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

RHB Research Institute

RHB Equity 360°

27 July 2010 (CSC Steel, KPJ; Technical: KKB)

Top Story : CSC Steel – Strong performance to sustain into 2QFY12/10 Outperform
Results Preview
- We believe 2QFY12/10 results are likely to come in at RM32-33m, which is 5-8% higher than the previous
quarter’s net profit of RM30.6m. This means 1HFY12/10 net profit is likely to come in at RM61-64m, which
is 74.3-76.7% of our full-year forecast.
- Despite having anticipated a strong 2Q, we are keeping our FY12/10 net profit forecast unchanged, as we
believe CSC Steel’s performance is likely to weaken significantly in 3Q.
- We expect the prices of steel products will likely stage a rebound in 4Q, as: 1) Steel consumption is
seasonally stronger in 4Q; and 2) Concerns on overcapacity are likely to ease in the near term.
- Indicative fair value is RM2.10, based on unchanged 9x FY12/11 EPS of 23.3 sen.

Corporate Highlights

KPJ : Back to fundamentals Outperform

Company Update
- Khazanah yesterday offered to buy all remaining shares that it does not own in Parkway Holdings for
S$3.95 per share. Fortis has reportedly decided to bow out of the bidding war and accept Khazanah’s offer.
We note that the other takeover, for Healthscope Ltd in Australia has also been concluded with the
consortium comprising US private equity firms, Carlyle Group and TPG Capital winning the bid at A$2bn.
- With the battles for control of Parkway and Healthscope now over, we believe the market will focus back on
the fundamentals for the healthcare sector and KPJ. Moreover, we believe KPJ’s revenue growth drivers
will help to support KPJ’s earnings growth moving forward. We note that KPJ’s long-term growth potential
is significant when compared to some regional peers’ operational and financial ratios e.g. revenue/bed and
EV/bed.
- We have maintained our FY10-12 earnings forecasts unchanged for now.
- Maintain fair value of RM4.25, based on target FY11 PER of 16x. Reiterate Outperform.

Technical Highlights

Daily Trading Strategy : Must hold above 1,350 to confirm a bullish breakout …
- Undeniably, the successful removal of the 1,350 heavy resistance barrier yesterday marks an encouraging
technical development, as this could signal a bullish technical breakthrough on the FBM KLCI.
- However at this juncture, the medium-term outlook remains uncertain and we prefer to wait for more
confirmation signals, given a “hangman-like” candle was formed yesterday. Usually, a “hangman” candle
means a potential pullback ahead.
- We therefore, are of the view that the FBM KLCI must secure a positive confirmation candle at above 1,350
today in order to confirm a bullish technical breakout pattern as well as to expand its uptrend towards the
next upside target at 1,390.
- Otherwise, this could trigger a toppish chart formation on the chart and push the FBM KLCI back into a
consolidation mode.
- On the downside, we continue to see firm support near the 10-day SMA of 1,339.

Daily Technical Watch: KKB Engineering – A possible rechallenge of the recent high of RM2.08 soon…
- 10-day SMA: RM1.874
- 40-day SMA: RM1.764
- Support: IS = RM1.80 S1 = RM1.43 S2 = RM1.15
- Resistance: IR = RM2.20

Bulletin Board
 Co/Sector News Impact Recom
Banking The oversight body of the Basel Committee on Generally positive for the banks and in line with OW
Banking Supervision announced that they have our belief that the final Basel III standard is likely
reached a broad agreement on the overall design to be watered down from the initial concept paper
of the capital and liquidity reform package and/or banks would be given more time to
(details to be issued later this year). According to comply and phase in the changes.
Bloomberg, the committee has softened some of
its proposed capital and liquidity rules. For
example, banks can count part of a stake it owns
in another financial firm and deferred tax assets
as part of capital. (Bloomberg)
Plantations Indonesia has reduced the export tax on CPO to Neutral, as the reduction in export tax is in line N
3% starting 1 Aug, while the base price for CPO with Indonesia’s graduated export tax policy for
exports in Aug will be US$725/tonne. According CPO, where export tax will be 3% when CPO is
to the Indonesian Palm Oil Association, CPO between US$750-800/tonne. The fact that India’s
exports from Indonesia rose 9% in Jun to 1.13m exports rose so substantially in June is likely due
tonnes, with exports to India, the biggest buyer to the upcoming festive season, as Malaysia also
jumping 45% mom to 476,030 tonnes. experienced a 54% mom jump in CPO exports to
(Bloomberg) India in June.
Hai-O Hai-O has decided not to proceed with the Positive. Based on our assumptions, the private MP, FV =
Proposed Private Placement after taking into placement would have diluted Hai-O’s EPS by RM4.06
consideration that the approval granted by Bursa 6.9%.
Malaysia had lapsed on 26 Jul. (Bursa)

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Magna Prima Final dividend of 1 sen single tier exempt 12-Aug-10 15-Sep-10
Oriental Food Industries Final dividend of 2 sen tax exempt + 2 sen less 25% tax 18-Aug-10 17-Sep-10
Complete Logistic Services Final tax-exempt dividend of 3 sen 1-Oct-10 28-Oct-10

Going “ex” on 28 Jul

Unisem Bonus issue on the basis of 3-for-10 28-Jul-10 -
Unisem Renounceable rights issue of new warrants on the basis of 1-for-4 28-Jul-10 -
Eng Kah Corp Final tax exempt dividend of 7.5 sen 28-Jul-10 9-Aug-10
Tanjong PLC Final gross dividend of 30 sen less 25% tax 28-Jul-10 13-Aug-10
Wang-Zheng First and final single tier dividend of 2.5 sen 28-Jul-10 13-Aug-10
Sapuracrest Petroleum Single-tier final dividend of 4 sen 28-Jul-10 16-Aug-10
IJM Plantations Interim dividend of 5 sen single Tier 28-Jul-10 17-Aug-10
Kumpulan Perangsang S’gor Final dividend of 4 sen less 25% tax 28-Jul-10 17-Aug-10
NV Multi Corporation First and final dividend of 3.25 sen less 25% tax 28-Jul-10 18-Aug-10
Chuan Huat Resources Final dividend of 2 sen less 25% tax 28-Jul-10 18-Aug-10
IJM Land Interim dividend of 2 sen single tier 28-Jul-10 19-Aug-10
DKLS Industries First and final dividend of 3 sen less 25% tax 28-Jul-10 20-Aug-10
IJM Corporation Interim dividend of 11 sen less 25% tax 28-Jul-10 24-Aug-10
CBIP Interim tax exempt dividend of 5 sen 28-Jul-10 25-Aug-10
Scomi Engineering Special int. div of 6 sen less tax + 11 sen (TE) + 12.5 sen single tier 28-Jul-10 26-Aug-10

...For more details, see individual reports attached

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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over a period of three months, but fundamentals are not
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Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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