Glove TOPG MK 5.64 6.10 Source: Maybank KE

4 December 2012 Page 2 of 27

3Q12 Results Review

MIB DRAFT FOR DISCUSSION

3Q12 RESULTS ROUNDUP

Market earnings grew, but not enough. 3Q12 core net profit of our research universe expanded 2% QoQ and 6% YoY, but the pace of growth was not good enough, with earnings misses in plantations and by major big caps in the oil & gas, telco, transport, casino and petrochemical sectors. On a positive note, core net profit of the key banking sector climbed a healthy 5% QoQ and 17% YoY. Other sectors like the gloves, auto and power reported strong double-digit QoQ/YoY growth. The 9M12 core net profit of our research universe rose 4% YoY driven by the banking (+15% YoY), power (+11%) and transport (+2.6x) sectors, which offset weaker plantation earnings (-18% YoY).

Quarterly recurring net profit of research universe, 1Q 2010 - 3Q 2012

8000

9000

10000

11000

12000

13000

14000

15000

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CY

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CY

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CY

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CY

4Q11

CY

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CY

2Q12

CY

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6% YoY,2% QoQ

-5% YoY,-8% QoQ

55% YoY,4% QoQ

46% YoY,9% QoQ

31% YoY,12% QoQ 22% YoY,

-3% QoQ 15% YoY,2% QoQ

16% YoY,5% QoQ

-2% YoY,-1% QoQ

34% YoY,3% QoQ

9% YoY,14% QoQ

Source: Maybank KE

Calendar year 3Q 2012 earnings season

CY 3Q10

CY 4Q10

CY 1Q11

CY 2Q11

CY 3Q11

CY 4Q11

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QoQ (%)

YoY (%)

Financials (1) 3,927 4,204 4,436 4,581 4,674 4,782 5,052 5,197 5,462 5.1% 16.9% Plantations 1,576 2,127 1,803 2,656 2,161 2,219 1,640 1,908 1,901 (0.4%) (12.1%) Energy utilities (2) 750 1,084 939 903 1,053 511 572 1,133 1,505 32.9% 42.8% Telcos 1,644 1,831 1,552 1,560 1,648 1,767 1,806 1,822 1,693 (7.1%) 2.7% Transport (3) 726 463 6 (107) 229 (51) (225) 267 425 59.6% 85.9% Construction, Infra 166 215 199 244 199 291 152 216 257 19.3% 29.4% Building Mats 74 33 83 103 117 51 60 100 116 15.2% (1.3%) Oil & gas 588 690 567 635 540 592 608 637 565 (11.3%) 4.7% Property & REIT 233 416 364 381 370 495 447 507 509 0.4% 37.3% Consumer 738 679 813 661 753 672 741 691 737 6.6% (2.2%) Autos 233 114 270 203 250 108 261 299 402 34.5% 60.9% Gaming 1,086 1,003 1,365 1,059 1,093 939 914 1,174 730 (37.8%) (33.2%) Media 138 170 117 141 142 184 101 150 133 (11.0%) (6.0%) Technology (4) 8 13 8 10 12 (5) 15 16 17 3.7% 34.7% Manufacturing (5) 140 122 112 98 104 105 125 130 151 15.8% 44.4% Petrochems 503 873 986 790 1,203 735 1,019 855 742 (13.2%) (38.3%) Total 12,530 14,038 13,619 13,919 14,549 13,395 13,287 15,101 15,345 1.6% 5.5% QoQ Chg (%) 3.1% 12.0% (3.0%) 2.2% 4.5% (7.9%) (0.8%) 13.7% 1.6% YoY Chg (%) 33.7% 30.5% 22.0% 14.5% 16.1% (4.6%) (2.4%) 8.5% 5.5% Note: (1) Comprises the banks, Bursa Malaysia; (2) Comprises Tenaga, YTL Power; (3) Comprises MAS, AirAsia, MAHB, MISC; (4) Comprises Notion VTec; (5) Comprises the glove producers; Source: Maybank KE


3Q12 Results Review


More misses. Earnings came in line at just 49% of our coverage universe during the quarter, while misses far outpaced positive surprises with 42% of companies under our coverage reporting earnings that fell short of expectations, vs. the 9% where earnings beat forecasts. The ratio of misses:beats is the highest since 3Q08. Earnings disappointments have, since 1Q09, tapered off to the 15-29% range. Major sectors that disappointed in 3Q12 are plantations and petrochemicals, while there were also quite a number of disappointments in the other big cap sectors (telco, casino and transport). The banking sector however provided some consolation, as results positively surprised for the second straight quarter. Plantations. The disappointments were mainly on account of lower

CPO ASPs. The upstream plantation players were also hit by high production costs. Pure upstream players in East Malaysia were affected by higher “discounting” of CPO prices to offload their CPO stocks to nearby refiners. These discounts, in the form of higher freight charges, raised their overall cost of production.

Banking. Earnings surprised at Maybank and BIMB, while earnings at the other banks were in line. On a cumulative basis, the sector clocked in 4% QoQ growth in net profit. Operating income was flattish with much of the bottom-line growth coming from lower credit costs as loan loss allowances halved QoQ.

Earnings surprises and disappointments (% of coverage)

17 2012

22 19 18 1722 21 24

14

2416 17

128 10

4047

65

54 52

65 68

5461

5665

51 5562 65

69

4943

33

23 2429

18 15

2518 20 21 24

2921 22 23

42

0

10

20

30

40

50

60

70

80

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

% Above In Line Below

Source: Maybank KE

Sectors’ out/under performance (vs. Maybank KE’s expectations) CY

2Q11 CY

3Q11 CY

4Q11 CY

1Q12 CY

2Q12 CY

3Q12 Auto In line Mixed - In line In line Below Banking Mixed In line In line In line Above Above Building materials Below Below Below In line Below Below Construction / infra In line Below In line In line In line Mixed Consumer In line Mixed Mixed Mixed In line Mixed Gaming In line In line In line Below In line Mixed Gloves In line Mixed In line In line In line In line Media In line In line Mixed Below In line Below Oil & Gas Mixed

Mixed

Below

Mixed In line Mixed

Petrochemicals Below In line Below In line Below Below Plantation Above In line In line Below Below Below Power Mixed Mixed Above In line In line In line Property (ex-REITs) In line In line Mixed In line In line Mixed REITs In line

In line Mixed

In line In line In line Telecommunications Below In line In line In line In line Mixed Transport (shipping, aviation)

In line Below Below In line Mixed Mixed


3Q12 Results Review


Stock outperformers and underachievers. Major outperformers during the 3Q12 reporting season were:

Maybank – 9M12 core net profit at 80% of consensus full-year;

Tenaga – 12FY8/12 core at 106% of our full-year forecast,

UMW – 9M12 core at 85% of our full-year forecast;

BIMB – 9M12 core at 84% of our full-year forecast.

Significant underachievers, within the big-cap space, were:

MISC – 9M12 core at 41% of our full-year forecast,

Bumi Armada – 9M12 core at 50% of our full-year forecast,

MMHE – 9M12 core at 57% of our full-year forecast,

FGVH – 9M12 core at 59% of our full-year forecast,

MAHB – 9M12 core at 61% of our full-year forecast,

KL Kepong – 12MFY9/12 at 87% of our full-year forecast.

3Q 2012 results roundup: Prominent outperformers and underachievers Stock Core net profit

vs. MBB-KE’s forecasts

Comments (on current quarter results)

OUTPERFORMERS

Maybank 9M12 at 80% of consensus full-year

Lower credit cost and a lower tax rate. Positively, NIMs were stable QoQ and CASA improved to 35% of total deposits.

Tenaga 12FY8/12 at 106% of our full-year

Better operations performances such as lower transmission losses, minimal interruptions and the booking of MYR1.48b in compensation from the government and PETRONAS under a cost-sharing agreement for the burning of alternative fuels.

Top Glove 12MFY8/12 at 106% of our full-year

Boosted by a low effective tax rate of 3% in the final quarter on recognition of deferred tax asset for unutilised tax allowances.

UMW 9M12 at 85% of our full-year

Stronger margins at auto despite lower Toyota sales in the quarter, fuelled by favourable model mix and lower expenses; Perodua’s contribution jumped despite weaker QoQ vehicle sales.

BIMB 9M12 at 84% of our full year

Bank Islam surprised positively on financing growth and NIMs.

Mah Sing 9M12 at 81% of our full-year

Stronger-than-expected progress billings and take-up rates, and a lower-than-expected tax rate.

KLCC Property

9M12 at 79% of our full year

Higher-than-expected rental reversions at Suria KLCC. 3Q12 results included a MYR1.43b fair value gain from revaluation of properties (PETRONAS Twin Towers, Suria KLCC, Menara Exxonmobil, Menara Dayabumi, Menara 3 PETRONAS, Lot D1).

UNDERACHIEVERS

Wah Seong Corp

9M12 at 34% of our full-year

Losses at its O&G division due to a glut of low-margin jobs.

MISC 9M12 at 41% of our full-year

Weaker earnings at the heavy engineering and offshore divisions, and higher taxes.

Padiberas 9M12 at 48% of our full-year

HIgher input cost as margin continues to contract due to sale of expensive imported rice which made up 62% of total rice sale.

Bumi Armada 9M12 at 50% of our full-year

A higher tax rate, slowdown in FPSO job wins (5 units YTD vs. 13 units in 2012 worldwide) and absence of any new OFS contracts in 2012 resulting in still a slow 3Q12.

MMHE 9M12 at 57% of our full-year

Substantial provisions on the FPSO Cendor conversion job and associate losses in Turkmenistan, were partially offset by writebacks at its marine repair operations.

Source: Maybank KE


3Q12 Results Review


3Q 2012 results roundup: Prominent outperformers and underachievers (continued) Stock Core net profit



UNDERACHIEVERS

Tan Chong 9M12 at 58% of our full-year

Slight erosion in auto margins on higher advertising and promotion expenses.

FGVH 9M12 at 59% of our full-year

Plantations underperformed with 9M12 FFB output at just 68% of our full-year forecast due to tree stress and its replanting programme. Sugar profits (under MSM) also disappointed.

Eversendai 9M12 at 60% of our full-year

Slow start in the execution of some new jobs.

Star Publications


Lower print earnings and startup losses at 80%-owned Capital FM in 3Q12; we estimate 3Q12 print adex was again down 3-4% YoY.

Sarawak Oil Palms


Hit by lethargic CPO prices and an inventory writedown at its refinery in 3Q12.

MAHB 9M12 at 61% of our full-year

Costs soared due to staff expenses and prior year adjustments.

Kinsteel 9M12 at 61% of our full-year

Substantially lower revenue with Perwaja’s (upstream) 3Q12 revenue falling 40% QoQ and sales volume at its downstream operation falling 16% QoQ.

TSH Resources


Higher-than-expected production costs and lower-than-expect JV (refinery) contributions despite lower CPO input cost.

Hock Seng Lee


Flattish construction jobs recognition in 3Q12 while we had expected a stronger pick-up.

MSM Malaysia


Input cost remains high despite raw sugar prices having fallen by 21% off its peak.

MBM 9M12 at 65% of our full-year

Impacted by lower vehicle sales and weaker auto distribution margins.

Digi.Com 9M12 at 66% of our full-year

Subdued service revenue growth and margin squeeze in 3Q12.

Genting Plantations


Impacted by low CPO ASPs and higher-than-expected production costs.

Sunway Berhad


Slower progress billings at the property development business.

Genting 9M12 at 67% of our full-year

Poor performance at Resorts World Sentosa, Genting UK and Genting Plantations.

Petronas Chemicals


3Q12 suffered from lower plant utilisation on maintenance shutdowns and Labuan Methanol Plant 1 closure for 36 days, and lower ASPs which plunged 12% YoY.

IHH Healthcare


Start-up costs at its new hospitals in Singapore (Novena) and Turnkey (Ankara) ate into profitability.

Maxis 9M12 at 69% of our full-year

Higher-than-expected depreciation charge from its on-going modernisation exercise.

Genting Malaysia


Genting UK swung into a loss on lower VIP win rates at its London casino despite higher VIP volume. Elsewhere, operationsa t Resorts World Genting were resilient.

Bursa Malaysia


Equities trading revenue shortfall, with 9M12 equities ADV at MYR1.72b (-10% YoY vs. 9M11’s MYR1.91b), a shortfall from our earlier MYR1.8b projection for the year.

Ann Joo 9M12 loss-making vs our forecast of profit for full-year

3Q12 revenue fell sharply (-22% QoQ, -25% YoY) on lower local sales volume (-18% QoQ) while export sales tonnage was close to zero; poor ASPs (-9% QoQ) on rampant dumping of construction steel from China impact margins.

KL Kepong 12MFY9/12 at 87% of our full-year

Higher-than-expected cost of production, lower CPO ASP, while FFB output was flattish in FY9/12.

F&N Holdings

12FY9/12 at 94% of our full-year

Full-year impact of loss of the Coca-Cola bottling business and factory closure in Thailand caused by the floods.

Source: Maybank KE


3Q12 Results Review


3Q 2012 results roundup: Prominent outperformers and underachievers (continued) Stock Core net profit



UNDERACHIEVERS

MCIL 6MFY3/12 at 45% of our full-year

Net adex eased while operating costs have risen.

IOI Corp 1QFY6/13 at 21% of our full-year

Reported net profit was boosed by forex translation gains. Core profit was below expectation on lower-than-expected CPO ASPs.

Padini 1QFY6/13 at 22% of our full-year

Additional operating expenses at new stores and increased promotional activities impacted current quarter’s margins.

Sime Darby 1QFY6/12 at 24% of our full-year

Plantations underperformed on lower CPO sales volumes (despite a 28% QoQ growth in FFB production, lwhich led to a a build-up in inventory) and ASPs.

Source: Maybank KE

Stock upgrades and downgrades. Following the high number of results disappointments, there were no recommendation upgrades during the latest reporting season. Instead, we have downgraded four stocks, as valuations no longer support the calls post our earnings downgrades or on a weaker outlook.

3Q 2012 results roundup: Stock upgrades and downgrades Stock Old Call New Call Old TP New TP Reason for upgrades / downgrades UPGRADES - NIL DOWNGRADES Telekom Buy Sell 6.60 5.10 Uncertainties on continued Unifi expansion in the face of Maxis’

challenge, along with expensive valuations, slowing growth and non-supportive dividend yield. Chances for capital management are also minimal without non-core aset sales.

MMHE Buy Hold 5.70 5.00 Cutting earnings forecasts on weak 3Q12 results and delays in project awards. These negatives will outweigh the positives from the potential Malikai TLP job win, capping upside potential.

Wah Seong Corp Buy Hold 2.20 1.70 Stock unlikely to gain traction until signs of a sustainable recovery in margins emerge.

Notion VTec Buy Sell 1.40 0.85 Earnings likely to thurn south for at least the next 6M due to a poor outlook at its key HDD and camera segments.

Source: Maybank KE


3Q12 Results Review


3Q 2012 results roundup: Analysis of sectors Sector Earnings vs.

MBB-KE’s expectations

Comments

Automotive Below Results were below expectation largely due to lower vehicle sales no thanks to (i) shorter working months due to holidays and (ii) wait-and-see attitude of prospective buyers in anticipation of a cut in car prices from the 2013 National Budget (which did not materialise). UMW was an exception – its results came in above expectation on margin expansion from earlier auto production improvement to increase productivity and lower production costs. 9M12 TIV tracked our expectation, accounting for 75% of our 612k TIV forecast for 2012. We expect 4Q12 vehicle sales to stay resilient on (i) aggressive discounting for year-end deliveries and (ii) interesting new model launch in the mass A and B-segments. UMW (BUY; TP: MYR12.00) continues to appeal to us with its resilient earnings and growth potential supported by good dividend yields of 4+% on a conservative 50% payout assumption. We believe that TCM (BUY; TP: MYR5.00) would surge in terms of earnings on a much-expected growth in vehicle sales following the introduction of its B-segment Almera in late October which has seen bookings of 8k units in since its launch. MBM remains most inexpensive in terms of PER and PBV valuations vis-à-vis its peers. As it transits from being a pure distributor into an auto manufacturer partnering Hino, MBM should re-rate towards TCM and UMW’s valuations.

Banking Above Yet again, for the second consecutive quarter, positive surprises emanated from Maybank and BIMB while there were no negative surprises from the other banking stocks within our coverage. On a cumulative basis, the top six banks clocked in a decent 4% QoQ (12% YoY) expansion in 3Q net profit. Operating income however was flat (+1% QoQ) and much of the growth was driven by lower credit costs, with loan loss allowances halving QoQ. Cumulative gross loans for the six banks rose 10% on an annualized basis while aggregate net interest margins declined 4 bps QoQ. Our BUYs continue to be RHB Capital, Hong Leong Bank, Hong Leong Financial Group and Public Bank. Our SELL is CIMB.

Building materials

Below Domestic sales volume was strong, which saw YTD sales of steel and cement grew 4% YoY and 4-5% YoY respectively. Demand was driven by the various mega infrastructure construction (i.e. LRT extension, MRT) and property developments. However, the steel-makers (AJR and Kinsteel) reported net losses in 3Q12 due to depressed ASP and one-off charges/unrealised forex losses. On the other hand, LMC (Lafarge) reported solid net profit of MYR82m (+27% QoQ, +6% YoY) on the back of higher sales volume, lower coal cost and ASP hike. Going forward, we think domestic demand momentum will remain strong but margins could be under pressure. For the steel-makers, dumping activity from China, which started since early-2012, has suppressed the global steel ASPs. We are cautious on the steel sector for the next six months given a weak steel demand outlook, especially in China (50% of global demand). Separately, we see weaker earnings for LMC in 4Q12 owing to the lower ASP, a result of lower demand on raining season and new capacity from Hume. We retain our SELL call for Ann Joo and HOLD call on Kinsteel. As for Lafarge, we maintain the stock at a BUY in view of its high dividend prospect.

Construction / Infrastructure

Mixed (large caps in line; mid caps below)

Big caps IJM Corp’s and WCT’s earnings were in line, while mid caps Hock Seng Lee (HSL) and Eversendai missed our expectations, but just marginally. Eversendai saw a slow start in the execution of some new jobs while HSL’s construction jobs recognition did not pick up as fast as we had expected. There has been no change in our stock calls – all are BUYs except IJM (HOLD).

Latest quarter construction margin (%) *

YoY (ppt) Construction as % of group earnings in latest quarter *

Outstanding order book (MYR b)

IJM Corp 7.2 4.0 13 3.3 Gamuda 9.1 1.6 35 4.8 WCT 6.7 # (9.0) 26 3.8 Hock Seng Lee 18.6 (0.2) 93 1.1 Eversendai 12.1 (1.3) 100 1.5

* Relates to: (i) construction pretax profit for IJM Corp and Gamuda, and EBIT for WCT, Hock Seng Lee and Eversendai, and (ii) quarter ended Jul 2012 for Gamuda. # Due to unrealised forex losses for its construction project in Qatar due to the weaker Ringgit; excluding the forex loss, 3Q12 construction EBIT margin was 11.5%

Source: Maybank KE


3Q12 Results Review


3Q 2012 results roundup: Analysis of sectors (continued) Sector Earnings vs.


Comments

Consumer Tobacco: In line Brewery: In line Retail: Mixed F&B: Mixed Staple: Below

Tobacco: In 3Q12, total industry cigarettes volumes merely crept up 2% QoQ and were 4% lower YoY since there were minimal pre-budget speculation activities. Market were generally not expecting any tax hike this round following the tax freeze in 2012 National Budget. JTI’s 3Q12 net profit rose 6% QoQ (-22% YoY) on better product mix while BAT’s 3Q12 net profit declined 16% QoQ as its unusually lower costs in 1H12 normalise in 3Q12. BAT’s share price has retreated by 10% since we downgraded the stock to SELL. Hence, our call under review for now. Our TP is MYR54.00. Meanwhile, JTI remains a HOLD (TP: MYR6.55) for its lucrative special dividend offering expected to be paid in 2014. Brewery: Earnings from both brewers under coverage were in line. Carlsberg’s 3Q12 net profit was up 62% QoQ making up for its seasonally subdued 2Q12. Guinness’ net profit too was up +63% YoY. Guinness remains the leader in the Malaysian MLM market with a c. 55-56% market share while Carlsberg continues to demonstrate solid growth both in Malaysia and Singapore. Carlsberg’s estimated share of the malt liquor market in Malaysia and Singapore stands at c.44% and 20% respectively. We expect Carlsberg to continue rewarding shareholders with lucrative dividends (c. 98% payout) and thus maintain our BUY call with a TP of MYR13.50. We keep Guinness a HOLD as we feel that most positives have been priced in, with its share price up 26% YTD. Moreover, while management targets a dividend payout ratio of 90-95%, we feel the stock will need further catalyst in the form of clarity regarding potential special dividends to gain further traction due its limited focus on the Malaysian market. Retail: Padini has underperformed our expectation for the first time since we initiated coverage. This is due to waeker-than-expected start in the new stores, especially those located in shopping malls that are still at their infant stage. AEON (results in line) had the same issue, however, the weak performance in its retail segment was offset by strong improvement in its mall management business, hence the group EBIT margin declined slightly by 0.6% in 9M12 and the cumulative core net profit was within our expectations. BUY Padini and SELL AEON. F&B: Nestle’s 9M12 was within expectations, although raw material costs still remain high but Nestle is able to pass on the higher costs and sustain its operating margins by having a few strong and established brands like Nescafe, Milo and Maggi. Our SELL call is now under review after the stock price fell 15% from its peak. Staple: Weak results at MSM and Padiberas were a negative surprise given management’s optimism earlier in the year for lower input cost to boost profits. Ironically, input cost rose in 3Q12 despite lower rice and raw sugar prices and this was the primary reason for profit deterioration. Both MSM and Padiberas remain as HOLD. Compared to the previous year, QL’s growth in 1HFY3/13 (results in line) was driven by its Marine Product division while the Integrated Livestock division was hit by (i) higher feed costs and (ii) overproduction of eggs in Peninsular Malaysia and consequently (iii) lower egg prices. Nevertheless, the situation has improved and we expect IL division to do better in 2HFY3/13. Maintain BUY.

Source: Maybank KE


3Q12 Results Review




Comments

Gaming Mixed (casinos below, NFOs in line)

Casinos: Both Genting (GENT, GENM) 3Q12 results disappointed: (i) GENT, on poor performance at Resorts World Sentosa, Genting UK and Genting Plantations, (ii) GENM, on losses at Genting UK on lower VIP win rates at its London casino despite higher VIP volume. Elsewhere, operations at GENM’s Resorts World Genting were resilient. We much prefer GENM (maintain BUY) over GENT (maintain HOLD). NFOs: Berjaya Sports Toto’s (BST) 1QFY4/13 revenue continued to improve due to 4D Jackpot, and the estimated prize payout ratio normalized at the theoretical level of 62%. Pan Malaysian Pool (PMP)’s 6D Jackpot does not appear to have overtly threatened its market share. At Multi-Purpose Holdings, 3Q12 core net profit was 9% lower YoY but this was due to a fair value investment loss, while its gaming fundamentals were intact. Both stocks are BUYs.

Gloves In line Top Glove, Hartalega and Kossan reported higher net profit: +5% QoQ, +6% QoQ and +8% QoQ respectively. The good results were due to margin expansions from lower input cost (latex: -15% QoQ, NBR: -13% QoQ). Additionally, Hartalega and Kossan also saw an increase of their sales volume: +9% QoQ, +15% QoQ respectively. Going forward, we expect strong earnings to sustain on stable input costs. Both latex and NBR prices have been staying at current levels after hitting the lows of MYR5.60/kg and MYR4.00/kg in Nov 2012. In view of the incoming new capacity and demand growth situation, we expect stronger sales volume going forward and margins to cap at current levels. All three glove producers remain BUYs.

Media Below Star Publications and MCIL’s results were below expectations, while Media Prima was in line. We estimate that print adex fell 3-4% YoY for both in the quarter ended Sept 2012. Star Publications’ earnings was also impacted by startup losses at 80%-owned Capital FM. At Media Prima, 3Q12 net TV adex growth slowed to 6% from 8% in 2Q12, which we have imputed into our forecasts. We have cut FY12-14 earnings forecasts for Star Publications by 13%/7%/7%. We are still cautious on the near-term outlook impacting overall net adex. There are no changes to our stock calls with Media Prima and Star Publications remaining as HOLD, and MCIL as BUY.

Oil & Gas Mixed

Results for six companies: Alam, Dialog, Gas Malaysia, KNM, Petronas Gas and Perisai tracked expectations. Elsewhere, Perdana Petroleum outperformed, on higher-than-expected utilization rates while Bumi Armada, MMHE and WSP disappointed, hit by provisions, margin erosion and higher overheads. Segment-wise, the OSV segment is showing strong signs of recovery, as it has experienced sustained, high utilization levels on firm charter rates. Demand for vessels are picking up as well as an influx of contract flows, from offshore fabrication to FPSO orders, which denotes increasing O&G activities. Our top BUY picks are Bumi Armada, SAKP and Dialog. Perisai and Yinson are our small-cap picks in the O&G sector.

Petrochem Below Petronas Chemicals’ net profit for the quarter ended Sep 2012 fell 38.3% YoY due to a combination of lower product volumes (-1% YoY) with lower ASP (-12% YoY). Associates continue to disappoint with 32.6% lower contribution YoY due to the same stated reasons. Overall, results were below our expectation as the average plant utilisation rate was at 74.8% (versus our 77.0% expectation) due to Labuan Methanol Plant 1 closure for 36 days as a safety precaution, disruptions in ethane gas feedstock at the Kertih IPC and other scheduled maintenance shutdown in the Gurun ferterliser plant.

Power In line Tenaga’s FY12 net profit (released in October) was above our expectations primarily due to lower coal costs. In total, Tenaga recognized MYR1.5b as compensation for using oil and distillates for generation. Gas supply remains tight, and management noted that the Melaka re-gasification plant has been delayed until 1Q13. We think the investment case for Tenaga is no longer compelling, and have downgraded Tenaga to HOLD, target price of MYR7.50. YTL Power’s 1QFY12 net profit was within our expectations. There were no major negatives. Utilities earnings contracted YoY as the Malaysian IPP underwent plant maintenance while PowerSeraya and Wessex saw cost inflation. Wimax meanwhile posted lower losses on increased billings from 1BestariNet. Post the recent share price correction, YTLP’s implied net yield is now c.3 while valuations (both PER and P/BV) are close to trough levels.

Source: Maybank KE


3Q12 Results Review




Comments

Plantation Below In our plantation sector report issued on 4 Oct 2012, we advocated “take some profits” strategy in 4Q12 as we expect CPO prices to stay low in 4Q12 after its sudden plunge from ~MYR3,000/t to ~MYR2,400/t in Sept 2012 itself. We justified low CPO price in 4Q12 with Malaysia’s historic stockpile amidst seasonally high production months and weak CPO demand. Malaysian refiners held back purchases in 3Q12 as they continued to suffer negative refining margins (impacted by Indonesia’s reformed export tax structure since Oct 2011) and waited out for millers to sell CPO at a discount to MPOB spot prices to boost their margins. In early Nov 2012, we warned that the sector’s 3Q12 results may yet again disappoint after 2Q12’s poor performance hurt by FFB production, hit by tree stress after a bountiful harvest in 2011. This time, 3Q12’s results were impacted by lower-than-expected CPO ASP. Given weak CPO ASP have persisted into 4Q12, it has wiped off all hopes of a possible quick rebound in profits in the final quarter. Upstream hurt by low CPO ASP and high costs. Of the nine stocks under our coverage,

all of them (2Q12: six) reported lower-than-expected 3Q12 results largely on weaker-than-expected CPO ASP, high cost of production, and to a lesser extent, a slow recovery in FFB production for a few (see table below). Pure upstream players in Sabah and Sarawak were affected by higher “discounting” of CPO price to offload their CPO stocks to nearby refiners as stocks were plentiful. These discounts (which have persisted on) are in the form of “higher freight charges” which raised their overall cost of production.

As for midstream and downstream operations, KLK and IOI reported strong downstream earnings due to timely hedges, benefiting from low raw material input cost. However, Sime and SOP were not as fortunate. Nonetheless, with current low (and stabilized) CPO cost, Malaysian refiners are ramping up utilization in Oct / Nov 2012 as they enjoy net positive refining margins of MYR100-150/t in these two months. Key surprise in 4Q12 will come from this division.

3Q CPO ASP 3Q FFB production (MYR t) (YoY) (QoQ) (tonnes) (YoY) (QoQ) Sime Darby 2,707 (8.1) (11.4) 2,940,109 5.6 28.1 IOI 2,941 (6.6) (8.6) 890,024 (8.6) 33.9 KL Kepong 2,778 (6.6) (7.7) 914,335 1.7 24.8 Felda Global Ventures 2,862 (7.8) (11.5) 1,160,000 (17.1) (0.4) GenPlantation 2,858 (7.7) (10.9) 380,815 2.6 37.9 TH Plant 2,827 (5.7) (9.8) 135,950 (2.6) 25.9 Sarawak Oil Palms 2,669 (11.2) (14.6) 267,051 11.7 38.5 Ta Ann 2,993 (7.3) (6.6) 162,806 15.0 62.4 TSH Resources 2,700* (2.7) (10.1) 102,927 (7.2) 12.3

* Maybank KE estimate

Property (Developers)

Mixed UEML’s results tracked expectations. 4Q12 should be stronger on the recognition of a MYR93m land sale in Puteri Harbour. Mah Sing reported a stronger-than-expected set of results due to strong progress billings and take-ups, and lower taxes whilst Sunway’s results were below our expectations, dragged down by slower-than-expected progress billings and weaker sales in China and Malaysia projects. All developers under our coverage are on track to meet their internal sales target for 2012 except for UEM Land. UEML’s YTD sales of MYR1.2b only accounted for 41% of its MYR3b initial sales target for 2012. This was due to the delays in the launch of projects such as Teega@Puteri Harbour and Aurora Tower. As a result, UEML has cut its 2012 sales target to MYR2b. We maintain our Neutral stance on the sector. We upgraded SP Setia to BUY (from HOLD) as we see value emerging after the recent selldown in SP Setia shares. It has recently sealed the prime land swap deal along Jalan Bangsar. The placement of 322.6m new SP Setia shares is expected to be completed by end-Dec 2012.

Property (REITs)

In line

Earnings were within our expectations except for IGB REIT where its 11 days results beat our forecast by 10% due to a higher-than-expected NPI margin. We are keeping our forecasts unchanged for now pending a meeting with the management. Retail REITs remain as the best performer among M-REITs with rental reversions of +6.7-16.4%. As for office REITs, the sector outlook remain challenging in view of the huge incoming supply of office spaces. Occupancy risk is on the rise. KLCCP will rise as a new dividend payer with its recent restructuring proposals which involves a stapled REIT. The new structure is positive as it provides yields comparable to the M-REITs. We maintain our Neutral stance on the M-REIT sector. Our picks are KLCCP and SunREIT.

Source: Maybank KE


3Q12 Results Review




Comments

Telecommunications

Mixed (Below expectations - DiGi.Com, Maxis Within expectations – Axiata, Telekom)

Maxis continued to tighten the competitive screws in the Malaysia telco market which heated up further in 3Q12. The biggest developments include - 1. Maxis launched its new aggressive TalkMore and TextMore mobile plans in Aug 2012, which

are basically bolt-on mobile postpaid plans with low monthly commitment fees of MYR28, MYR48 and MYR78.

2. Fibre broadband, with Maxis’ aggressive pricing of MYR138 for a 10Mbps fibre plan (vs. MYR199 for a similar plan from TM) seeing tremendous response. Maxis subsequently raised its 10Mbps price to MYR148, which is still competitive relative to TM.

3. Pay TV, with Maxis’ tie-up with sister company Astro that offers advantages to both sides, ie Maxis benefiting from TV content that it can offer to its fibre subscribers and Astro benefiting from a fibre backup to minimise rain-caused service disruptions

Maxis continued to challenge the industry in 4Q12, especially in mobile postpaid. It launched two new initiatives during the current quarter – 1. Bolt-on SurfMore plans for mobile internet with 33-43% more data caps than older plans for

the same price. SurfMore 50 offers 2GB of data for MYR50 while SurfMore 75 offers 5GB for MYR75, while calls and SMS are charged separately.

2. Maxis is also offering more generous handset subsidies. For instance, the iPhone 4S 16GB will be subsidised to the tune of MYR350-950 compared to much more miserly rates in the past.

We maintained Maxis as a HOLD (TP cut to MYR6.80 from MYR7.00). 3Q12 results were below expectations and we expect margins to be permanently trend lower now that Maxis has given up on stubbornly hanging on to its industry-leading margins in favour of stronger topline growth. While plans to recapture market share are on track, many things can still go wrong between now and 2013. Still, its generous MYR0.40 a share dividend should be sustained, and the yield is good at 6.1% even if nothing else is so hot yet. Axiata has been kept as a BUY (TP maintained MYR6.70) following 3Q12 results which were within expectations. Axiata’s improving cashflow profile amidst capex expected to peak this year should open the door for better ordinary dividend payouts in 2013. We think Axiata has the potential to increase its dividend payout in FY13. We have raised our dividend payout assumption from 65% in FY12 to 80% in FY13. We also do not rule out capital management initiatives as its net debt/EBITDA ratio is the lowest in the market. TM has been downgraded to a SELL (TP MYR5.10) although 3Q12 results were expectations. Maxis’ price challenge in home fibre is likely to cut into Unifi growth in the next few quarters, and we see an escalation from 1Q13 in particular as Maxis’ content-sharing deal with Astro gets underway. We prefer Axiata for cheaper valuations, better growth and more supportive dividend yield.

Transport Mixed MISC’s 3Q12 results disappointed on weaker earnings at the heavy engineering and offshore divisions, and higher taxes, which negated a better pretax profit performance at the LNG division and lower losses at the petroleum and chemical operations. Both MAS and AirAsia has performed well in comparison with the industry which was decimated in the period with 30%-50% YoY profit declines. MAS has successfully turnaround with a positive operating income of MYR4m (versus a loss of MYR212m YoY), buoyed by its business revamp, cost cutting initiatives and significant yield growth YoY (+4.5% YoY). AirAsia on the other hand is battling cost escalations and deteriorating yields, which are eating in into its margins. Core net income for the Malaysian operations was down 8.2% YoY, which indicates that the market is getting soft. Fortunately, its Thailand and Indonesian operations have performed strongly to offset the impact and the Group airline operations were flat YoY. The multiple new business start-ups and JVs have incurred MYR25m of losses and this has weighed down on the collective Group performance to MYR160m (-16.6% YoY. MAHB’s results were below due to multiple cost adjustments, many which are one-offs. Net income of MYR125m was flattish on a YoY basis, with 1.6% decline. This was a disappointment given that traffic volumes grew by 2.9% YoY coupled with unit revenue increase of 10.9% YoY. We have lowered our 2012-14 earnings by 10.6%/8.7%/5.8% respectively to take into account the higher cost items. Our target price was lower accordingly, to MYR6.90/share.

Source: Maybank KE


3Q12 Results Review


MARKET VALUATION

Market earnings revision. Following the earnings downgrades for stocks that posted disappointing results in the September quarter, our 2012-13 KLCI earnings forecasts are shaved by 1%/2.6%. The major downgrades came from plantations, with individual stock earnings cut by 13% to 40% in FY12 and 5% to 16% in FY13 on lower CY12 CPO ASP forecast of MYR2,950/t (vs MYR3,150/t previously; CY13: unchanged at MYR3,000/t) and a 2-7% cut in FFB production estimates for both FY12 and FY13 (for a selected few). The other big-cap downgrade was a 4%/5% reduction in Petronas Chemicals’ FY12-13 earnings, due to the cessation of its Vinyl business.

Earnings growth estimates lowered. Consequently, we now expect KLCI core earnings to grow by a slower 10.8% this year (+11.9% previously) and 8.0% in 2013 (+9.8% previously). The revised combined core earnings growth of our coverage universe, which makes up 75% of total market capitalisation of the Malaysian bourse, is +8.6%/+11.6% for 2012-13. With the exception of plantations and oil & gas, we expect all other sectors to register earnings growth this year. As for 2013, all sectors are expected to grow except for utilities/power – this is due to Tenaga, which reported bumper earnings in FY8/12 after recognising two years’ worth (in FY8/11 and FY8/12) of alternate fuel compensation.

Malaysia market earnings growth & valuation as at 30 Nov 2012 2012E 2013E 2014E KLCI 30 @ 1,610.8 PE (x) 14.9 13.5 12.8 Earnings Growth (%) – current * 10.8% 8.0% 7.6% Earnings Growth (%) – Sep ’12 est 11.9% 9.8% - Earnings Growth (%) – Dec ’11 est 7.7% 7.9% - Maybank IB’s Research Universe PE (x) 16.0 14.3 13.1 Earnings Growth (%) – current 8.6% 11.6% 9.5% Earnings Growth (%) – Sep ’12 est 12.6% 11.9% - Earnings Growth (%) – Dec ’11 est 11.2% 8.5% - * Ex-Tenaga: +12.0% (2011), +5.3% (2012), +9.8% (2013); Source: Maybank KE

KLCI earnings (based on estimates as at 30 Nov 2012)

0

5

10

15

20

25

30

35

40

45

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Market Net Profit ex EI (RM b)

Source: Maybank KE estimates


3Q12 Results Review


Maybank IB Research Universe earnings growth, PERs, P/B, ROE Earnings Growth (%) PE (x) P/B (x) ROE (%) Rec Sector CY 11A CY 12E CY 13E CY 11A CY 12E CY 13E CY 11A CY 12E CY 11A CY 12E OW Banking & Finance 16.5 8.5 8.5 14.1 13.0 12.0 2.3 2.0 16.1 15.6 NT Building Materials (10.0) 29.8 17.1 26.7 20.6 17.6 1.9 1.9 7.1 9.1 NT Consumer 2.4 18.0 15.0 26.8 22.7 19.7 3.2 3.0 11.9 13.2 OW Construction, Infra 20.5 13.3 12.2 15.4 13.6 12.1 1.7 1.6 11.1 11.6 OW Gaming 5.3 7.2 5.9 13.6 12.7 12.0 2.0 1.7 14.4 13.7 OW Gloves (11.2) 19.1 11.3 18.4 15.4 13.9 3.6 3.1 19.4 20.2 NT Media 32.2 12.1 22.3 20.4 18.2 14.9 3.1 2.7 15.0 14.9 OW Oil & Gas (9.0) (16.5) 9.5 17.6 21.0 19.2 5.1 5.6 28.9 26.7 NT Plantation 21.9 (10.7) 8.1 14.9 16.7 15.5 2.6 2.3 17.6 13.6 NT Property 40.6 28.5 14.7 21.9 17.1 14.9 1.5 1.3 6.9 7.6 NT Telcos 0.9 6.9 12.1 23.2 21.7 19.4 4.4 4.5 18.8 20.8 NT Transport (60.9) 98.2 96.5 51.6 26.0 13.2 1.1 1.1 2.2 4.1 NT Utilities 15.2 19.9 (6.7) 11.2 9.4 10.0 1.2 1.1 10.5 11.4 Stocks under cvrg 11.8 8.6 11.6 17.4 16.0 14.3 2.4 2.2 13.7 13.5 OW = Overweight; UW = Underweight; NT = Neutral; Source: Maybank KE

Market: Earnings breakdown by sector – CY2012 KLCI 30: Earnings breakdown by sector – CY2012

Banking & Finance

32%

Building materials

1%Consumer

7%Construction, I

nfra 3%Gaming

8%Gloves

1%

Oil & Gas10%

Media2%

Plantation12%

Property4%

Telcos11%

Transport2%

Utilities8%

Banking & Financials

40%Consumer

4%Gaming

8%

Oil & Gas6%

Plantations14%

Property0%

Telcos13%

Transport2%

Utilities13%

Source: Maybank KE Source: Maybank KE

Valuations. The KLCI hit an intra-day high of 1,679 pts on 29 Oct 2012 but has since retreated by 68pts (-4.1%), as investors turn jittery over the pending 13th general election (on expectations that the Parliament would be dissolved post the UMNO General Assembly which ended on 1 Dec). At last Friday’s close of 1,611, the KLCI trades at 13.6x 12M forward earnings (14.9x 2012 earnings, 13.5x 2013), closing in to 1SD below its long-term mean. At its intra-day high of 1,679, the KLCI was trading at 14.3x 12M forward PER. In terms of trailing P/B multiple, the KLCI is at its 5-year mean of 2.2x, and it now offers a net yield of 3.5%.

KLCI vs. 12M forward PER

8

10

12

14

16

18

20

22

01 02 03 04 05 06 07 08 09 10 11 12

1-yr fwrd PER Mean +1 SD -1 SD(x)

Source: Maybank KE, Bloomberg


3Q12 Results Review


KLCI vs. Trailing P/B

1.0

1.4

1.8

2.2

2.6

01 02 03 04 05 06 07 08 09 10 11 12

(x)KLCI P/B Mean+1 SD -1 SD

Source: Bloomberg, Maybank KE

KLCI’s Dividend Yield

0.0

2.0

4.0

6.0

8.0

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

(%)

Source: Bloomberg, Maybank KE

2012 PER vs 2013 growth 2012 P/B vs 2012 ROE

Malaysia

Hong Kong Singapore

China

Thailand

Taiwan

Indonesia

Philippines

India

8.0 9.0

10.0 11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 19.0 20.0

6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 22.0 24.0 26.0 28.0

FY12 PER (x)

FY13 EPS growth (%)

Malaysia

Hong Kong

Singapore China

ThailandTaiwan

Indonesia

PhilippinesIndia

0.81.01.21.41.61.82.02.22.42.62.8

9.0 11.0 13.0 15.0 17.0 19.0 21.0

P/B x)

ROE (%)

Source: Bloomberg, Maybank KE Source: Bloomberg, Maybank KE


3Q12 Results Review


MARKET STRATEGY

Maintaining 2012 YE KLCI target, introducing 2013 YE target. We maintain our 2012 year-end KLCI target at 1,620 and introduce our 2013 year-end target of 1,710. Our valuation basis is unchanged at 13.5x 12M forward earnings, one standard deviation below the KLCI’s mean PER. This reflects a still-cautious outlook on the external front, compounded by investor jitters ahead of Malaysia’s 13th general election (13GE) which looks likely to be held in 1Q13; 28 Apr 2013 is the last day that Parliament can be dissolved in the current term.

Economic outlook. Our economics team projects slower real GDP growth for the Malaysian economy in 2013 of 4.8% due to a higher-than-expected base this year, with real GDP likely to come in at slightly above our forecast of 5.0% (9M12A: 5.3%) and the official estimate of 4.5-5.0%. The growth narrative and dynamics for Malaysia will remain the same i.e. domestic demand will continue to be especially supported by macroeconomic and targeted policies as well as the Economic Transformation Programme that will sustain consumer spending and spur investments in infrastructure and specific industries (e.g. MRT; oil, gas & energy; real estate/property developments on government land).

Externally, the global economic outlook for 2013, as highlighted in our “3Q12 Real GDP: Local Flavour” note dated 19 Nov 2012, predominantly depends on the policies of the major economies:

US “fiscal cliff”. Promising early signs of a compromise between President Obama and Party Congressional leaders – with the Democrats recognising the need to curb spending and the Republicans accepting the need to discuss raising revenues – have given way to renewed uncertainties over the details in terms of the exact points of convergence and the timing of an agreement or announcement. The key sticking points are tax increases on the wealthy and investment incomes on one side, and the rising cost of – and hence spending on – entitlements such as healthcare on the other. In addition, the US federal government's outstanding debt has more or less reached the USD16.4tr ceiling last month.

Eurozone sovereign debt crisis. Despite the major policy announcement by the European Central Bank (ECB) in Sep 2012 i.e. Outright Monetary Transactions (OMT) that have stabilised the government bond market somewhat (demonstrated by a drop in sovereign yields) and an extended “lifeline” to Greece, full resolution of the crisis remains a distant prospect amid policy inertia and social-political resistance e.g. the Spain-ECB standoff over the terms and conditions of OMT’s activation; fresh rounds of anti-austerity protests and strikes; and the “guarded” stance of northern Eurozone countries towards greater union (banking, fiscal).

China’s leadership and economic transition. Post the once-in-a-decade leadership transition in China last month, all eyes will now be looking for firm indication of policy direction, although the “reformist bias” in the new leadership line-up suggests economic structural changes and financial sector liberalisation will be the order of the day. The key issue is whether the new leadership will be able to engineer a smooth transition or whether the transformation process will be somewhat disruptive in terms of growth.


3Q12 Results Review


No smooth sailing yet for equities. Though the policy safety net put in place by the US QE3 and ECB OMT programmes will help to place a floor on the decline in economic activities, equity markets are likely to stay volatile in 2013 as investors weigh the impact of rising excess liquidity against a still-weak economy. The programmes may bring along a new set of problems i.e. asset price inflation in Asia, which has been outpacing wage growth. This complicates policy decisions and the macro outlook in Asia, as the authorities try to strike a balance between upholding households’ purchasing power against the need to keep their industries competitive, where the latter has been affected by rising costs and the lack of pricing power in US dollar terms.

Cautious ahead of the 13GE. Over in Malaysia, the 13GE is unlikely to be called in the current year, but will likely take place in 1Q13 with an automatic Parliament dissolution deadline of 28 April 2013. The current ruling coalition, Barisan Nasional (BN), now controls 137 House of Representative seats (62%), out of a total 222 – and, it controls all but four states. BN is expected to regain its majority, although there is still a risk that the total number of seat wins could be shaved. Ahead of the 13GE, investors will price in the political risks and we reiterate our view that the KLCI will weaken further into 1Q13. Uncertainties on the external front (US' “fiscal cliff”) will also weigh on domestic equities.

KLCI performance during and post Malaysian General Elections

GE Year Dissolution date Polling Date Dissolution –

1Day Dissolution +

1Day Dissolution to

Polling Day Polling +

1Month Polling +

3Months Dissolution to

Polling + 1Month

Dissolution to Polling + 3Months

2008 13-Feb 8-Mar 0.4% 0.9% -8.9% -5.4% -3.7% -13.9% -12.3% 2004 4-Mar 21-Mar 0.6% 0.4% 2.5% -4.5% -8.7% -2.1% -6.4% 1999 11-Nov 29-Nov -0.5% -0.5% 2.9% 7.9% 31.7% 11.0% 35.5% 1995 6-Apr 25-Apr -2.0% -1.2% -0.4% 6.6% 7.6% 6.2% 7.2% 1990 5-Oct 21-Oct 0.6% 0.0% 1.4% -0.2% 0.7% 1.2% 2.2% 1986 19-Jul 3-Aug 0.0% 0.0% -0.8% 15.9% 29.8% 15.0% 28.8% 1982 29-Mar 22-Apr -0.8% 0.9% 5.1% 1.0% -16.0% 6.1% -11.8% Source: Bloomberg (data), Maybank KE (computations)

Regional markets 11M 2012 performance (%) KLCI vs. MSCI performance

(10.0)5.2 5.9

7.2 7.5

11.7 11.9

15.9 16.0

19.5 25.1

29.0 29.1

-10 -5 0 5 10 15 20 25 30 35

ChinaMalaysia

KoreaTaiwan

VietnamJapan

IndonesiaMSCI Asia ex Jap

SingaporeHong Kong

IndiaPhilippines

ThailandYTD 30 Nov (%)

90

100

110

120

Jan-

12Ja

n-12

Feb-

12M

ar-1

2M

ar-1

2Ap

r-12

May

-12

May

-12

Jun-

12Ju

l-12

Jul-1

2Au

g-12

Sep-

12Oc

t-12

Oct-1

2No

v-12Index

MSCI AC World MSCI Asia Ex-Japan KLCI

Source: Bloomberg, Maybank KE Source: Bloomberg, Maybank KE


3Q12 Results Review


Higher foreign holding a double-edged sword? Foreign holding of Malaysian equities has risen 1ppt year to-date to 23.7% as at end-Oct 2012 (the high was 26-27% in end-2007/early-2008; low was 20-21% in early-2009 to mid-2010). Foreigners were net buyers of Malaysian equities in the first 10M of this year, before turning net sellers in November. Nonetheless, year to-date (11M 2012) net foreign buying of MYR12.9b is still significant compared to net buying of MYR1.8b for the whole of 2011. While this is a positive indication of investor confidence in Malaysian equities, the rising foreign shareholding could be a double-edged sword ahead of the 13GE.

Market: Foreign shareholding at 23.7% end-Oct 2012 Market: Foreign net buying / (selling)

0 50 100 150 200 250 300 350 400

15

17

19

21

23

25

27

29

Dec 9

8De

c 01

Dec 0

4De

c 07

Feb 0

9M

ay 09

Aug 0

9No

v 09

Feb 1

0M

ay 10

Aug 1

0No

v 10

Feb 1

1M

ay 11

Aug 1

1No

v 11

Feb 1

2M

ay 12

Aug 1

2

23.7% end-Oct 2012 (Dec 2011: 22.7%)

MYR b (RHS) % (LHS)

-

(0.7)

1.1 0.3

(1.3)

1.8 2.3

2.9

4.3

1.8 0.9

2.6

0.1

(3.4)

(0.1)

1.2 1.6

3.2

0.6

(3.8)

(0.3)

1.4 0.6 0.7

0.2 1.3

3.4

1.6 0.5

(0.8)

3.2

1.1 1.3

1.4

(0.3)

(5.0)(4.0)(3.0)(2.0)(1.0)

-1.0 2.0 3.0 4.0 5.0

Jan-

10M

ar-1

0M

ay-1

0Ju

l-10

Sep-

10No

v-10

Jan-

11M

ar-1

1M

ay-1

1Ju

l-11

Sep-

11No

v-11

Jan-

12M

ar-1

2M

ay-1

2Ju

l-12

Sep-

12No

v-12

Source: Bursa Malaysia, Maybank KE Source: Bursa Malaysia, Maybank KE

Strategy: Defensives. We expect weakness still as we approach the 13GE deadline – despite retreating 4% from its high on 29 October, the KLCI is still up 5.2% YTD. Into 2013, we advocate accumulating big cap, defensive and apolitical names, especially in banking and gaming. The banking sector also offers value relative to the other big caps.

Banking. We are upgrading the sector to Overweight as the sector offers value. Malaysia’s economy continues to be resilient and this provides banks with sufficient fodder to maintain their loan growth momentum. Downside risk to earnings, which lies largely in credit costs, are low at this juncture, as we project stable GDP growth for the Malaysian economy and the region as a whole.

The sector now trades at just 12x 2013 earnings versus the KLCI’s 13.5x, while its 2012 P/B of 2x is lower than the market’s 2.2x. Forward ROE of 15.6% is higher than the market’s 13.5%. Our top picks are Public Bank, Hong Leong Bank and RHB Capital, which should re-rate in 2013 as it reaps synergies from its recently completed merger with OSK IB.

Gaming. We continue to Overweight the sector. We like the NFOs and our pick is Multi-Purpose Holdings (MPHB) which should see its NFO subsidiary, Magnum, taking over its listing status in Jan 2013; this should prompt a re-rating on the stock. Elsewhere, we continue to prefer Genting Malaysia – operations at Resorts World Genting are resilient, while its growing cash pile will enable it to continue its ventures in Florida and New York. The stocks are trading at 13x (MPHB) and 11x (GENM) 2013 earnings.


3Q12 Results Review


Elsewhere, we are downgrading our rating of the telco sector to Neutral from Overweight as we note a more competitive operating environment in the domestic broadband segment going forward. The power sector is now also a Neutral (from Overweight) due to a lack of near-term re-rating catalysts for Tenaga.

Sector weights

Overweight Neutral Underweight Banking Consumer Steel Construction Media Technology Gaming Plantations Manufacturing – Gloves Property – developers Oil & gas Property – REITs Property – REITs Power Telcos Petrochemicals Transport

Source: Maybank KE

Some changes to top stock picks. We retain Public Bank, Hong Leong Bank, Genting Malaysia, SapuraKencana, Bumi Armada and Top Glove in our top BUY list. We have taken off KLCCP as its share price (+83% year to-date) is close to our target price. Telekom has also been taken off after we downgraded the stock to SELL yesterday on uncertainties relating to its continued expansion of Unifi in the face of challenges from Maxis, along with high valuations, slowing growth and a non-supportive dividend yield. We introduce RHB Capital as a top pick on re-rating potential arising from its current low valuations, implying little downside risk to its share price. We also introduce WCT on its long-term growth potential supported by relatively low valuations.

Top picks Price TP EPS (sen) PE (x) EPS Growth (%) Div ROE P/B (x) 30 Nov CY11A CY12F CY13F CY11A CY12F CY13F CY11A CY12F CY13F Yld (%) CY12F CY11A Big caps: Market cap >RM4b Public Bank 15.52 16.70 99.5 109.2 120.2 15.6 14.2 12.9 14.1 9.7 10.1 3.5 21.9 3.5 HLBK 14.66 16.40 96.5 104.4 107.4 15.2 14.0 13.7 23.0 8.2 2.9 2.1 14.6 2.6 Genting Malaysia 3.42 4.18 27.5 29.7 30.9 12.4 11.5 11.1 11.3 8.0 4.0 2.0 12.8 1.6 RHB Capital 7.50 8.70 72.5 79.1 85.3 10.3 9.5 8.8 3.0 9.1 7.8 3.2 14.2 1.4 SapuraKencana 2.83 4.10 8.3 9.6 17.9 33.9 29.6 15.9 NA 14.6 86.7 0.0 8.7 2.8 Bumi Armada 3.70 4.40 13.2 14.9 17.2 28.0 24.8 21.5 10.0 12.9 15.4 0.0 11.2 3.1 Mid caps: Market cap RM1.5b-4b Top Glove 5.64 6.10 23.1 33.3 35.7 24.4 16.9 15.8 (29.1) 44.3 7.1 2.9 16.0 3.0 WCT 2.75 3.30 19.6 20.1 24.1 14.0 13.7 11.4 10.4 2.6 19.9 2.7 10.5 1.5

Source: Maybank KE


3Q12 Results Review


Appendix 1

Foreign shareholding of selected stocks Foreign shareholding Dec-09 Dec-10 Dec-11 Latest As at (month, year) CIMB Group 42.4 42.6 38.1 40.5 30-Sep-12 Malayan Banking 10.9 14.0 13.5 18.9 30-Sep-12 Sime Darby 14.2 15.3 17.3 20.8 30-Sep-12 Genting Berhad 36.0 42.0 42.0 42.0 30-Jun-12 Maxis 13.5 12.5 12.1 12.5 30-Sep-12 Axiata Group 6.7 12.2 28.0 29.0 30-Sep-12 IOI Corporation 22.0 19.0 17.0 17.4 30-Sep-12 Tenaga Nasional 9.4 10.5 10.8 12.6 30-Sep-12 MISC Bhd 4.3 4.9 3.9 5.2 30-Sep-12 Public Bank 26.5 26.5 26.1 30.3 30-Sep-12 KL Kepong 16.4 19.3 18.5 16.5 30-Sep-12 Petronas Gas 2.4 2.0 3.0 3.0 30-Sep-12 Genting Malaysia 31.0 35.0 37.0 38.0 30-Jun-12 AMMB Holdings 29.6 30.0 26.2 26.2 30-Sep-12 Digi.com 6.8 9.0 12.9 12.6 30-Sep-12 RHB Capital 5.6 12.4 11.6 10.9 30-Sep-12 YTL Power Int'l 5.0 5.0 9.0 6.0 30-Sep-12 YTL Corporation 22.0 23.0 23.0 26.0 30-Sep-12 British American Tobacco 22.0 25.3 26.8 28.0 30-Sep-12 Telekom Malaysia 9.1 11.0 19.9 19.0 31-Oct-12 UMW Holdings 5.9 11.7 13.5 25.4 30-Sep-12 Gamuda 35.0 36.0 33.0 37.0 31-Oct-12 Malaysia Airline System NA NA 4.0 4.5 30-Sep-12 WCT 9.0 14.0 14.0 10.0 30-Oct-12 MMHE NA 14.1 5.4 4.4 30-Sep-12 Mah Sing 17.7 16.7 20.9 24.0 30-Sep-12 S P Setia 24.0 24.0 17.6 3.6 30-Sep-12 AirAsia NA 51.4 51.0 52.0 30-Jun-12 MAHB NA NA 9.5 10.7 30-Sep-12 KNM 16.0 26.0 16.0 16.1 30-Sep-12 Hong Leong Bank NA NA 7.7 8.2 30-Sep-12 Petronas Chemicals NA NA 9.0 5.0 30-Sep-12 Genting Plantations NA NA 9.8 10.0 30-Sep-12 UEM Land NA NA 14.6 15.0 30-Sep-12 Sunway Berhad NA NA 21.8 20.0 30-Sep-12 SapuraKencana NA NA NA 22.0 30-Sep-12 Bumi Armada NA NA NA 18.0 30-Sep-12 Dialog Group NA NA NA 16.0 30-Sep-12

Note: Highlighted are stocks which have foreign shareholding of >20% (based on latest data available) Source: Company, compiled by Maybank KE


3Q12 Results Review


Appendix 2

Dividend stocks (Maybank KE’s coverage: Stocks with more than 4% net yield) Stocks Rec Shr px at

30-Nov-12 Market Cap

(RM m) TP (RM) 2012 Net

Yld (%) Upside to

TP (%) Potential total

returns (%) Padiberas Nasional Hold 3.24 1,524.1 3.40 8.1 4.9 13.1 Glomac Buy 0.81 585.9 0.96 6.9 19.3 26.2 AmanahRaya REIT Hold 0.93 530.2 0.91 6.9 (1.6) 5.3 Quill Capita Hold 1.22 476.0 1.26 6.4 3.3 9.7 MCIL Buy 1.12 1,889.7 1.94 6.4 73.2 79.6 Maxis Hold 6.43 48,228.6 6.80 6.2 5.8 12.0 Guinness Hold 16.08 4,857.7 15.50 6.1 (3.6) 2.5 Star Hold 2.99 2,208.3 2.80 6.0 (6.4) (0.3) Axis REIT Hold 3.12 1,424.3 3.04 5.5 (2.6) 3.0 Berjaya Sports Toto Buy 4.50 6,079.6 5.00 5.3 11.1 16.4 Maybank Non-Rated 9.05 76,380.6 Non-Rated 5.0 NA 5.0 DiGi.Com Hold 4.83 37,553.3 4.96 4.9 2.7 7.6 Media Prima Hold 2.27 2,450.3 2.47 4.8 8.8 13.7 Mah Sing Hold 2.30 1,931.0 2.45 4.7 6.5 11.3 Sunway REIT Hold 1.46 3,942.9 1.60 4.7 9.6 14.3 Carlsberg Brewery Buy 12.56 3,869.5 13.50 4.7 7.5 12.2 BAT (M) Sell 53.20 15,190.2 54.00 4.7 1.5 6.2 Petronas Chemicals Hold 5.95 47,600.0 6.50 4.5 9.2 13.8 CMMT Hold 1.71 3,023.3 1.77 4.5 3.5 8.0 Gas Malaysia Hold 2.63 3,377 2.76 4.4 4.9 9.3 Bursa Malaysia Hold 6.20 3,298.5 6.50 4.3 4.8 9.1 Pavilion REIT Hold 1.39 4,176 1.45 4.2 4.3 8.5 Padini Holdings Buy 1.75 1,151 2.40 4.0 37.1 41.1 Lafarge Buy 9.57 8,131.6 10.10 4.0 5.5 9.5

Source: Maybank KE


3Q12 Results Review Maybank KE Equity Research Stock Universe

Company FYE Price Market Targe

Recom Core Net Profit EPS CAGR

PER PER PER ROE Div Yld PBV Price Chg 30-Nov Cap Price CY11A CY12F CY13F CY11A CY12F CY13F 11-13 CY11A CY12F CY13F CY12F CY12F CY11A YTD (RM m) (RM) (RM m) (RM m) (RM m) (sen) (sen) (sen) (%) (x) (x) (x) (%) (%) (x) (%) Autos MBM MK MBM Resources 12 3.42 1,336.0 4.05 Buy 121.2 146.3 160.0 49.9 41.1 45.0 (5.0) 6.9 8.3 7.6 11.0 1.2 0.8 66.6 TCM MK Tan Chong 12 4.59 3,084.5 5.00 Buy 216.1 184.9 320.9 33.1 28.3 49.2 21.9 13.9 16.2 9.3 9.5 2.4 1.6 12.5 UMWH MK UMW Hldgs 12 10.62 12,407.3 12.00 Buy 502.1 950.2 1,025.2 43.0 81.5 87.9 43.0 24.7 13.0 12.1 20.1 3.8 3.1 51.7 Banking MAY MK Maybank 6 9.05 76,380.6 NR NR 5,338.2 5,800.1 6,279.9 68.9 73.9 80.0 7.7 13.1 12.3 11.3 14.9 5.0 2.4 5.5 AMM MK AMMB Holdings 3 6.38 19,230.5 6.30 Hold 1,468.8 1,612.9 1,746.4 49.1 53.6 57.9 8.6 13.0 11.9 11.0 13.5 3.5 1.8 7.2 BIMB MK BIMB Holdings 12 2.94 3,136.4 3.15 Hold 203.3 253.1 275.2 17.6 23.7 25.8 21.2 16.8 12.4 11.4 12.7 2.9 1.7 44.8 CIMB MK CIMB 12 7.47 55,522.8 7.30 Sell 4,030.8 4,344.5 4,713.1 54.2 58.5 63.4 8.2 13.8 12.8 11.8 15.4 3.1 2.1 0.4 HLBK MK Hong Leong Bank 6 14.66 27,559.5 16.40 Buy 1,516.1 1,807.7 1,931.7 96.5 104.4 107.4 5.5 15.2 14.0 13.7 14.6 2.1 2.6 34.5 HLFG MK HL Financial 6 12.76 13,433.3 14.20 Buy 1,414.3 1,205.0 1,293.1 136.2 115.1 122.8 (5.1) 9.4 11.1 10.4 12.8 2.1 1.7 9.4 PBK MK Public Bank 12 15.52 54,815.5 16.70 Buy 3,483.8 3,858.4 4,247.0 99.5 109.2 120.2 9.9 15.6 14.2 12.9 21.9 3.5 3.5 16.0 RHBC MK RHB Capital 12 7.50 18,706.6 8.70 Buy 1,578.8 1,782.4 1,923.2 72.5 79.1 85.3 8.5 10.3 9.5 8.8 14.2 3.2 1.4 0.3 Building Materials AJR MK Ann Joo Resources 12 1.32 690.0 1.30 Sell 112.8 62.6 79.4 16.1 9.7 11.8 (14.4) 8.2 13.6 11.2 5.6 3.2 0.6 (23.3) KSB MK Kinsteel 12 0.35 367.3 0.38 Hold (86.8) 23.4 35.9 (11.3) 2.4 3.6 n.a. n.a. 14.6 9.7 3.6 2.9 0.4 (30.0) LMC MK Lafarge 12 9.57 8,131.6 10.10 Buy 317.8 360.2 407.4 37.4 42.4 47.9 13.2 25.6 22.6 20.0 11.5 4.0 2.6 36.7 Construction / Infra EVSD MK Eversendai 12 1.35 1,044.9 2.00 Buy 119.5 120.8 128.7 15.4 15.6 16.6 3.8 8.8 8.7 8.1 14.8 2.3 0.7 (20.6) GAM MK Gamuda 7 3.65 7,608.6 4.10 Buy 472.9 563.8 612.7 23.0 27.3 29.7 13.8 15.9 13.4 12.3 13.7 2.6 2.0 7.7 HSL MK HSL 12 1.46 850.7 2.25 Buy 87.3 95.0 106.1 15.8 17.0 19.0 9.7 9.2 8.6 7.7 19.0 1.8 1.9 13.2 IJM MK IJM Corp 3 4.95 6,839.2 5.60 Hold 420.3 458.2 514.1 30.8 33.2 37.2 10.0 16.1 14.9 13.3 8.2 1.8 1.3 (12.4) LTK MK Litrak 3 4.15 2,112.0 4.30 Hold 87.0 119.7 135.3 17.3 23.7 26.8 24.5 24.0 17.5 15.5 23.8 3.1 5.6 8.4 WCT MK WCT 12 2.75 2,265.8 3.30 Buy 162.4 171.6 218.2 19.6 20.1 24.1 10.9 14.0 13.7 11.4 10.5 2.7 1.5 15.5 Consumer AEON MK AEON Co 12 11.82 4,148.8 9.30 Sell 185.9 201.7 217.6 52.9 57.5 62.0 8.3 22.3 20.6 19.1 14.1 1.4 3.2 63.6 ROTH MK BAT (M) 12 53.20 15,190.2 54.00 Sell 732.6 788.0 818.2 252.0 276.0 286.5 6.6 21.1 19.3 18.6 154.4 4.7 35.2 6.6 PNL MK Padiberas Nasional 12 3.24 1,524.1 3.40 Hold 165.7 112.7 160.6 35.2 24.0 34.1 (1.6) 9.2 13.5 9.5 10.2 8.1 1.4 3.8 CAB MK Carlsberg Brewery 12 12.56 3,869.5 13.50 Buy 154.1 183.5 202.0 50.4 60.0 66.1 14.5 24.9 20.9 19.0 27.7 4.7 6.1 47.3 GUIN MK Guinness 6 16.08 4,857.7 15.50 Hold 194.4 216.8 239.1 64.4 71.8 79.2 10.9 25.0 22.4 20.3 57.1 6.1 5.4 25.2 RJR MK JTI 12 6.84 1,788.9 6.55 Hold 122.8 123.1 113.2 47.0 47.1 43.3 (4.0) 14.6 14.5 15.8 27.1 3.3 3.9 0.2 NESZ MK Nestle 12 59.60 13,976.2 58.60 Sell 456.2 507.4 544.9 194.6 216.4 232.4 9.3 30.6 27.5 25.6 76.2 3.4 21.8 6.0 QLG MK QL Resources 3 3.09 2,570.9 3.75 Buy 129.7 149.8 167.7 15.6 17.3 19.2 10.8 19.8 17.9 16.1 16.6 1.6 3.2 0.3 MSM MK MSM Malaysia

H ldi 12 4.99 3,507.9 4.70 Hold 265.3 260.3 272.0 37.7 37.0 38.7 1.3 13.2 13.5 12.9 14.7 3.7 2.3 2.3

KPJ MK KPJ Healthcare 12 5.90 3,798.3 5.84 Sell 131.7 152.6 175.1 24.1 24.4 28.0 7.8 24.5 24.2 21.1 15.6 2.0 3.9 25.5 IHH MK IHH 12 3.48 28,032.9 3.00 Hold 245.7 481.0 661.7 3.0 6.0 8.2 65.3 116.0 58.0 42.4 2.8 - 1.7 NA


3Q12 Results Review Maybank KE Equity Research Stock Universe (continued) Ticker Company FYE Price Market Target Recom Core Net Profit EPS CAGR

PER PER PER ROE Div Yld PBV Price Chg

30-Nov Cap Price CY11A CY12F CY13F CY11A CY12F CY13F 11-13 CY11A CY12F CY13F CY12F CY12F CY11A YTD (RM m) (RM) (RM m) (RM m) (RM m) (sen) (sen) (sen) (%) (x) (x) (x) (%) (%) (x) (%) Gaming MPU MK Multi-Purpose Hldgs 12 3.73 5,362.8 4.43 Buy 297.5 355.3 410.8 23.4 24.9 28.8 10.9 15.9 15.0 13.0 10.2 3.0 1.7 39.7 GENT MK Genting 12 9.00 33,475.4 8.95 Hold 2,539.0 2,382.2 2,428.6 68.6 64.5 65.7 (2.1) 13.1 14.0 13.7 11.0 0.6 1.9 (18.2) GENM MK Genting Malaysia 12 3.42 20,308.1 4.18 Buy 1,559.3 1,687.5 1,753.8 27.5 29.7 30.9 6.0 12.4 11.5 11.1 12.8 2.0 1.6 (10.7) Manufacturing HART MK Hartalega Hldgs 3 4.80 3,514.7 5.40 Buy 203.8 214.9 240.3 28.0 29.6 33.1 8.6 17.1 16.2 14.5 30.3 2.7 5.9 64.4 KRI MK Kossan Rubber 12 3.26 1,042.3 3.75 Buy 91.4 100.5 119.4 28.6 31.4 37.4 14.4 11.4 10.4 8.7 17.3 1.8 2.1 0.3 TOPG MK Top Glove 8 5.64 3,491.6 6.10 Buy 142.8 206.1 220.8 23.1 33.3 35.7 24.3 24.4 16.9 15.8 16.0 2.9 3.0 12.8 Media ASTRO MK Astro Malaysia 1 2.87 14,919.1 3.70 Buy 640.7 455.0 499.9 12.3 8.7 9.6 (11.8) 23.3 33.0 29.9 99.3 2.0 28.5 NA MCIL MK MCIL 3 1.12 1,889.7 1.94 Buy 189.8 192.8 197.5 11.3 11.4 11.7 1.9 9.9 9.8 9.6 23.7 6.4 1.5 28.3 MPR MK Media Prima 12 2.27 2,450.3 2.47 Hold 205.4 211.6 237.9 18.3 18.3 20.5 5.8 12.4 12.4 11.1 14.5 4.8 1.8 (12.7) STAR MK Star 12 2.99 2,208.3 2.80 Hold 186.7 161.2 182.4 25.3 21.8 24.7 (1.2) 11.8 13.7 12.1 14.7 6.0 2.1 (3.3) Non-Banking Finance BURSA MK Bursa Malaysia 12 6.20 3,298.5 6.50 Hold 146.2 147.9 172.0 27.5 27.8 32.4 8.5 22.5 22.3 19.1 17.1 4.3 3.8 (7.5) Oil & Gas AMRB MK Alam Maritim 12 0.69 539.2 0.80 Buy 27.9 56.9 62.1 3.5 7.2 7.8 49.3 19.6 9.5 8.8 10.5 - 1.1 (9.9) DLG MK Dialog 6 2.44 5,910.5 3.05 Buy 179.9 220.4 251.4 8.3 9.4 10.7 13.6 29.6 26.1 22.9 19.9 1.7 7.2 2.1 KNMG MK KNM Group 12 0.46 685.4 0.60 Hold (29.0) 99.7 90.9 (2.0) 6.8 6.2 n.a. n.a. 6.8 7.4 4.5 - 0.3 (45.9) PETR MK Perdana Petroleum 12 0.97 480.3 1.30 Buy (26.9) 2.4 32.0 (6.0) 0.5 7.1 n.a. n.a. 194.0 13.7 0.5 - 0.9 23.6 PTG MK Petronas Gas 12 18.40 36,408.7 20.20 Hold 1,439.3 1,446.6 1,648.7 72.7 73.1 83.3 7.0 25.3 25.2 22.1 15.6 2.7 4.3 21.1 WSC MK Wah Seong 12 1.75 1,356.1 1.70 Hold 121.4 51.6 110.8 15.8 6.7 14.3 (4.9) 11.1 26.1 12.2 5.0 2.3 1.1 (15.5) MMHE MK MMHE 12 4.41 7,056.0 5.00 Hold 338.4 279.5 326.0 28.2 17.5 20.4 (14.9) 15.6 25.2 21.6 11.2 2.3 3.1 (22.1) BAB MK Bumi Armada 12 3.70 10,837.9 4.40 Buy 387.3 436.4 504.6 13.2 14.9 17.2 14.2 28.0 24.8 21.5 11.2 - 3.1 (9.8) YNS MK Yinson 1 1.92 384.7 2.54 Buy 25.9 30.9 47.1 34.6 17.2 23.5 (17.6) 5.5 11.1 8.2 11.5 1.3 0.9 49.3 PPT MK Perisal Petroleum 12 1.11 945.5 1.40 Buy 21.3 91.0 92.3 2.8 10.7 10.8 96.4 39.6 10.4 10.3 20.8 - 2.6 50.0 SAKP MK SapuraKencana 1 2.83 14,162.4 4.10 Buy - 480.3 1,063.0 8.3 9.6 17.9 46.3 33.9 29.6 15.9 8.7 - 2.8 NA GMB MK Gas Malaysia 12 2.63 3,376.9 2.76 Hold 229.2 147.8 183.6 17.8 11.5 14.3 (10.4) 14.8 22.9 18.4 15.5 4.4 3.3 NA Plantation GENP MK Genting Plantation 12 8.57 6,503.3 8.00 Hold 442.0 338.1 417.3 58.3 44.6 55.0 (2.9) 14.7 19.2 15.6 9.7 1.2 2.0 0.2 IOI MK IOI Corp 6 4.96 31,891.0 5.19 Hold 1,892.5 1,798.4 1,927.2 29.5 28.0 30.0 0.8 16.8 17.7 16.6 13.7 3.1 2.6 (7.8) KLK MK KL Kepong 9 20.64 22,033.3 20.20 Hold 1,264.3 1,097.0 1,206.5 118.4 102.8 113.1 (2.3) 17.4 20.1 18.3 15.2 3.2 3.2 (9.1) SIME MK Sime Darby 6 8.97 53,904.9 10.40 Buy 3,939.8 3,888.2 3,742.0 65.6 64.7 62.3 (2.6) 13.7 13.9 14.4 14.5 3.6 2.2 (2.5) FGV MK Felda Global Vntrs 12 4.55 16,599.1 4.55 Hold 1,070.2 757.0 1,041.0 40.1 21.0 29.0 (15.0) 11.3 21.7 15.7 12.8 2.4 NA NA SOP MK Sarawak Oil Palms 12 5.89 2,571.2 7.56 Buy 242.9 176.8 252.7 56.0 40.7 58.2 1.9 10.5 14.5 10.1 12.9 0.6 2.1 5.4 TSH MK TSH Resources 12 2.10 1,766.6 2.02 Hold 118.5 58.1 113.2 14.0 6.9 13.4 (2.2) 15.0 30.4 15.7 6.6 1.0 2.1 10.5 THP MK TH Plantations 12 2.05 1,493.1 2.28 Hold 124.8 75.9 105.2 24.5 14.9 20.7 (8.1) 8.4 13.8 9.9 11.5 3.7 1.7 (3.3) TAH MK Ta Ann 12 3.70 1,371.7 4.70 Buy 153.0 65.9 116.2 41.3 17.8 31.3 (12.9) 9.0 20.8 11.8 6.8 2.2 1.6 (17.8)


3Q12 Results Review Maybank KE Equity Research Stock Universe (continued) Ticker Company FYE Price Market Target Reco

Core Net Profit EPS CAGR

PER PER PER ROE Div Yld PBV Price Chg

30-Nov Cap Price CY11A CY12F CY13F CY11A CY12F CY13F 11-13 CY11A CY12F CY13F CY12F CY12F CY11A YTD (RM m) (RM) (RM m) (RM m) (RM m) (sen) (sen) (sen) (%) (x) (x) (x) (%) (%) (x) (%)

Petrochemicals PCHEM MK Petronas Chemicals 12 5.95 47,600.0 6.50 Hold 3,714.0 3,752.4 4,268.3 46.4 46.9 53.4 7.3 12.8 12.7 11.1 19.3 4.5 2.8 (4.0) Property AXRB MK Axis REIT 12 3.12 1,424.3 3.04 Hold 64.8 84.2 88.8 16.4 18.5 19.5 9.0 19.0 16.9 16.0 8.9 5.5 1.2 19.1 KLCC MK KLCC Prop 12 5.75 5,370.9 6.38 Buy 261.0 331.9 388.2 20.2 26.2 30.0 21.9 28.5 21.9 19.2 4.9 1.7 0.9 82.5 MSGB MK Mah Sing 12 2.30 1,931.0 2.45 Hold 168.6 227.6 282.5 20.3 27.4 34.0 29.4 11.3 8.4 6.8 18.8 4.7 1.8 9.5 QUIL MK Quill Capita 12 1.22 476.0 1.26 Hold 34.3 35.6 36.8 8.8 9.1 9.4 3.4 13.9 13.4 13.0 7.0 6.4 0.9 13.0 SPSB MK SP Setia 10 3.04 6,097.7 3.77 Buy 306.4 382.0 499.6 16.7 19.9 26.0 24.9 18.2 15.3 11.7 10.5 3.9 1.6 (21.0) ULHB MK UEM Land 12 2.11 9,131.8 2.25 Hold 301.7 365.4 377.1 6.5 7.7 8.0 10.9 32.5 27.4 26.4 7.1 0.7 1.8 (12.8) SWB MK Sunway Berhad 12 2.30 2,972.8 2.53 Hold 325.6 344.8 380.5 25.2 26.7 29.4 8.0 9.1 8.6 7.8 10.6 2.3 1.0 (17.9) AARET MK AmanahRaya REIT 12 0.93 530.2 0.91 Hold 42.5 43.0 43.7 7.4 7.5 7.6 1.3 12.5 12.3 12.2 7.1 6.9 0.9 2.2 GLMC MK Glomac 4 0.81 585.9 0.96 Buy 74.7 95.9 124.2 12.4 13.9 17.1 17.3 6.5 5.8 4.7 12.7 6.9 0.4 0.6 CMMT MK CMMT 12 1.71 3,023.3 1.77 Hold 110.9 135.8 142.2 7.3 7.6 7.9 4.0 23.4 22.5 21.6 6.7 4.5 1.0 18.8 SREIT MK Sunway REIT 6 1.46 3,942.9 1.60 Hold 178.3 198.9 213.4 6.6 7.2 7.5 6.0 22.0 20.2 19.6 6.2 4.7 1.4 16.8 IGBREIT MK IGB REIT 12 1.34 4,556.0 1.39 Hold - 162.1 204.3 - 1.6 6.0 - - 84.3 22.3 4.8 3.7 NA NA PREIT MK Pavilion REIT 12 1.39 4,175.7 1.45 Hold 148.8 185.7 192.2 4.8 6.2 6.4 15.5 29.0 22.4 21.7 6.5 4.2 1.4 27.5 Tech NVB MK Notion Vtec 9 0.91 246.1 0.85 Sell 41.9 44.1 39.6 17.7 17.2 14.6 (9.0) 5.1 5.3 6.2 14.0 3.2 0.9 (7.4) Telecommunications DIGI MK DiGi.Com 12 4.83 37,553.3 4.96 Hold 1,361.9 1,463.8 1,863.6 17.5 18.8 24.0 17.1 27.6 25.7 20.1 161.5 4.9 26.8 26.5 T MK Telekom 12 5.47 19,568.4 5.10 Sell 634.8 823.3 862.6 17.8 23.0 24.1 16.4 30.7 23.8 22.7 13.3 3.8 3.2 16.0 AXIATA MK Axiata 12 5.92 50,365.1 6.70 Buy 2,538.6 2,717.9 2,964.2 30.0 32.1 35.0 8.0 19.7 18.4 16.9 13.4 3.5 2.6 15.2 MAXIS MK Maxis 12 6.43 48,228.6 6.80 Hold 2,175.0 2,167.0 2,352.0 29.0 28.9 31.4 4.1 22.2 22.2 20.5 30.3 6.2 6.0 17.3 Transport AIRA MK AirAsia 12 2.85 7,922.7 3.36 Hold 1,000.3 1,011.1 1,164.3 36.2 36.6 42.2 7.9 7.9 7.8 6.8 16.9 - 1.7 (24.4) MAHB MK MAHB 12 5.31 6,425.1 6.90 Buy 445.3 470.8 261.0 40.5 39.7 21.6 (27.0) 13.1 13.4 24.6 10.7 2.5 1.6 (8.4) MAS MK MAS 12 0.87 2,891.0 1.20 Buy (1,322.4) (557.2) 337.4 (39.6) (16.7) 10.1 n.a. n.a. n.a. 8.6 (37.3) - 2.8 (33.5) MISC MK MISC 12 4.02 17,944.4 4.55 Hold 559.0 427.8 894.8 21.2 7.2 9.6 (32.7) 19.0 55.8 41.9 2.0 - 0.9 (26.5) Utilities TNB MK Tenaga 8 6.94 38,415.2 7.50 Hold 3,203.7 4,226.3 3,835.3 58.9 79.3 74.6 12.5 11.8 8.8 9.3 11.4 2.0 1.1 17.6 YTLP MK YTL Power 6 1.58 11,589.5 2.20 Buy 1,256.2 1,119.6 1,151.4 16.3 14.2 13.9 (7.7) 9.7 11.2 11.4 11.4 3.0 1.3 (11.2)

Source: Maybank KE


3Q12 Results Review

RESEARCH OFFICES REGIONAL

P K BASU Regional Head, Research & Economics (65) 6432 1821 [email protected]

WONG Chew Hann, CA Acting Regional Head of Institutional Research (603) 2297 8686 [email protected]

ONG Seng Yeow Regional Products & Planning (852) 2268 0644 [email protected]

ECONOMICS Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected]

Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] Strategy Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] Banking - Regional LIAW Thong Jung (603) 2297 8688 [email protected] Oil & Gas Automotive Shipping ONG Chee Ting, CA (603) 2297 8678 [email protected] Plantations Mohshin AZIZ (603) 2297 8692 [email protected] Aviation Petrochem Power YIN Shao Yang, CPA (603) 2297 8916 [email protected] Gaming – Regional Media Power TAN CHI WEI, CFA (603) 2297 8690 [email protected] Construction & Infrastructure Power WONG Wei Sum, CFA (603) 2297 8679 [email protected] Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] Building Materials Manufacturing Technology

LEE Cheng Hooi Head of Retail [email protected] Technicals

HONG KONG / CHINA Edward FUNG Head of Research (852) 2268 0632 [email protected] Construction Ivan CHEUNG, CFA (852) 2268 0634 [email protected] Property Industrial Ivan LI, CFA (852) 2268 0641 [email protected] Banking & Finance Jacqueline KO, CFA (852) 2268 0633 [email protected] Consumer Staples Andy POON (852) 2268 0645 [email protected] Telecom & equipment Alex YEUNG (852) 2268 0636 [email protected] Industrial Warren LAU (852) 2268 0644 [email protected] Technology - Regional Karen Kwan (852) 2268 0640 [email protected] China Property

INDIA Jigar SHAH Head of Research (91) 22 6623 2601 [email protected] Oil & Gas Automobile Cement Anubhav GUPTA (91) 22 6623 2605 [email protected] Metal & Mining Capital goods Property Ganesh RAM (91) 226623 2607 [email protected] Telecom Contractor

SINGAPORE Gregory YAP Head of Research (65) 6432 1450 [email protected] Technology & Manufacturing Telcos - Regional Wilson LIEW (65) 6432 1454 [email protected] Hotel & Resort Property & Construction James KOH (65) 6432 1431 [email protected] Logistics Resources Consumer Small & Mid Caps YEAK Chee Keong, CFA (65) 6433 5730 [email protected] Healthcare Offshore & Marine Alison FOK (65) 6433 5745 [email protected] Services S-chips Bernard CHIN (65) 6433 5726 [email protected] Transport (Land, Shipping & Aviation) ONG Kian Lin (65) 6432 1470 [email protected] REITs / Property Wei Bin (65) 6432 1455 [email protected] S-chips Small & Mid Caps

INDONESIA Katarina SETIAWAN Head of Research (62) 21 2557 1125 [email protected] Consumer Strategy Telcos Lucky ARIESANDI, CFA (62) 21 2557 1127 [email protected] Base metals Coal Oil & Gas Rahmi MARINA (62) 21 2557 1128 [email protected] Banking Multifinance Pandu ANUGRAH (62) 21 2557 1137 [email protected] Auto Heavy equipment Plantation Toll road Adi N. WICAKSONO (62) 21 2557 1130 [email protected] Generalist Anthony YUNUS (62) 21 2557 1134 [email protected] Cement Infrastructure Property Arwani PRANADJAYA (62) 21 2557 1129 [email protected] Technicals

PHILIPPINES Luz LORENZO Head of Research (63) 2 849 8836 [email protected] Strategy Laura DY-LIACCO (63) 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 [email protected] Consumer Media Cement Kenneth NERECINA (63) 2 849 8839 [email protected] Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected] Banks Construction Ramon ADVIENTO (63) 2 849 8842 [email protected] Mining

THAILAND Sukit UDOMSIRIKUL Head of Research (66) 2658 6300 ext 5090 [email protected]

Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] Consumer/ Big Caps

Andrew STOTZ Strategist (66) 2658 6300 ext 5091 [email protected]

Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] Strategy

Suttatip PEERASUB (66) 2658 6300 ext 1430 [email protected] Media Commerce Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] Energy Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected] Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 [email protected] Banking & Finance Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 [email protected] Transportation Small cap. Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] Electronics Pongrat RATANATAVANANANDA (66) 2658 6300 ext 1398 [email protected] Services/ Small Caps

VIETNAM Michael KOKALARI, CFA Head of Research (84) 838 38 66 47 [email protected] Strategy Nguyen Thi Ngan Tuyen (84) 844 55 58 88 x 8081 [email protected] Food and Beverage Oil and Gas Ngo Bich Van (84) 844 55 58 88 x 8084 [email protected] Banking Trinh Thi Ngoc Diep (84) 844 55 58 88 x 8242 [email protected] Technology Utilities Construction Dang Thi Kim Thoa (84) 844 55 58 88 x 8083 [email protected] Consumer Nguyen Trung Hoa +84 844 55 58 88 x 8088 [email protected] Steel Sugar Resources



3Q12 Results Review

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report. This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report. Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Singapore

This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US

This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations.

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3Q12 Results Review

DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.Philippines:MATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Kim Eng Vietnam Securities Company (“KEVS”) (License Number: 71/UBCK-GP) is licensed under the StateSecuritiesCommission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority. Disclosure of Interest Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 4 December 2012, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 4 December 2012, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment. OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Reminder Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings Maybank Kim Eng Research uses the following rating system:

BUY Total return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Total return is expected to be between -10% to +10% in the next 12 months (excluding dividends) SELL Total return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share

NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax


3Q12 Results Review

Malaysia Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194

Singapore Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard #39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090 Fax: (65) 6339 6003

London Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstan’s Hill London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828 Fax: (44) 20 7283 6674

New York Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888 Fax: (603) 2282 5136

Hong Kong Kim Eng Securities (HK) Ltd Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong Tel: (852) 2268 0800 Fax: (852) 2877 0104

Indonesia PT Kim Eng Securities Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Vietnam In association with Kim Eng Vietnam Securities Company 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 838 38 66 36 Fax : (84) 838 38 66 39

Saudi Arabia In association with Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

South Asia Sales Trading Connie TAN [email protected] Tel: (65) 6333 5775 US Toll Free: 1 866 406 7447

North Asia Sales Trading Eddie LAU [email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.kimengresearch.com.sg


Sector Update 4 December 2012

Singapore

Co. Reg No: 198700034E MICA (P) : 099/03/2012

Land Transport Sector The Long and Short of it all

Pair trade: staging a revival. Our pair trade call since April this year has been doing well, and looks set to stage a revival as the differential of 15% between a Long-ComfortDelGro (CDG), Short-SMRT strategy has been maintained since our last update (Fig 1). Since our call, CDG now counts BlackRock, the world’s largest asset manager, as a new significant shareholder. We urge investors not to miss this opportunity as our Target Prices suggest a further 30% differential still to surface. Reiterate BUY CDG, SELL SMRT.

SMRT bus drivers’ protests a wake-up call. Top of the news recently were reports on SMRT’s mainland-Chinese bus drivers staging a sit-in protest on an alleged pay dispute. While the news itself had more political ramifications than impact to company fundamentals, this wake-up call simply cannot be ignored, as PTOs start to feel the pressure from the Bus Services Enhancement Programme (BSEP) rollout that has exacerbated the scarcity of available bus drivers. This fallout has also resulted in SMRT’s CEO Mr Desmond Kuek recognising ‘deep-seated issues’ that need addressing within the company.

SMRT: overvalued vs peers. While dividend yields are comparable between CDG and SMRT (~4% p.a.), we highlight that SMRT’s valuations look rich on both a forward P/E and P/B basis, which further supports a compelling SELL recommendation for the company. Its forward P/E of ~19x, while comparable to HK-listed MTR, is significantly higher than that of CDG (at ~14x P/E). Its investment case looks similarly unappealing on a P/B basis, where its 3.0x P/B multiple looks significantly inflated versus CDG (1.7x P/B) and MTR (1.3x P/B).

CDG: still our pick. CDG remains our pick of the sector for its diversified land transport business across international borders. Not only does this present steady growth opportunities, it also shields the company from country-specific concerns such as those currently being experienced in Singapore.

Reiterate: BUY CDG, SELL SMRT. Our Long-CDG, Short-SMRT strategy remains intact, premised on our projection of a further 30% differential widening between these two companies. Our target prices for CDG (SGD1.94) and SMRT (SGD1.37) are pegged to 16x and 15x forward PER respectively, with CDG deserving its premium valuation based on its diversified global land transport business.

Sector Summary / Peer Comparisons Company Price EPS EPS Growth Rec 3 Dec 12 TP 2012F 2013F 2012F 2013F P/E P/B Div Yield (SGD) (SGD) (SGD) (SGD) (%) (%) (x) (x) (%) ComfortDelGro Buy 1.675 1.94 11.7 12.1 4.0 3.6 13.8 1.7 3.9 SMRT Sell 1.70 1.37 9.2 9.2 16.6 -0.5 18.6 3.0 4.1 MTR (HK) N.R. 4.86 N.A. 0.25 0.25 -15.9 0.00 19.7 1.3 2.5 Sector Average 17.4 2.0 3.5 Source: Maybank KE, Bloomberg

Bernard CHIN [email protected] (65) 6432 1446


Company Update 4 December 2012

Indonesia

Indocement Firm Growth to Continue

No major surprises. Indocement (INTP) booked a 9M12 net profit of IDR3.4t, up 30% YoY. Revenue saw a 26% YoY increase to IDR12.4t (9M11: IDR9.8t), buoyed by strong domestic sales volume and a higher ASP. Operating and net margins inched up 1ppt on the back of a decline in both COGS and operating expenses. On a quarterly basis, earnings grew by 3% QoQ to IDR1.2t, bringing 3Q12 net margin to 29% (2Q12: 27%). The results were within our expectations.

Higher domestic sales but lower exports. INTP registered domestic sales volumes of 12.8m tonnes for 9M12. This was a 19% YoY increase over the 10.7m tonnes it recorded for the same period last year, the highest-ever figure for the first nine months of the year in the company’s history. That its volume growth has outpaced the industry’s at 15% YoY is testament to the increase in its market share from 31% in 9M11 to 32% in 9M12. This was fuelled by robust demand from the private sector for the construction of residential and high-rise buildings, particularly in the Java area (+15.5% YoY) which accounted for 55% of total domestic demand. To cater to the booming domestic market, INTP scaled back its exports. As a result, export volumes plunged by 91% YoY to only 44k tonnes in 9M12 from 466k tonnes in 9M11.

Firm growth to continue. We forecast INTP to book earnings growth of 15% YoY in FY13F on ASP hike of 4% and sales volume growth of 11%. Combined with the decline in average energy costs, we expect margins to also expand in FY13F by 1-2ppts. Moreover, the company’s new 2mtpa cement mill is expected to be up and running in 3Q13 and industry utilisation rate should reach 96% in FY13F from 94% in FY12F.

Roll over valuation to FY13, reiterate HOLD. We raise our TP to IDR25,000, from IDR23,000, as we roll over our valuation basis to FY13. Our new TP, pegged at 18.5x FY13F PER, implies 8.2% upside from the current level. Reiterate HOLD. Going forward, we expect Indocement’s revenue to grow at 15% CAGR over FY12F-15F, led by strong demand and better positioning to increase its ASP.

Indocement – Summary Earnings TableFYE Dec (IDR b) 2010A 2011A 2012F 2013F 2014FRevenue 11,138 13,888 16,914 19,570 22,716 EBITDA 4,397 4,774 5,859 6,800 7,790 Recurring Net Profit 3,225 3,602 4,537 5,356 6,106 Recurring Basic EPS (IDR) 876 977 1,232 1,455 1,659 EPS growth (%) 17.4 11.5 26.1 18.0 14.0 DPS (IDR) 225 263 684 986 1,309

PER (x) 26.4 23.6 18.7 15.9 13.9 EV/EBITDA (x) 17.1 15.7 12.8 11.0 9.6 Div Yield (%) 1.0 1.1 3.0 4.3 5.7 P/BV (x) 6.5 5.4 4.8 4.4 4.1

Net Gearing (%) net net net net net ROE (%) 24.7 22.9 25.6 27.5 29.5 ROA (%) 21.0 19.8 22.7 24.5 26.4 Consensus Net Profit (IDR b) 3,285 3,655 4,350 5,040 5,670 Source: Company, Kim Eng estimates

HOLD (unchanged) Share price: IDR23,100 Target price: IDR25,000 (from IDR23,000) Anthony Yunus [email protected] (62 21) 2557 1136 Stock Information Description: Indocement is a cement-producing company in Indonesia with a total of 12 plants operating in West Java and South Kalimantan. It is a subsidiary of the German-based HeidelbergCement Group, a leading cement player in the world. Ticker: INTP.IJ Shares Issued (m): 3,681 Market Cap (USD m): 8,845 3-mth Avg Daily Turnover (USD m): 5.7 IDX index: 4302 Free float (%): 36.0 Major Shareholders: % Birchwood Omnia Ltd. 51.0 PT Mekar Perkasa 13.0 Key Indicators

ROE – annualised (%) 25.9 Net cash (IDR b): Net cash NTA/shr (IDR): 19,553 Interest cover (x): 496.3

Historical Chart

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Performance: 52-week High/Low IDR23,250/IDR15,000 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 6.0 14.9 42.6 53.0 34.7 Relative (%) 6.8 10.4 24.9 39.2 21.7


Philippines Interim results 4 December 2012

Megaworld Corp Higher TP on gaming, lower NAV discount

Growth driven by real estate sales. Real estate sales rose almost 16% YoY to PHP5.3b in 3Q12, bringing 9M12 sales to PHP14.6b, reflecting a 12% increase. Sales take-up rose 22% YoY to PHP10.4b in 3Q12, but showed a 15% QoQ drop. For 9M12, MEG managed to post a 62% YoY increase in sales take-up totaling PHP33b.

Third largest rental income. Rental income rose 24% YoY to PHP1.36b in 3Q12, with 9M12 rental income totaling PHP3.6b, up almost 33%. Contributing to the growth are the escalation and completion of additional leasing properties and increase in demand for office space. MEG now ranks third among the developers that rely on both real estate sales and rental income as revenue sources.

Adjustment in earnings outlook. With the 9M12 earnings results, we’ve adjusted our 2012 earnings estimate to PHP6.96b, 5.6% or PHP371m higher than our previous estimate mainly on account of the downward adjustment made in 2012 estimated operating expenses since 9M12 opex turned out to be lower than expected. With greater sale take-up though, we’ve raised our 2013 revenue projection but coupled that with lower margin due to our expectation competition will remain intense. Net income is forecast to grow 12.7% to PHP7.8b next year, but because of the increased number of shares resulting from the conversion of warrants, EPS is seen to decline about 1.2% to PHP0.26.

Higher NAV on account of greater contributions from parts. We are now looking at an NAV of PHP106.7b, almost 9% higher than our previous estimate. The most notable increase came from the upward adjustment in Travellers International and Empire East Land Holdings Inc (ELI – Not rated). In particular, our revised estimate for Travellers (operator of Resorts World Manila and 10% owned by MEG) is PHP163.9b. We also attach a lower discount to NAV, now at 30% versus 40% previously. We figure the discount to NAV should be less than what we have assumed for Filinvest Land Inc (FLI – HOLD) and Vista Land & Landscapes Inc (VLL – SELL) which have lesser or no rental income as compared with MEG, as well as not having the lucrative gaming play from Travellers. Maintain HOLD.

Megaworld Corporation – Summary Earnings Table FYE 31 Dec (PHPm) 2009A 2010A 2011A 2012F 2013FRevenues 12,575 13,111 15,888 18,740 21,288 EBITDA 5,482 5,467 6,309 8,181 8,519 Recurring Net Profit to Common 4,055 5,026 6,032 6,957 7,846 Recurring Basic EPS (PHP) 0.18 0.20 0.24 0.27 0.26 EPS growth (%) (6.2) 13.9 19.9 11.2 (1.2) DPS (PHP) 0.02 0.02 0.02 0.02 0.02 PER 14.9 13.1 10.9 9.8 9.9 Div Yield (%) 0.7 0.7 0.9 0.9 0.9 P/BV(x) 1.4 1.2 0.9 1.0 0.9 Net Gearing (%) (8.0) (10.8) (13.4) (13.7) (9.9) ROE (%) 9.1 9.3 9.2 9.2 9.5 ROA (%) 5.4 5.5 5.3 5.1 5.5 Consensus Net Profit (PHPm) n.a. n.a. n.a. 7,000 7,810 Source: Maybank ATR Kim Eng estimates

Hold (unchanged) Share price: PHP2.62 Target price: PHP2.60 (from PHP2.30

previously) Kenneth Nerecina [email protected] (632) 849 8839

Stock Information Description: MEG is engaged in the business of real estate development. Its projects include large-scale mixed-use planned communities that integrate residential, commercial, educational, leisure and entertainment components. Ticker: MEG PM / MEG.PS Shares Issued (m): 25,638 Market Cap (PHPm): 67,171.6 Market Cap (US$ m): 1,643.1 3-mth Avg Daily Value (US$m): 3.9 PSEi: 5,672.70 Free float (%): 38.4 Major Shareholders: % ALLIANCE GLOBAL GROUP 34.2 NEW TOWN LAND PARTNERS 20.2 Key Indicators

ROE (%) 9.5 Net debt (PHPm) (8,559) NTA/share (PHP) 2.9 Interest cover (x) 45.4

Historical Chart

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Source: Bloomberg Performance: 52-week High/Low PHP2.62/PHP1.59 1-mth 3-mth 6-mth 1-yr YTD Absolute (%) 6.94 18.02 31.66 43.17 53.22 Relative (%) 2.36 9.33 19.60 10.97 24.21


Economics 4 December 2012

Regional Co. Reg No: 198700034E

MICA (P) : 099/03/2012

2013 outlook still good But US fiscal cliff cloud likely to darken

ISM headline loses momentum, likely reflecting the risk of the US going over the fiscal cliff. After two strong months (in the immediate aftermath of the Fed’s QE3 announcement), the ISM manufacturing PMI (a reliable indicator of US industrial activity) receded to 49.5 in November 2012 – reflecting partly the impact of Hurricane Sandy (which severely hurt manufacturing employment, taking the ISM employment index down to 48.4 in November, from October’s 52.1) but mainly the impact of the growing risk of the US going over the fiscal cliff. Although negotiations toward averting the fiscal cliff have made considerable progress in the month since the US election, the two sides have demonstrated in the past week that the chasm between them remains wide. Increasingly, Pres. Obama is making it clear that he will not budge from raising income taxes on the top 2% of US income earners (individuals earning more than US$200,000 and families more than US$250,000 annually). He hardened his position last week by sending to Congress a proposal comprising US$1.6tn in tax increases over the next decade and only US$400bn of spending cuts. This is clearly unacceptable to Congress, although the Republican Speaker of the House, John Boehner, has made clear that he is willing to consider “revenue increases” (primarily through reduced deductions). Pres. Obama is now making it clear that – unless the House Republicans are willing to countenance some tax increases, and publish details of their proposed spending cuts – the White House is quite prepared to go “over the cliff”, allowing the large tax increases and spending cuts to automatically kick in at the start of 2013 (and then, later consider the possibility of reducing some spending cuts and tax increases).

Chart 1: US demand outlook for Asian exports good, but losing steam

Source: Maybank-KE, CEIC ISM new orders moderate to 50.3, indicating a deceleration in US demand for Asian exports in May 2013. The crucial ISM new orders index (which leads US imports from Asia by 6 months; chart 1 above) still remained above 50, albeit slowing to 50.3 in November (from 54.2 in October). This would still translate to about 9% YoY growth in Asian

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5

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35

20

30

40

50

60

70

Jun-93 Jun-97 Jun-01 Jun-05 Jun-09 Jun-13

US imports from Asia to decelerate, then regain momentum in March-May 2013

US ISM new orders (6m lag) (LHS) US imports from Asia-10 (YoY %, 3mma) (RHS)

Prasenjit K. Basu [email protected] (65) 6432 1821


Regional | Economics

exports to the US in May 2013 (albeit slower than the 12-13% YoY growth indicated for March-April 2013). However, with producer inventories moderating to 45 (from 50) and customers’ inventories to 42.5 (from 49), the setback to new orders (and therefore to Asian exports to the US in 2013) should be short-lived – IF the president and Congress are able to resolve the fiscal crisis by late-January (even if they choose to temporarily go over the fiscal cliff). We think this is, in fact, the likely outcome: while most Republican Congressmen have signed conservative ideologue Grover Norquist’s “no new taxes” pledge, at least one Republican Senator (Georgia’s Chambliss) has agreed to higher tax rates, a few (less than five) Republican congressmen have also done so – as has the other influential conservative ideologue, Bill Kristol. We expect Pres. Obama to allow substantially more spending cuts than the US$400bn in his proposal last week – but only if the Republicans concede his bottom-line of higher taxes on the top-2% of income earners.

Chart 2: OECD CLI points to Asian export recovery next year too

Source: Maybank-KE, CEIC

OECD CLI also points to a recovery in Asian exports in 1H 2013. The OECD composite leading indicator (CLI) is also a good 6-month leading indicator of global demand for Asia’s exports (chart 2). It has been stable in the latest 3 months (July-September), despite the severe turmoil in Europe during that period. But, it’s YoY growth improved as a result of even that stability – and appears likely to improve further in October-November. With the risk of Grexit (a Greek exit from the Eurozone) now largely eliminated for the next two years (with the troika’s agreement last week to provide US$44bn in loans to Greece), the Eurozone can return to the task of forming a banking union. The first step in that process (ESM injection of capital into Bankia and other weak banks) in Spain is likely to be especially contentious amid the possible emergence of a pro-secession coalition in Catalonia. But the risk of a disorderly collapse of the Euro has clearly receded, and this should bolster the OECD CLI in the coming months.

China, India and intra-EM trade to provide a fillip too. The PMIs published for China, India and other economies (by Markit) are much less reliable than those of ISM for the US. (The China PMI was below 50 for much of 2012, but actual industrial production was growing more than 9% YoY for much of the period, while India’s PMI was consistently above 55 – suggesting strong growth – while actual industrial growth slumped to a decade-low over the past half-year). But the official PMI for China rose to 50.6 in November (from 50.2 in October) – and this corroborates ample other evidence of a modest cyclical turnaround in China over the past two months. And similarly, India’s infrastructure

-15

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(40)(30)(20)(10)

01020304050

Mar-92 Mar-95 Mar-98 Mar-01 Mar-04 Mar-07 Mar-10 Mar-13

OECD CLI is troughing, and intra-EM demand to stay strong

Exports: Asia-9: YoY%: 3mma

OECD CLI (amplitude adjusted): YoY%: 6 m lag


Regional | Economics

sector grew 6.5% YoY in October 2012 (the fastest in 8 months), likely marking the start of a turnaround from the dismal 5.4% YoY real GDP growth in Apr-Sep 2012 (marked by just over 1% YoY growth in manufacturing, a decade low). Brazil too marked a cyclical low in growth, but appears set to rebound – while Mexico is gaining market-share in the US, and is set to accelerate into next year. The consequent strengthening of intra-emerging-economy trade is likely to provide a further fillip to Asia’s export performance in 1H 2013, marking a recovery to 8-10% YoY growth for Asia’s exports (from 3.5-5% YoY in the last half-year).

Kim Eng Securities is a subsidiary of Malayan Banking Berhad SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

Indonesia

Economics 4 December 2012

Economic Focus Preparing for Policy Changes

Jump in imports offsets slower export decline. Merchandise exports declined 7.6% YoY in October to USD15.7b, shallower than the 9.4% drop in September as oil and gas exports fell at a slower pace. But the improvement in exports was more than offset by a 10.8% jump in imports to USD17.2b resulting in a trade deficit of USD1.5b. This comes after two months of trade surpluses and brings the trade balance in 10M12 to a deficit of USD516m, a sharp turnaround from a surplus of USD23.6b in 10M11. The weak global economy and domestic policy changes that curbed mining production have led to exports dropping much faster than imports this year; the latter continue to expand on the back of robust domestic demand. See Figure 1 for details.

Another reason to cut fuel subsidies. Given the lackluster prospects for global growth, exports are likely to stay anemic for some time. However, given the low base this year, YoY comparisons in 2013 may look better. On the other hand, as domestic demand is expected to be buoyant, imports are likely to continue expanding and that may keep pressure on the trade balance. This bolsters the argument for reducing fuel subsidies as lowering these is likely to result in more efficient use of fuel and therefore could potentially lower imports.

Core, headline inflation rates converge. A cut in fuel and other subsidies is likely in 2013 after a delay of two years. This is the main reason we are forecasting a rise in inflation to 5.3% from an estimated 4.5% this year. Indeed, with headline consumer inflation declining to 4.32% YoY in November, the 11M12 average is only 4.28%. The latest headline rate is lower than October’s 4.61% as lower food, utilities and clothing inflation tempered faster increases elsewhere. Core inflation also has been falling and at 4.27% for the year is almost the same as headline inflation, as seen in Figure 2.

Minimum wage hike makes policy rate hike in 2013 more likely. With stable inflation and export demand weak, we see no reason for the central bank to move on the policy rate either way in its next meeting. If so, there would only have been one 25-bp reduction in the policy rate this year. In 2013, if fuel and electricity subsidy cuts we have factored into our inflation forecasts materialize, it is likely the next move on the policy rate will be up. Recently, in a surprise development, the new governor of Jakarta raised the monthly minimum wage in the capital city 44% to IDR2.2m to be effective next year. At least 25 provinces are reported to have increased minimum wages too. In response, two major business organizations and several industry associations are up in arms and aim to challenge the regulation in courts. Meanwhile, the government is said to have allowed delayed implementation of the wage hike in labor-intensive industries and exempted SMEs. It is almost certain we have not heard the last in this policy debate. But unless it is taken back, there will be an inflationary effect with the only question being how much. We will factor that in when there is greater clarity.

Luz Lorenzo [email protected] +63 2 849 8836


Indonesia – Economic Focus

Figure 1. October exports posted shallower decline but imports jump

3Q11 4Q11 2011 1Q12 2Q12 3Q12 Aug-12 Sep-12 Oct-12 10M12 In USDb Trade balance 7.2 3.9 26.1 2.8 -2.3 0.5 0.2 0.5 -1.5 -0.5 Non-oil and gas 6.4 4.2 25.3 3.3 -1.5 1.6 0.8 1.2 -0.7 2.6 Oil and gas 0.7 -0.3 0.8 -0.5 -0.7 -1.0 -0.5 -0.7 -0.8 -3.2 Exports 53.6 51.3 203.5 48.5 48.4 46.0 14.0 15.9 15.7 158.7 Non-oil and gas 41.8 41.2 162.0 38.5 38.3 37.6 11.3 13.1 12.7 127.0 Oil and gas 11.8 10.1 41.5 10.0 10.2 8.5 2.8 2.8 3.0 31.6 Imports 46.5 47.4 177.4 45.7 50.7 45.5 13.8 15.3 17.2 159.2 Non-oil and gas 35.4 37.0 136.7 35.2 39.8 36.0 10.5 11.9 13.4 124.4 Oil and gas 11.1 10.4 40.7 10.5 10.9 9.5 3.3 3.4 3.8 34.8 Change, % YoY Trade balance 81.5 -55.0 17.6 -58.0 -126.7 -92.8 -93.5 -76.9 -208.6 -102.2 Non-oil and gas 49.2 -45.4 17.5 -50.6 -119.1 -75.7 -76.8 -36.4 -142.5 -88.4 Oil and gas -307.2 -132.4 23.7 415.5 -264.0 -240.8 -286.8 -248.2 292.5 -465.2 Exports 39.6 9.4 28.9 6.9 -9.0 -14.1 -24.7 -9.4 -7.6 -6.2 Non-oil and gas 28.8 8.6 24.8 3.9 -8.8 -10.1 -22.6 -3.6 -8.8 -5.7 Oil and gas 98.5 12.9 47.9 20.4 -9.8 -28.3 -32.0 -29.5 -2.4 -8.2 Imports 34.8 23.9 30.8 17.9 13.2 -2.0 -8.4 1.2 10.8 9.4 Non-oil and gas 25.7 22.2 26.3 15.9 17.2 1.8 -6.8 1.8 9.2 11.1 Oil and gas 75.5 30.1 48.5 25.3 0.6 -14.2 -13.0 -1.0 17.0 3.5

Source: CEIC and PT Kim Eng Securities estimates

Figure 2. Headline and core inflation rates converge in the absence of subsidy cuts

Weight Change %Y/Y (2007=100) NSA

2011 1Q12 2Q12 3Q12 Sep-12 Oct-12 Nov-12 11M12 Headline inflation, %YoY 100.00 5.36 3.72 4.50 4.49 4.31 4.61 4.32 4.28 Foodstuff 19.57 8.55 3.57 6.93 7.01 6.55 6.47 5.71 5.87 Processed food, beverages, cigarettes & tobacco 16.55 5.10 4.64 5.28 6.06 6.20 6.33 6.33 5.52 Housing, water, electricity, gas & fuel 25.40 4.18 3.41 3.31 3.28 3.31 3.54 3.46 3.36 Clothing 7.09 8.37 8.17 6.50 4.24 3.85 6.16 4.63 6.10 Medical care 4.43 3.77 3.84 3.06 2.92 2.86 2.86 2.90 3.20 Education, recreation & sports 7.81 4.43 4.80 4.68 4.09 4.30 4.21 4.23 4.46 Transport, communication & financial services 19.12 2.42 1.79 1.83 2.01 1.58 1.97 2.07 1.91 Core inflation 4.56 4.28 4.18 4.19 4.12 4.59 4.40 4.27

Source: CEIC and PT Kim Eng Securities estimates

4 December 2012

Regional Daily

RESEARCH OFFICES

REGIONAL P K BASU Regional Head, Research & Economics (65) 6432 1821 [email protected]

WONG Chew Hann, CA Acting Regional Head of Institutional Research (603) 2297 8686 [email protected]

ONG Seng Yeow Regional Products & Planning (852) 2268 0644 [email protected]

ECONOMICS SuhaimiILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected]

Luz LORENZO Economist Philippines | Indonesia (63) 2 849 8836 [email protected]

MALAYSIA WONG Chew Hann, CAHead of Research (603) 2297 8686 [email protected] Strategy Construction & Infrastructure Desmond CH’NG, ACA (603) 2297 8680 [email protected] Banking - Regional LIAW Thong Jung (603) 2297 8688 [email protected] Oil & Gas Automotive Shipping ONGChee Ting, CA (603) 2297 8678 [email protected] Plantations MohshinAZIZ (603) 2297 8692 [email protected] Aviation Petrochem Power YIN Shao Yang, CPA (603) 2297 8916 [email protected] Gaming – Regional Media Power TAN CHI WEI, CFA (603) 2297 8690 [email protected] Construction & Infrastructure Power WONG Wei Sum, CFA (603) 2297 8679 [email protected] Property & REITs LEE Yen Ling (603) 2297 8691 [email protected] Building Materials Manufacturing Technology

LEE Cheng HooiHead of Retail [email protected] Technicals

HONG KONG / CHINA Edward FUNGHead of Research (852) 2268 0632 [email protected] Construction Ivan CHEUNG, CFA (852) 2268 0634 [email protected] Property Industrial Ivan LI, CFA (852) 2268 0641 [email protected] Banking & Finance Jacqueline KO, CFA (852) 2268 0633 [email protected] Consumer Andy POON (852) 2268 0645 [email protected] Telecom & equipment Alex YEUNG (852) 2268 0636 [email protected] Industrial WarrenLAU (852) 2268 [email protected] Technology - Regional Karen Kwan (852) 2268 0640 [email protected] China Property

INDIA JigarSHAHHead of Research (91) 22 6623 2601 [email protected] Oil & Gas Automobile Cement AnubhavGUPTA (91) 22 6623 2605 [email protected] Metal & Mining Capital goods Property Ganesh RAM (91) 226623 2607 [email protected] Telecom Contractor

SINGAPORE Gregory YAPHead of Research (65) 6432 1450 [email protected] Technology & Manufacturing Telcos - Regional Wilson LIEW (65) 6432 1454 [email protected] Hotel & Resort Property & Construction James KOH (65) 6432 1431 [email protected] Logistics Resources Consumer Small &Mid Caps YEAK Chee Keong, CFA (65) 6433 5730 [email protected] Healthcare Offshore & Marine Alison FOK (65) 6433 5745 [email protected] Services S-chips Bernard CHIN (65) 6433 5726 [email protected] Transport (Land, Shipping & Aviation) ONGKian Lin (65) 6432 1470 [email protected] REITs / Property Wei Bin (65) 6432 1455 [email protected] S-chips Small &Mid Caps

INDONESIA Katarina SETIAWANHead of Research (62) 21 2557 1125 [email protected] Consumer Strategy Telcos Lucky ARIESANDI,CFA (62) 21 2557 1127 [email protected] Base metals Coal Oil & Gas RahmiMARINA (62) 21 2557 1128 [email protected] Banking Multifinance PanduANUGRAH (62) 21 2557 1137 [email protected] Auto Heavy equipment Plantation Toll road Adi N. WICAKSONO (62) 21 2557 1130 [email protected] Generalist Anthony YUNUS (62) 21 2557 1134 [email protected] Cement Infrastructure Property ArwaniPRANADJAYA (62) 21 2557 1129 [email protected] Technicals

PHILIPPINES Luz LORENZOHead of Research (63) 2 849 8836 [email protected] Strategy Laura DY-LIACCO (63) 2 849 8840 [email protected] Utilities Conglomerates Telcos Lovell SARREAL (63) 2 849 8841 [email protected] Consumer Media Cement Kenneth NERECINA (63) 2 849 8839 [email protected] Conglomerates Property Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected] Banks Construction Ramon ADVIENTO (63) 2 849 8842 [email protected] Mining

THAILAND SukitUDOMSIRIKULHead of Research (66) 2658 6300 ext 5090 [email protected]

Maria LAPIZHead of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] Consumer/ Big Caps

Andrew STOTZStrategist (66) 2658 6300 ext 5091 [email protected]

MayureeCHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] Strategy

SuttatipPEERASUB (66) 2658 6300 ext 1430 [email protected] Media Commerce SutthichaiKUMWORACHAI (66) 2658 6300 ext 1400 [email protected] Energy Petrochem TermpornTANTIVIVAT (66) 2658 6300 ext 1520 [email protected] Property WoraphonWIROONSRI (66) 2658 6300 ext 1560 [email protected] Banking & Finance JaroonpanWATTANAWONG (66) 2658 6300 ext 1404 [email protected] Transportation Small cap. Chatchai JINDARAT (66) 2658 6300 ext 1401 [email protected] Electronics PongratRATANATAVANANANDA (66) 2658 6300 ext 1398 [email protected] Services/ Small Caps

VIETNAM Michael KOKALARI,CFA Head of Research (84) 838 38 66 47 [email protected] Strategy Nguyen ThiNganTuyen (84) 844 55 58 88 x 8081 [email protected] Food and Beverage Oil and Gas Ngo Bich Van (84) 844 55 58 88 x 8084 [email protected] Banking Trinh Thi Ngoc Diep (84) 844 55 58 88 x 8242 [email protected] Technology Utilities Construction Dang Thi Kim Thoa (84) 844 55 58 88 x 8083 [email protected] Consumer Nguyen TrungHoa +84 844 55 58 88 x 8088 [email protected] Steel Sugar Resources


4 December 2012

Regional Daily

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. 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This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. Thailand The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result. Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect. US

This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

4 December 2012

Regional Daily

DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.Philippines:MaybankATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities JSC (License Number: 71/UBCK-GP) is licensed under the StateSecuritiesCommission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

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OTHERS Analyst Certification of Independence The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

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No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE. Definition of Ratings Maybank Kim Eng Research uses the following rating system:

BUY Return is expected to be above 10% in the next 12 months (excluding dividends) HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends) SELL Return is expected to be below -10% in the next 12 months (excluding dividends)

Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share

NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax

4 December 2012

Regional Daily

Malaysia

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Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India Kim Eng Securities India Pvt Ltd 2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines Maybank ATR Kim Eng Securities Inc. 17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200 Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand Maybank Kim Eng Securities (Thailand) Public Company Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan, Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Vietnam In association with Maybank Kim Eng Securities JSC 1st Floor, 255 Tran Hung Dao St. District 1 Ho Chi Minh City, Vietnam Tel : (84) 844 555 888 Fax : (84) 838 38 66 39

Saudi Arabia In association with Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686 Fax: (966) 26068787

South Asia Sales Trading Kevin FOY [email protected] Tel: (65) 6336-5157 US Toll Free: 1-866-406-7447

North Asia Sales Trading Eddie LAU [email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.maybank-keresearch.com

Documents

P K Basu - xinhua08.comupload.xinhua08.com/2012/1204/1354596987321.pdf · Thai Vegetable Oil TVO TB 23.20 35.50 53.02 ... Genting Malaysia GENM MK 3.46 4.05 17.05 ... Cathay Pacific