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

RHB Research Institute

RHB Equity 360°

25 June 2010 (JCY, Top Glove, IJM Land, QSR, Gamuda, SapuraCrest; Technical: HL Bank)

Top Story : JCY – Riding the technology wave Outperform

New Coverage
- JCY International is principally involved in precision engineering for hard disk drive mechanical
components, with plants in Malaysia, Thailand and China. The company is one of the largest HDD
component manufacturers in the world with an estimated monthly capacity of 32m pieces.
- JCY’s main customers are the world’s top HDD vendors i.e. Western Digital and Seagate. Together, they
combine a market share of 59%. JCY is estimated to command a global market share of 25% for the base
plate, 16% of the top cover, and 12% of the APFA.
- We like JCY given: 1) its proven track record of manufacturing capability; 2) it is a leading HDD component
manufacturer; and 3) its ability to diversify into various HDD components.
- We estimate FY09-12 EPS CAGR of 28.4% on good earnings visibility given the strong demand outlook for
hard disk drives. We have assumed a target PER of 12x for JCY after imputing a discount to the peers’
weighted average FY11 PER of 13.6x to reflect its mid-range market cap.
- We initiate coverage on JCY with an Outperform call and a fair value of RM2.16 based on 12x FY11 PER.

Corporate Highlights

Top Glove : Demand for gloves still positive Outperform

Briefing Note
- Top Glove is still positive on the demand as rubber gloves remain a necessity in healthcare as a form of
protection. Coupled with organic growth, rising healthcare awareness, especially from developing
countries, and restocking activities, these should help support demand for rubber gloves moving forward.
- While demand prospects remain favourable, latex price, however, hit an all-time high of RM7.80/kg in Apr
’10 and the US$ has weakened against RM by 4.7% YTD. Past experience, however, has shown that Top
Glove has been able to pass on the higher cost to their customers, albeit with a slight time lag.
- Management indicated that commercial production for the additional eight new lines in F18 is set to start in
Jul 10 and the construction of F21 has finished and is expected to commence commercial production in
Aug 10. Top Glove is also adding 16 new lines at its existing F7 factory in Thailand. All in, these will boost
Top Glove’s annual production capacity to 36.8bn pieces by end-FY10, from 33 bn pieces p.a. currently.
- For 2012, the company is constructing a new factory (F22) in Klang, which will house 16 new lines and is
expected to start commercial production in Mar 11. Top Glove is also putting in 32 new lines in its recently
acquired land and building in Ipoh. Commercial production is expected to start by May ‘11. In total, the
expansion plans would increase Top Glove’s annual production capacity to 41.3 bn pieces by end-FY11.
- No change to our FY10-12 forecasts. Maintain fair value of RM16.40, based on target FY11 PER of 17x.

IJM Land : Disposes Of Aeon Bandaraya Melaka Outperform

News Update
- IJM Land is disposing of its retail property Aeon Bandaraya Melaka for RM66.3m cash (plus debt of Aeon
Bandaraya Melaka, we believe, taking the cue from the net book value of RM319.4m as at 31 Mar 2010).
- IJM Land expects to record RM64m gains from the disposal, translating to 5.8sen/share.
- We are positive on the deal as it is in line with IJM Land’s strategy to continuously develop, nurture and
eventually unlock value of its investment properties.
- Fair value is raised from RM3.06 to RM3.11 to reflect the gains. Maintain Outperform.

QSR : Value in quick service restaurant business Not Rated

Visit Note
- Strong trend in demand likely to continue in 2010 following: 1) FY09’s low base factor; 2) continuous effort
by PH and KFC in initiating new product innovations to cater for local consumer preference; 3) aggressive
advertising campaigns; and 4) improving consumer sentiment.
- QSR targets to open 20-25 new Pizza Hut outlets p.a. and 40 new KFC outlets p.a. for FY10-12.
Introducing 3-5 new “Pizza Hut Delivery” outlets by end-10 / early-11, to compete with Dominos which
currently dominates the pizza delivery business in Malaysia.
- Management highlighted that is first KFC outlet in Pune, India, is currently generating revenue of about
RM18-19k/day, which is about 2x the revenue/day generated in Malaysia. KFC will also be opening its
outlet in Mumbai by month-end, which will be located in a food court.
- Based on consensus estimates, QSR’s estimated FY10-11 PERs of 9.8x and 8.6x respectively are
significantly lower than for KFC (34% and 30% above that of QSR). Based on 12.5x target PER on QSR’s
FY11 consensus earnings (our target PER for KFCH), the fair value for QSR would be at RM5.25, which
represents 44.6% upside from the current share price. Commendable yield of 3.5% (based on 25%
minimum dividend payout policy) and potential share price catalysts from: 1) earnings upside; and 2) M&A
activities, we believe that QSR is an attractive buy.

Gamuda : 9MFY07/10 net profit grows 36% yoy, lobbying hard for KL MRT Underperform
3QFY10 Results/Briefing Note
- 9MFY07/10 net profit came in within our expectation but missed the market consensus.
- The proposed RM36bn KL MRT will have two new lines, i.e. Damansara – Serdang and Kepong – Kajang,
and a circle line around KL City Centre, with a total length of 180km.
- Gamuda did acknowledge that at this point of time, it “will not call it a project, but just a proposal pending
the Cabinet’s approval”.
- Gamuda is hopeful that work can start in Jan 2010. We believe this target is simply too ambitious.
- On project funding, we feel that Gamuda’s suggestion of “AAA-rated government guaranteed securities
backed by assets in the form of certified completed works” may be easier said than done.
- Fair value is RM2.74. Maintain Underperform.

SapuraCrest : Lower marine division losses boosted earnings Market Perform

1QFY11 Results
- 1QFY01/11 core net profit of RM50.7m accounted for 22% and 24% of our and consensus full-year
estimates respectively, comfortably within expectations. We note that 1Q EBIT was boosted by lower
losses from the marine division, but if we strip this out, EBIT for the IPF, drilling and O&M divisions would
have been flat despite higher revenue.
- With the orderbook standing at RM9.1bn, SapuraCrest’s earnings visibility appears to be good at least for
the next two years but we highlight that there are still risks of delays.
- We have adjusted our FY01/11-13 forecasts slightly by +1.4-4.3% p.a. for these results, and factoring in the
improved financial position for the marine division.
- We recently downgraded our target PER to 13x, to be in line with the sector benchmark and this implies a
new fair value of RM2.46/share (vs. RM2.39 previously) based on FY01/12 PER.

Technical Highlights

Daily Trading Strategy : Investors to stay further at bay…

- In line with our expectation, the FBM KLCI sustained its trading range between 1,300 and 1,350, amid
persistent rangebound trading activities of late.
- Also, investors will continue to “wait-and-see”, pending clearer technical signals before making fresh
investment decision ahead of the weekend.
- With a mild T+4 force-selling pressure expected today due to the heavy volume transacted on Monday,
plus the weaker momentum readings on the chart, investors will likely to stay further at bay today.
- As a result, the FBM KLCI will likely trend sideways today, with a solid support seen at 1,300 and the 10-
day and 40-day SMAs near 1,313 and 1,310.

Daily Technical Watch: Hong Leong Bank – Potential negative turn on the near-term sentiment…
- 10-day SMA: RM8.48
- 40-day SMA: RM8.539
- Support: IS = RM8.40 S1 = RM7.78 S2 = RM7.22
- Resistance: IR = RM8.96

Bulletin Board

Co/Sector News Impact Recom

 EON Cap An independent financial adviser of EON Cap At RM8.91/share, this would imply a takeover MP, FV =
had recommended a fair and reasonable P/BV multiple of 1.7x (based on EON Cap’s RM8.07
takeover price of RM6.18bn or RM8.91/EON Cap FY09 BVPS) and would be within the average
HL Bank share (22% above HL Bank’s offer price), P/BV multiples of 1.6x and 2x range for the first MP, FV =
according to details in Primus’ lawsuit. (Financial and second rounds of consolidation respectively. RM9.05
Daily) However, we doubt HL Bank would be willing to
raise its offer to meet this price given its
disciplined approach towards acquisition.
KFCH KFCH has acquired 4.6m units of Al-Aqar KPJ Positive. KPJ REIT is deemed as a non-risky OP, FV =
REIT for a total purchase consideration of asset given a locked in contract between KPJ RM11.20
RM4.86m from the open market. The rationale and KPJ REIT.
for the purchase is due to the better investment
return from KPJ REIT vs. fixed deposit of 7.3%
vs. 2.5-3.0% and the opportunity of capital
appreciation from the REIT assets. (Bursa)
Allianz Allianz shareholders have approved all the Neutral. We have already factored in the ICPS in OP
resolutions set out in the Notice of EGM dated 2 our forecasts as we did not expect the resolution
June 2010. The main resolution is the issuance to not be approved by shareholders.
of ICPS.(Bursa)

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Allianz Malaysia Renounceable rights issue of ICPS on the basis of 125-for-100 6-Jul-10 -
Marco Holdings First and final dividend of 0.5 sen less 25% tax 13-Jul-10 30-Jul-10
Top Glove Bonus issue on the basis of 1-for-1 16-Jul-10 -
Gamuda Second interim dividend of 6 sen less 25% tax 4-Aug-10 18-Aug-10
Unico-Desa Plantations Single tier final dividend of 2 sen 1-Oct-10 22-Oct-10

Going “ex” on 28 Jun

Berjaya Corporation Int. div-in-specie of 1 B-Retail share for every 10 B-Corp shares 28-Jun-10 -
Malayan United Industries Issue of Class A3 ICULS in place of interest for Class A1 ICULS 28-Jun-10 -
Malayan United Industries Issue of Class A3 ICULS in place of interest for Class A2 ICULS 28-Jun-10 -
Alam Maritim Resources Final dividend of 0.75 sen less 25% tax 28-Jun-10 8-Jul-10
Protasco Final single tier dividend of 5 sen 28-Jun-10 8-Jul-10
CSC Steel Holdings Special dividend of 6 sen less 25% tax + 1 sen single tier 28-Jun-10 12-Jul-10
CSC Steel Holdings Final dividend of 13 sen less 25% tax 28-Jun-10 12-Jul-10
Manulife Holdings First and final dvidend of 17 sen less 25% tax 28-Jun-10 13-Jul-10
TRC Synergy First and final gross dividend of 4 sen less 25% tax 28-Jun-10 13-Jul-10
Padiberas Nasional Final dividend of 12 sen less 25% tax 28-Jun-10 14-Jul-10
Freight Management Gross interim dividend of 2.5 sen less 25% tax 28-Jun-10 15-Jul-10
Genting Plantations Final dividend of 5.25 sen less 25% tax 28-Jun-10 15-Jul-10
Integrax Final dividend of 3 sen less 25% tax (payment date amended) 28-Jun-10 15-Jul-10
Lii Hern Industries First interim single-tier dividend of 2.5 sen 28-Jun-10 15-Jul-10
Mega First Corporation Final dividend of 5 sen less 25% tax 28-Jun-10 15-Jul-10
Muda Holdings First and final dividend of 2.5 sen 28-Jun-10 15-Jul-10
Multi-Purpose Holdings Final dividend of 5 sen less 25% tax 28-Jun-10 15-Jul-10
Perak Corporation First and Final Dividend of 2.5 sen less 25% tax 28-Jun-10 15-Jul-10
Ta Ann Holdings First interim franked dividend of 3 sen less 25% tax 28-Jun-10 15-Jul-10
TSR Capital First and final dividend of 2 sen less 25% tax 28-Jun-10 15-Jul-10
YTL Cement Third interim single tier dividend of 3.75 sen 28-Jun-10 15-Jul-10
YTL Power Third interim single tier dividend of 3.75 sen 28-Jun-10 15-Jul-10
Eng Kah Corporation First tax exempt interim dividend of 3.75 sen 28-Jun-10 16-Jul-10
Metrod (M) First and final dividend of 12 sen tax exempt 28-Jun-10 16-Jul-10
PBA Holdings Bhd Final tax-exempt dividend of 2 sen 28-Jun-10 16-Jul-10
Bina Darulaman First and final dividend of 7 sen less 25% tax 28-Jun-10 19-Jul-10
Padini Holdings Interim dividend of 7.5 sen single tier 28-Jun-10 19-Jul-10
Uchi Technologies Final tax exempt dividend of 3 sen 28-Jun-10 19-Jul-10
Genting Malaysia Final dividend of 4.3 sen less 25% tax 28-Jun-10 21-Jul-10
 Ya Horng Electronic First & final div of 5 sen + Special div of 5 sen, less 25% tax 28-Jun-10 21-Jul-10
Acoustech Second interim single tier tax exempt dividend of 3 sen 28-Jun-10 22-Jul-10
Formosa Prosonic Industries Second interim single tier tax exempt dividend of 7 sen 28-Jun-10 22-Jul-10
Sarawak Oil Palms First & final tax exempt dividend of 3 sen 28-Jun-10 22-Jul-10
TSH Resources First & final single tier dividend of 5 sen 28-Jun-10 22-Jul-10
Cahya Mata Sarawak First and final dividend of 5 sen less 25% tax 28-Jun-10 23-Jul-10
Gopeng Final tax exempt dividend of 1 sen 28-Jun-10 23-Jul-10
Mudajaya Group First interim dividend of 1 sen single tier 28-Jun-10 23-Jul-10
Unimech Group Final dividend of 3.7sen less 25% tax 28-Jun-10 23-Jul-10
Al-Aqar KPJ Reit Interim dividend of 4.43 sen tax exempt 28-Jun-10 26-Jul-10
Emas Kiara Industries First and final tax exempt dividend of 1.5 sen 28-Jun-10 26-Jul-10
KPJ Healthcare Interim dividend of 3.25 sen gross less 25% tax 28-Jun-10 26-Jul-10
Genting Final dividend of 4.2 sen less 25% tax 28-Jun-10 27-Jul-10
Petra Energy Final single-tier exempt dividend of 1 sen 28-Jun-10 27-Jul-10
Petra Perdana First and final dividend of 2 sen less 25% tax 28-Jun-10 28-Jul-10
Dufu Technology Corp First and final tax exempt dividend of 1 sen 28-Jun-10 29-Jul-10
Ire-Tex Corporation First and final tax exempt dividend of 2.5 sen 28-Jun-10 29-Jul-10
Landmarks First and final dividend of 1 sen less 25% tax 28-Jun-10 29-Jul-10
TA Enterprise First and final dividend of 2.5 sen 28-Jun-10 29-Jul-10
TA Global First and final dividend of 0.15 sen 28-Jun-10 29-Jul-10
Handal Resources Single tier first and final dividend of 2 sen 28-Jun-10 30-Jul-10
Kulim (M) Final dividend of 7.5 sen less tax 28-Jun-10 30-Jul-10
Sindora Final dividend of 5 sen less tax 28-Jun-10 31-Jul-10

...For more details, see individual reports attached

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