Daily Focus

Malaysia MalaysiaEquity EquityResearch ResearchPP PP12941/7/2008 12941/7/2008

Key Indices
KLCI FBM30 FBMEmas KL2nd Daily Volume (m shrs) Daily Turnover (RMm) Daily Turnover (US$m) Close 1,389 9,118 9,431 6,553 787 1,455 449 Chg 0.6% 0.6% 0.6% 1.6%

21 December 30 January 2007 2008

Highlights
YTL Power: Poised for acquisition growth (Buy; RM2.53; YTLP MK; TP RM3.00) Story: YTLP is one of the few companies that has demonstrated a steady yield and commendable growth for regulated assets. Its acquisitions over the last few years including Wessex Water, Jawa Power and Electranet, have resulted in commendable FY05-07 net profit CAGR of 28%. Point: YTL Power is also well poised for further valueaccretive acquisitions of regulated assets given its gross cash of RM6b. There is also scope for YTL Power to leverage on Wessex Waters expertise to gain entry into Malaysias water concessions business. Relevance: We favour YTLP for its defensive earnings and stable dividend stream. We initiate coverage on YTLP with a Buy recommendation and SOP-derived target price of RM3.00/share. YTLP offers growth potential from new acquisitions and attractive net yield of 8.5%, thanks to a combination of cash and share distribution.

Market Key Data

(%) 2006A 2007F 2008F (x) 2006A 2007F 2008F EPS Gth 18.8 30.8 19.1 PE 23.6 18.0 15.1 Div Yield 3.5 4.3 4.6 EV/EBITDA 10.8 9.5 8.6

Stock Picks Large Cap

Company Price (RM) Target Price Target 29-Jan (RM) Return

Large Cap Picks (Mkt Cap > RM2,000m) Public Bank-F BCHB PPB Group AMMB MRCB 11.10 10.50 10.40 3.60 2.69 13.00 13.00 13.70 5.75 3.60 17% 24% 32% 60% 34%

Comments
MISC: Joint Venture to develop LNG Business in Nigeria (Buy; RM9.45; MISF MK; TP RM11.70) MISC announced that it had entered into a joint venture with Nigerian National Petroleum Corporation (NNPC), Hyundai Heavy Industries Co. Ltd. and Deepwater Shipping and Maritime Company. MISC will have a 30% share in the Nigerian-incorporated joint venture company to be called Nikorma Transport Limited. The purpose of the joint venture is to provide NNPC business solutions for it to develop its LNG business. We are positive on this deal as it would also allow MISC to further expand its LNG business worldwide, although immediate earnings impact is expected to be minimal given the Groups large profit base. Maintain Buy on MISC with a RM11.70 price target, based on 16x CY08 EPS. Catalyst for the stock includes new oil and gas projects. KNM: Secures 10 new projects worth RM185m (Buy; RM6.95; KNMG MK, TP RM9.70) KNM has clinched 10 new projects worth RM185m in total. The projects are awarded to KNM Process Systems Sdn Bhd, W E Smith Engineering Pty Ltd, FBM Hudson Italiana SpA and FBM-KNM FZCO, the whollyowned subsidiaries of KNM in Malaysia, Italy, Australia, Italy and the United Arab Emirates respectively.

Stock Picks Small Cap

Company Price (RM) Target Price 29-Jan (RM) Target Return

Small Cap Picks (Mkt Cap < RM2,000m) Sunrise Kinsteel Evergreen Southern Steel TRC Synergy 2.80 1.51 1.40 2.52 2.19 4.90 1.70 3.20 3.00 2.95 75% 13% 129% 19% 35%

Refer to important disclosures at the end of this report.

Malaysia Daily Focus

These projects involve the design, manufacture and supply of mid-high end range products with an estimated EBIT margin of 25%. We expect EBIT contribution of RM46.3m from the new projects over FY08-09. The awards of projects reinforce our positive view on KNM and we expect more projects to be secured over the next few months. Nevertheless, we maintain our FY08-09 forecasts as this is part of ourassumed new orders of RM3b for FY08. Earnings visibility for KNM is good with close to RM3b orderbook to be recognized over FY08-09. We maintain our Buy recommendation with a 12-month target price of RM9.70 based on FY09 PE of 25x. We continue to favour KNM for its strong earnings CAGR of 57% for FY07-09F, promising sector outlook and proven overseas expansion plans. Maintain Buy. Details of the new projects include:-(i) KNMPS, from ABB Lummus Global BV-Toyo Engineering Corporation JV for Shell Eastern Petroleum (Pte) Ltd, to design, manufacture and supply columns for the Houdini BDX Plant; (ii) KNMPS, from SNC Lavalin Inc to design, manufacture and supply third shift and methanation reactors and columns for the North West Upgrader Project; (iii) KNMPS, from Saudi Kayan Petrochemical Company (an affiliate of SABIC of Saudi Arabia), to design, manufacture and supply splitters, demethanisers and deethanisers for the SK Olefins Plant; (iv) KNMPS, from an affiliated company of Petronas (PSRI), to design, manufacture and supply columns and vessels for the PSR Project; (v) FBM, from Techint Compagnia Tecnica Internazionale, to design, manufacture and supply methanol converters for the EMethanex Methanol Plant; and (vi) WES, from Woodside Burrup Pty Ltd, to design, manufacture and supply butted kettle and tube heat exchangers and shell and tube heat exchangers for the Pluto LNG Project. SP Setia: Signs agreement to develop land measuring 41.8 acres in Kota Kinabalu, Sabah (Buy; RM5.05; SPSB MK; TP RM6.10) SP Setia has signed a development agreement with the State Government of Sabah to develop a land measuring 59.2 acres. The proposed development land is located approximately 5km from Kota Kinabalu City Centre and 2km from Kota Kinabalu International Airport. In return for the development rights to a parcel of land measuring 41.8 acres, SP Setia will build a new railway station and other ancillary buildings within the proposed development with combined costs not exceeding RM110m.

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Malaysia Daily Focus

SP Setia plans to build a shopping mall, a five-star hotel, a three-star hotel, condominiums and SOHO units with GDV of RM1.0b on the land. We are positive on the deal because of the good location and accessibility. In addition, Sabah is also expected to benefit from the anticipated RM105b in investments over 18-year implementation period under the Sabah Development Corridor (SDC) which was launched yesterday. We understand SP Setia will only launch the project soonest by 2H2009 and therefore, we maintain our current earnings estimates for FY08 and FY09. We reiterate our Buy recommendation with a target price of RM6.10, which is based on 15% premium on its RNAV to account for potential land deals. EON Capital: BNM approves DRB-Hicom to sell 20% to Primus (Buy; RM5.75; EON MK; TP RM9.00) DRB-Hicom announced that it has been approved by the central bank, Bank Negara Malaysia (BNM), to dispose of its 20.2% stake in EON Capital (EonCap) to Primus Pacific Partner (Primus). Though no price was mentioned in that announcement, the Business Times quoted sources as saying the price tag is RM9.55/EonCap share. Since this stake does not trigger a mandatory general offer (MGO), which is at 30%, there will be no MGO for minority shareholders. Nevertheless, there may be positive sentiment towards EonCap shares today following this announcement due to the possible entry of a new major shareholders. Our forecasts and price target of RM9.00 (based on 1.9x BV) are unchanged. We reiterate our Buy call. Automobile: Commendable growth for 2008 expected (Underweight under review) New vehicle sales for December rose 14% y-o-y but fell 4% m-o-m to 42,244 units. The growth, we believe was driven by the introduction of Proton Pesona in August 2007 while consumption was propelled by government servants pay hike effective July 2007. This brings full year 2007 new vehicle sales to 487,176 units, a marginal contraction of < 1%. This is above house projection of a 5% contraction to 466,229 units. Stepping into 2008, MAA expects new car sales to surge 4.7% to 510,000 units. We are reviewing our projected 2% growth for 2008 for a potential upgrade on the back of an early indication of a successful launch of the Proton Saga Replacement in January 2008 and healthy consumption pattern. We also believe that a potential fuel hike, which could clip growth in vehicle sales (due to lower disposable income), may be partly mitigated by the RM9.6b withdrawal of EPF Account II (to pay monthly mortgage installments). Thus, we are reviewing our underweight call on the sector for a potential upgrade. Top pick is MBM Resources (MBM MK; TP RM4.20) on easy valuations, credible parent i.e. Daihatsu and pole market position.

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Total industry volume (TIV)

60,000 55,000 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 Jan Feb Mar Apr May Jun 2005
Source: MAA

Jul 2006 2007

Aug

Sep

Oct

Nov

Dec

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This document is published by HWANGDBS Vickers Research Sdn Bhd (HDBSVR) (formerly known as HwangDBS Vickers Research Sdn Bhd), a subsidiary of HWANGDBS Investment Bank Berhad (HDBS) (formerly known as Hwang-DBS Securities Berhad) and an associate of DBS Vickers Securities Holdings Pte Ltd (DBSVH). The research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. HDBSVR accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBS Vickers Securities Holdings Pte Ltd is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. HDBSVR, HDBS, DBSVH, DBS Bank Ltd, and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other banking services for these companies. HDBSVR, HDBS, DBSVH, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc (DBSVUSA), a U.S.-registered broker-dealer, may beneficially own a total of 1% or more of any class of common equity securities of the subject company mentioned in this document. HDBSVR, HDBS, DBSVH, DBS Bank Ltd and/or other affiliates of DBSVUSA may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. DBS Vickers Securities (UK) Ltd is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients.

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Published and Printed by HWANGDBS Vickers Research Sdn Bhd (128540 U) (formerly known as Hwang-DBS Vickers Research Sdn Bhd) Suite 26-03, 26th Floor Menara Keck Seng, 203, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia. Tel.: +603 2711-2222 Fax: +603 2711-2333 email : general@hwangdbsvickers.com.my

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Company Focus
Malaysia Equity Research
PP 11272/7/2008

30 Jan 2008

BUY RM2.53 KLCI : 1,388.50

(Initiating Coverage) Price Target : 12-Month RM 3.00 Reason for Report : Initiation of coverage Potential Catalyst: Acquisition of new regulated assets, potential new water projects and higher dividend payout. ANALYST June Ng +603 27110970 june@hwangdbsvickers.com.my

YTL Power
Poised for acquisition growth
Story: YTLP is one of the few companies that has demonstrated a steady yield and commendable growth for regulated assets. Its acquisitions over the last few years including Wessex Water, Jawa Power and Electranet, have resulted in commendable FY05-07 net profit CAGR of 28%. Point: YTL Power is also well poised for further valueaccretive acquisitions of regulated assets given its gross cash of RM6b. There is also scope for YTL Power to leverage on Wessex Waters expertise to gain entry into Malaysias water concessions business. Relevance: We favour YTLP for its defensive earnings and stable dividend stream. We initiate coverage on YTLP with a Buy recommendation and SOP-derived target price of RM3.00/share. YTLP offers growth potential from new acquisitions and attractive net yield of 8.5%, thanks to a combination of cash and share distribution.
Global utility player. YTL Power (YTLP) enjoys good earnings visibility from its regulated asset with a 100% stake in Wessex Water Limited, a water and sewerage operator in the United Kingdom and an indirect 33.5% investment in ElectraNet Pty Ltd, the company which owns and operates the power transmission grid for the state of South Australia. YTLP also holds a 35% stake in PT Jawa Power which owns a 1,220MW coal-fired power plant in East Java, Indonesia. 65% of YTLPs FY07 revenue came from outside Malaysia. Water and sewerage operation from Wessex accounts for 74% of FY07 EBIT, followed by power generation of 19.8% and investment holding of 5.8%. Poised for growth with new acquisition. There is a tremendous opportunity for YTLP to acquire regulated assets in the region given its gross cash of RM6b. We envisage reduced competition especially from private equity firms, particularly when the subprime crisis is raising required rate of returns. Apart from its expansion in Indonesia, other potential new assets under consideration are new water concessions in Malaysia and Gencos asset in Singapore. YTLP has proposed a RM2.2b bond in Nov 07 to refinance existing debts and to fund potential new acquisition. Potential unlocking of asset value in Wessex? There is scope for YTLP to unlock value from Wessex Water as a new benchmark on valuation was set in October 2007, valuing Southern Water at EV/RAB of 1.4x. While we understand that YTLP is not planning to sell down its stake in Wessex in the near term, we cannot discount the possibility of the company doing so, if a lucrative offer is presented at a later stage. Attractive net yield of 8.5%. YTLP declared net dividend of 11.2 sen and 1-for-25 share distribution in 2007. The combined FY07 net dividend yield based on share price of RM2.50 amounts to 21.2 sen or net yield of 8.5%. Given the improving cashflow from its water and power assets, we expect YTLP to maintain net dividend per share of 11.2 sen for FY08-09, with potential share distribution from its share buyback programme.

FORECASTS AND VALUATION 2007A FY Jun (RM m) Turnover 4,068.0 EBITDA 2,624.9 Pre-tax Profit 1,296.8 Net Profit 1,269.2 Net Pft (Pre Ex.) 1,084.4 EPS (sen) 19.0 EPS Pre Ex. (sen) 13.0 EPS Gth Pre Ex. (%) 45 Diluted EPS (sen) 19.0 Net DPS (sen) 11.2 BVPer Share (sen) 91.7 PE Pre Ex. (X) 21.8 P/Cash Flow (X) 10.1 EV/EBITDA (X) 9.5 Net Div Yield (%) 4.4 P/Book Value (X) 2.8 Net Debt/Equity (X) 1.3 ROAE (%) 21.4 SHARE PRICE CHART
RM 2.80 2.60 2.40 2.20 2.00 1.80 1.60 1.40 1.20 1.00 Jan-07 Apr-07 Jun-07

2008F 4,085.2 2,662.8 1,443.3 1,096.9 1,096.9 16.4 16.4 (14) 16.4 11.2 97.0 15.4 11.2 9.6 4.4 2.6 1.3 17.4

2009F 4,221.1 2,726.2 1,501.1 1,110.8 1,110.8 16.6 16.6 1 16.6 11.2 102.5 15.2 10.7 9.4 4.4 2.5 1.3 16.7

2010F 4,338.5 2,771.9 1,525.2 1,128.7 1,128.7 16.9 16.9 2 16.9 11.2 108.2 15.0 10.2 9.2 4.4 2.3 1.2 16.0

Sep-07

Nov-07

Jan-08

YTL Power

100-Day MA

AT A GLANCE Issued Capital (m shrs) Mkt. Cap (RMm/US$m) Major Shareholders YTL Corporation Bhd (%) Employees Provident Fund Board (%) Yeoh Tiong Lay & Sons Hldg (%) Free Float (%) Avg. Daily Vol.(000) Consensus EPS (sen): Variance vs Cons (%): 2008: 17.2 2008: (4.6)

5,313.6 13,390 / 3,881 56.7 8.4 4.0 15.0 2,993 2009: 18.5 2009: (10.2)

Sector : Utilities Bloomberg/Reuters Code: YTLP MK/YTLP.KL Principal Business: Water and sewerage management, power generation and transmission

Refer to important disclosures at the end of this report.

Company Focus Investment highlights

(i) Global utility player with proven acquisition track record

YTL Power

Growth led by acquisitions. YTLP enjoys good earnings visibility with stable cashflows and earnings from its regulated assets from Malaysia, Indonesia and UK. YTLPs acquisitions over the last five years including Wessex Water, Jawa Power and ElectraNet, resulted in commendable three-year FY05-07 net profit CAGR of 28%. 65% of YTLPs FY07 revenue came from outside Malaysia. Water and sewerage operation from Wessex accounts for 74% of FY07 EBIT, followed by power generation of 19.8% and investment holding of 5.8%. Fig.1: Segmental breakdown and revenue breakdown by geographic location FY07 EBIT segmental breakdown FY07 Revenue breakdown Investment holdings 5.8% Water & sewerage 74.4%

Power generation 19.8%

Malaysia 32%

Others 3%

United Kingdom 65%

Source: Company

Wessex is the key contributor. As illustrated in Fig.1, Wessex is the key contributor of YTLP, accounting for 74.4% FY07 EBIT. YTLP holds a 100% stake in Wessex Water. The concession was acquired from Enron for 1.24b in year 2002. Wessex Water provides water services to 1.2m customers and sewerage facilities to 2.5m customers over an area of approximately 10,000 sq km in the south west of England and operates under a rolling 25-year licence granted by the UK government. Wessexs operation ranges from collecting and treating raw water, and storing and transporting high quality drinking water to households and businesses all around the region, to collecting, treating and disposing of sewerage safely back to the environment. IPP assets in Malaysia contribute 20% of EBIT. YTLP is the first independent power producer in Malaysia with two gas fired combined cycle power plants and combined capacity of 1,212MW at Paka Terengganu (404MW) and Pasir Gudang, Johor (808 MW). YTLP has a 21-year power purchase agreement (PPA) with Tenaga Nasional (TNB) till year 2015. The two local power-generation plants sell electricity to Tenaga Nasional under a long-term take or pay PPA. The annual revenue is more or less fixed right from the beginning and earnings growth is driven by costs savings and improvement in plant efficiency. The groups IPP assets have another nine years to go and account for 23% and 22% of FY08-09 EBIT. Expanding Indonesian operation. YTLP also holds a 35% stake in PT Jawa Power which owns a 1,220MW coal-fired power plant located at the Paiton Power Generation Complex in East Java, Indonesia. Jawa Power is the second largest IPP in Indonesia and has a 30-year PPA with PT PLN (Persero), the state-owned electric utility company. Jawa Power posted the best ever performance in 2006 with high availability of 94.8% compared to 83% contracted under the PPA. PT Jawa is entitled for bonus payment for availability above 83%. The other shareholders of PT Jawa are Jawa Power Holding GmbH, a subsidiary of Siemen with 50% stake and PT Bumipertiwi Tatapradipta which owns the remaining 15%. We understand that YTLP is negotiating on expansion for PT Jawa. It is also developing a 2x55MW greenfield power plants at Sulawesi, Indonesia. Power demand growth in Indonesia is recorded at 6-7% over the last two years following the countrys industrialisation plan. Power transmission business in South Australia. YTLP has an indirect investment of 33.5% in ElectraNet Pty Ltd (ElectraNet), together with a 33.5% investment in ElectraNet Transmission Services that manages ElectraNets assets. ElectraNet owns, operates and maintains South Australias 5,566 km of high voltage transmission lines under a 200-year power transmission concession. The other partners in ElectraNet are Powerlink from Queensland and a fund under the Macquirie Group.
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Company Focus

YTL Power

(ii) Poised for growth with potential value-accretive acquisitions

RM6b gross cash provides ample opportunities. YTLP has a successful acquisition track record with acquisitions of Wessex, PT Jawa and ElectraNet at attractive prices, resulting in commendable three-year FY05-07 net profit CAGR of 28% (refer to Fig.2). We understand that YTLP is actively looking out for new opportunities, focusing on regulated assets. Given YTLPs gross cash of RM6b, there is a tremendous opportunity for YTL to acquire regulated assets in the region, and we envisage reduced competition especially from private equity firms, particularly when the subprime crisis is raising required rate of returns. YTLP has proposed to raise RM2.2b bond in November 07 to refinance existing debts and to fund potential new acquisition. We believe that new acquisitions will be funded mostly by non-recourse project financing loans.

Fig.2: Commendable growth

5,000 4,000 3,000 2,000 1,000 0 FY04 FY05 FY06 FY07 FY08f FY09f FY10f 1,400 1,200 1,000 800 600 400 200 0

Revenue (RMm) LHS

Source: Company, HwangDBS Vickers Research

Net profit (RMm) RHS

Looking out for new regulated assets. We understand that YTLP is more interested in green field utility projects given the high prices of brown field projects. For YTLP, its main advantage is the ability to conceptualise power projects from ground up, and securing the necessary funding at attractive costs, thanks to its solid balance sheet and track record. Apart from Indonesia, YTLP is also looking for potential new regulated power and water assets in China, Middle East and Africa. May be interested in Jimah and Genco assets. Closer to home, there is a possibility that YTLP will bid for 1,400MW coal-fired Jimah Power plant. The Jimah plant is scheduled for commissioning in 2009 and there are talks the owner may be interested to dispose some stake in Jimah. In addition, Genco Singapore, a Temasek-owned company, plans to sell three of Singapores largest generating assets, estimated to be worth more than S$2b each. Genco Senoko Power (3,300MW), Power Seraya (3,100MW) and Tuas Power (2,670MW) together account for more than 80% of Singapores generating capacity. It was reported that the sale process commenced in 2007 and will be completed in end-08 or early 2009 with no foreign ownership cap. Apart from YTLP, there are numerous competitors such as Singaporean companies SembCorp, Kepcorp and CitySpring Infrastructure Trust - as well as foreign players like Hong Kongs CLP Power, Japanese groups like Tokyo Electric Power (Tepco) and Petronas, that are said to be involved in the bids for Gencos assets

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Company Focus
(iii) Second round of PPA negotiation in Malaysia not detrimental to valuation

YTL Power

YTLP accounts for 5% of Malaysias national grid capacity. YTLP is the first independent power producer in Malaysia with two gas fired combined cycle power plants and combined capacity of 1,212MW at Paka Terengganu (404MW) and Pasir Gudang, Johor (808 MW). YTLPs Paka and Pasir Gudang plants have combined capacity of 1,212MW, or approximately 12% of total IPP capacity and 5% of the national grids installed capacity, compared to IPPs total generation capacity of 43% in Malaysia (refer to Fig. 3). Potential extension of PPAs in Malaysia. We understand that Malaysia Energy Ministry and Tenaga Nasional Bhd (TNB) have begun fresh talks with independent power producers to review power purchase pacts after an earlier round of talks failed. The last round of talk with IPPs was on potential cut in capacity payment to partially compensate for the fuel cost hike. However, the talks were not successful due to agreed terms in the PPA. For this round, we believe that the negotiation is likely to focus on the sweetener, i.e. extension of PPAs beyond the original expiry period, in exchange for reduced capacity payments (refer to Fig.4). Key concern on PPA extension focuses on tariff rates and returns. The key concerns for IPPs under the second round of PPA talk will be on the new tariff rates and the returns on additional capex for the upgrade of the power plants. We believe that the discussion is likely to be a long drawn issue and unlikely to be finalised in the near term. We expect minimal impact on YTLP earnings and DCF valuation since local generation assets (Paka and Pasir Gudang) account for only 23% and 22% of FY08-09 EBIT. Fig.3: YTLP accounts for 5% of national grid capacity
Sime Darby 2%

Genting 3% YTLP 5% Jimah 6% Powertek 6%

Tg. Perlis 3%

TNB 56% MMC 19%

Source: Company, HwangDBS Vickers Research

Fig.4: Malaysia projected power reserve margin

Total IPPs Tenaga Bakun Installed capacity (MW) % growth Peak Demand % growth Reserve margin (%) Excess capacity 2005 6,554 11,497 0 18,051 4.2 12,853 6.9 40.4 5,198.4 2006 6,554 11,030 0 17,584 -2.6 12,825 5.6 37.1 4,759.0 2007F 7,254 11,030 0 18,284 4.0 13,582 5.9 34.6 4,702.3 2008F 8,654 11,030 0 19,684 7.7 14,369 5.8 37.0 5,314.6 2009F 9,354 11,030 0 20,384 3.6 15,232 6.0 33.8 5,152.4 2010F 10,054 11,030 0 21,084 3.4 15,841 4.0 33.1 5,243.2 2011F 10,054 11,030 800 21,884 3.8 16,474 4.0 32.8 5,409.5 2012F 10,054 11,030 800 21,884 0.0 17,133 4.0 27.7 4,750.5 2013F 10,054 11,030 800 21,884 0.0 17,819 4.0 22.8 4,065.2 2014F 10,054 11,030 1,600 22,684 3.7 18,532 4.0 22.4 4,152.5 2015F 10,054 11,030 2,400 23,484 3.5 19,273 4.0 21.9 4,211.2

Source: HwangDBS Vickers Research

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Company Focus

YTL Power

(iv) YTLPs valuations yet to reflect the UK water sector re-rating

Improving asset quality. YTLP acquired Wessex from Enron for 1.24b in year 2002 when it was ranked No.8 among the UK Water and Sewerage Companies. The value has been enhanced with top quality management and a successful efficiency improvement programme. Wessex Water achieved No.1 ranking in 2005-06 and received one of the highest allowable increases in water and sewerage charges of 25% for the 2005-2010 review period. Based on Wessexs 2007 annual report, the regulatory capital value (RCV) of Wessex Water increased 8.4% p.a. to 1,987m for 2006/07. RCV is the value of the Wessex business and approved by the UK office of Water Services (Ofwat) and forms the basis upon which prices are set. The next tariff review for Wessex will be carried in end 2009 for the new rates from 2010-2015. Growing interest in regulated asset The value of water regulated assets in UK has been on the up trend since late 2006 (refer to Fig.5). A benchmark on valuation was set in October 2007 when a group of investors led by JP Morgan agreed to buy Southern Water from Royal Bank of Scotland for an enterprise value of 4.2b, valuing Southern Water at EV/RAB of 1.44x. Using the same 1.44x RAB benchmark for Wessex, YTLs stake is worth RM19.7b. We believe that there is scope for YTLP to unlock value from Wessex Water given the rising EV/RAB values. Fig.5: Recent M&A in UK water sector
Date Oct 06 Dec 06 Oct 07 Source: Various sources Assets South East Water Thames Water Southern Acquirer Hasting Funds Management Kemble Water Ltd JP Morgan Chase Premium to RAB 35% 36% 44%

Potential unlocking of asset value? YTLP valuations are not fully reflecting the UK water sectors re-rating. We estimate Wessex Waters implied value is about 1.2x RAB, against the benchmark valuation of 1.4x, possibly due to YTLPs listing in Malaysia. We believe at some point the significance of YTLPs exposure to the UK water sector should take precedence over the issues in the domestic IPPs given Wessexs 74% contribution to YTLPs FY07 EBIT. While we understand that YTLP is not planning to sell down its stake in Wessex in the near term, we cannot discount the possibility of the company doing so, if a lucrative offer is presented at a later stage.

(v) Bright prospects for water-related jobs in Malaysia

More local water projects to be awarded soon. The water sector in Malaysia is taking a major step forward with the government taking over the assets from the various states. This implies that capex spending going forward will be borne by the federal government. The state entities will continue to operate the water assets, but, there are plans that should involve private sector collaboration. YTL Group may be bidding for RM10b Pahang-Selangor water transfer project. The press reported that a consortium comprising UEM World Bhd, a member of the YTL group, and parties linked to the Pahang royalty is believed to have joined the race for a slice of the RM10b Pahang-Selangor interstate water project. It is understood that the consortium has put in a bid for the job, which will include the construction of a 45km pipeline through the Titiwangsa mountain range to transport raw water from Pahang to Selangor. Given the need to improve the water distribution system and the ongoing negotiation on water asset transfer, we expect more water projects to be awarded in 2008. Leverage on Wessex water expertise. Wessex Waters water and sewerage water expertise clearly comes in handy for YTL Group to bid for local water projects. We understand that YTL Corp will be involved in the construction part of the job while the water-related concession and management aspects will be handled by YTLP, if YTL Group wins any of the new water projects. As it is, Wessex Water is already providing technical expertise with regards to YTLs recently secured river cleaning job, estimated at RM1b.

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Company Focus
(vi) More capital management on the cards?

YTL Power

Cash dividend policy of 20% and share distribution. YTLPs various businesses generate steady cash flow which enables the company to pay out attractive dividend every year. YTLP has consistently paid out dividends in two forms: - a cash dividend policy of 20% of net profits with minimum gross DPS of 10.0 sen per share, and (ii) share dividend from its share buyback programme. Aggressive share buyback programme. Since the last announced date for 1-for-25 share distribution on 16 Nov 07, YTLP has accumulated in total 67.7m shares at between RM2.48-RM2.83 per share from its aggressive share buyback programme (refer to Fig.6). We estimate that YTLP requires 220m shares for the next 1-for-25 share distribution, and YTLP has accumulated 68m shares over the last two months, implying that the next round of similar 1-for-25 share distribution is on the cards. Given the improving cashflow from its water and power assets, we expect YTLP to maintain net dividend per share of 11.2 sen for FY0809, with potential share distribution from its share buyback programme. Fig 6: Summary of YTLPs share buyback since 17 November 2007
Date 11/20/2007 11/21/2007 11/22/2007 11/23/2007 11/26/2007 11/27/2007 11/28/2007 11/29/2007 11/30/2007 12/3/2007 12/5/2007 12/6/2007 12/7/2007 12/13/2007 12/14/2007 12/17/2007 12/18/2007 12/19/2007 12/21/2007 12/24/2007 12/26/2007 12/27/2007 12/27/2007 12/28/2007 12/31/2007 1/2/2008 1/3/2008 1/4/2008 1/4/2008 1/7/2008 1/11/2008 1/11/2008 1/14/2008 1/15/2008 1/16/2008 1/17/2008 1/17/2008 1/18/2008 1/21/2008 1/22/2008 1/22/2008 1/24/2008 1/25/2008 Total Source: Bursa Malaysia Shares Bought (m) 0.80 0.26 0.78 0.97 0.12 0.88 2.82 1.36 0.01 0.07 0.17 0.54 0.00 0.79 1.22 0.29 0.75 0.67 1.05 0.55 0.40 3.69 0.63 0.47 4.27 1.28 1.69 2.04 2.10 0.39 9.30 1.13 2.00 0.94 0.30 6.64 2.37 2.45 2.44 2.48 1.05 2.97 2.58 67.71 Lo 2.48 2.51 2.52 2.51 2.51 2.50 2.48 2.53 2.62 2.76 2.82 2.81 2.80 2.76 2.58 2.61 2.60 2.52 2.51 2.54 2.50 2.51 2.54 2.55 2.58 2.60 2.58 2.50 2.60 2.64 2.58 2.64 2.61 2.58 2.55 2.64 2.56 2.48 2.51 2.48 2.46 2.49 2.48 Price (RM) Hi 2.51 2.54 2.55 2.54 2.53 2.53 2.55 2.55 2.62 2.80 2.83 2.83 2.80 2.83 2.60 2.62 2.62 2.54 2.54 2.57 2.54 2.62 2.60 2.59 2.70 2.64 2.64 2.60 2.69 2.69 2.70 2.68 2.62 2.62 2.59 2.70 2.60 2.57 2.58 2.62 2.49 2.53 2.53

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Company Focus

YTL Power

Higher FY07 dividend. For FY07, YTLP has declared two tax exempt dividends of 3.75 sen per share, together with final gross dividend of 5 sen. This translates to attractive net dividend yields of 4.5%, against 3.6% for FY06. YTLP also recently completed a 1-for-25 share distribution on 7 Jan 08 (refer to Fig.7). The combined FY07 net dividend yield based on share price of RM2.50 amounts to 21.2 sen (11.2 sen + 10.0 sen) or net yield of 8.5%. Fig.7: Growing dividend with share distribution
Cash div (sen) Net div yield (%) @RM2.50 Distribution Net yield from distribution @RM2.50 Total net yield (%) Source: Company FY03 10.0 4.0 1-for-50 2.0 6.0 FY04 10.0 4.0 1-for-25 4.0 8.0 FY05 10.0 4.0 FY06 10.0 4.0 1-for-25 4.0 8.0 FY07 11.2 4.5 1-for-25 4.0 8.5

4.0

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Company Focus Valuation

YTL Power

We initiate coverage on YTLP with a Buy recommendation and SOP-derived target price of RM3.00/share. Our SOP valuation values YTLPs Wessex investment at RM17.8b based on 1.4x 2006/07 RAB of 1,987. We have applied 1.2x RAB valuation for YTLPs 35% investment in ElectraNet based on management indicative RAB of A$1b. As for PT Jawa and Malaysian IPPs, we value them using DCF valuation based on WACC of 14% and 9% respectively. Our SOP valuation assumes full conversion of 2000/2010 warrants but we have yet to factor in any dilution impact from the proposed 2.2m new warrants which was announced on 16 Nov 07. Apart from capital upside of 19%, YTLP also offers attractive net dividend yield of up to 8.5%. YTLP has declared net dividend of 11.2 sen per share and a 1-for-25 share distribution for 2007. The combined FY07 net dividend yield based on share price of RM2.50 amounts to 21.2 sen or net yield of 8.5%. Given the improving cashflow from its water and power assets, we expect YTLP to maintain net dividend per share of 11.2 sen for FY08-09, with potential share distribution from its share buyback programme. The groups aggressive share buyback programme over the last two months is also a good indication that the share distribution for 2008 is on the cards. YTLP is one of the few companies listed on the Bursa Malaysia that has demonstrated a steady yield and commendable growth. YTL Powers acquisitions over the last five years including Wessex Water, Jawa Power and Electranet, resulted in commendable FY05-07 net profit CAGR of 28%. YTLP has also declared average net dividend yields of 8.3% over the past two years, thanks to a combination of cash and share distribution in specie. We believe YTL Power is well poised for further value-accretive acquisitions of regulated assets in the region given its gross cash of RM6b. We envisage reduced competition especially from private equity firms, particularly when the subprime crisis is raising required rate of returns. Apart from its expansion in Indonesia, other potential new assets under consideration are new water concessions in Malaysia and Gencos asset in Singapore. There is also scope for YTL Power to leverage on Wessex Waters expertise to gain entry into Malaysias water concessions business. YTLP has recently proposed to raise RM2.2b bond to refinance existing debts and to fund potential new acquisition. Fig 8: YTLPs sum of parts
Stak e (%) Wessex Water, UK ElectraNet, South Australia DCF for Jawa Power, Indonesia 100.0 35.0 35.0 RCV RMm 12,716. 8 2,900.0 Value RMm 17,803.5 3,480.0 1,272.5 3,427.8 614.4 1,236.8 (8,025.2) 19,809.8 6,683.9 2.96 SOP/shr RM 3.35 0.65 0.24 0.65 0.12 0.23 Remarks

DCF for Paka and P.Gudang IPP 100.0 Other investments Cash from warrant conversion Net cash/(debt) SOP FD shares capital (m)* SOP per share (RM) Source: Company, DBS Vickers * assumes full conversion of 2000/2010 warrants

Assuming RM6.40/ and 1.4x RCV Assuming RM2.90/A$ and 1.2x RCV Based on WACC of 13.7% (Ke-18%, Kd13%) Based on WACC of 9.1% (Ke-10.2%, Kd- 4%) Based on 8x FY07 PER

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Company Focus
Fig 9: YTLPs regional peer comparison Company YTL Power International Tenaga Nasional MMC Energy American Electric Power Co Tata Power Kansai Chubu Electric Lanco Infratech GVK Power & Infrastructure CLP Holdings Contact Energy GD Power Development Hongkong Electric Holdings Korea Electric Power (Kepco) Shenergy Company Limited Shenyang Jinshan Energy Sichuan Chuantou Energy Xinjiang Tianfu Thermoele Tokyo Electric Power First Philippine Holdings Average
Source:, DBS Vickers, Bloomberg

YTL Power

Currency MYR MYR MYR USD INR JPY JPY INR INR HKD NZD CNY HKD KRW CNY CNY CNY CNY JPY PHP

Mkt Cap (US$) 4142.44 11931.91 4047.59 17048.26 6718.54 22883.10 19240.05 2844.43 2188.17 18571.28 3294.41 5792.04 11628.99 25479.51 6461.54 820.75 2134.39 1675.22 33790.30 816.33

PE (x) FY08 15.4 10.6 17.1 13.4 40.5 23.8 21.7 28.8 57.1 13.9 19.0 28.3 12.9 11.0 24.4 25.3 86.9 56.8 -66.2 8.0 22.8

PE (x) FY09 15.2 10.0 14.8 12.5 36.3 17.7 19.1 18.4 44.0 13.8 16.9 23.2 12.4 9.7 21.4 17.9 62.6 39.4 81.6 7.6 25.2

ROE (%) 21.4 18.7 9.9 10.8 14.0 8.1 5.3 23.0 8.8 18.6 8.8 11.9 16.0 4.9 16.6 9.2 6.5 4.8 10.3 26.7 12.3

Div Yield (%) 4.5% 3.0% 0.8% 3.5% 0.8% 2.3% 2.3% 0.0% 0.4% 4.0% 3.7% 0.7% 4.4% 2.7% 2.0% 0.1% 0.0% 0.4% 2.6% 3.5% 1.9%

Fig 10: Segmental breakdown of YTL

FY Dec (m) Revenue Water & sewerage Power generation Investment holding 2368.74 1160.62 228.77 3758.13 EBIT Water & sewerage Power generation Investment holding 1005.8 523.2 78.3 1607.3 EBIT Margins (%) Water & sewerage Power generation Investment holding 42.5% 45.1% 34.2% 42.8% EBIT % Water & sewerage Power generation Investment holding Source:, DBS Vickers 62.6% 32.5% 4.9% 100.0% 74.4% 19.8% 5.8% 100.0% 76.9% 23.1% 0.0% 100.0% 78.4% 21.6% 0.0% 100.0% 80.1% 19.9% 0.0% 100.0% 82.0% 18.0% 0.0% 100.0% 9 of 12 52.1% 32.6% 36.6% 45.6% 54.2% 36.0% 0.0% 44.1% 52.8% 33.3% 0.0% 42.5% 51.1% 30.1% 0.0% 40.6% 49.4% 26.6% 0.0% 38.6% 1380.0 368.1 106.7 1854.8 1384.9 416.6 0.0 1801.5 1407.8 388.0 0.0 1795.8 1412.7 350.7 0.0 1763.4 1414.5 309.7 0.0 1724.1 2649.10 1127.57 291.34 4068.01 2556.05 1156.53 372.66 4085.25 2665.23 1164.57 391.29 4221.09 2763.08 1164.57 410.86 4338.51 2865.09 1164.57 431.40 4461.06 06 07 08F 09F 10F 11F

Company Focus Appendix

SWOT Analysis Strengths Good earnings visibility with stable concession earnings Proven earnings enhancing acquisitions Commendable track record in improving asset values Opportunities Cost saving from efficiency improvement in managing regulated assets Potential acquisition of new regulated assets given its gross cash of RM6b Leveraging on Wessexs expertise to bid for water concession and other related services in Malaysia River cleaning jobs in Malaysia
Source: DBS Vickers

YTL Power

Weakness Limited growth due to stable nature of regulated assets Exposure to currency fluctuation risk

Threats Potential unfavourable changes from PPA negotiation for Malaysia power assets. We believe that the negotiation is likely to be favourable to IPPs, given the agreed terms in PPA.

Fig.11 YTLPs Corporate structure YTL CORP 60% YTL Power and Utilities 100% 100% 35% 33.5%

YTL Power Generation Malaysia

Wessex Water United Kingdom

Jawa Power Indonesia

ElectraNet SA Australia

Source: Company

Fig. 12: Key Management Team

Board of Directors Tan Sri Dato Seri (Dr) Yeoh Tiong Lay Tan Sri Dato (Dr) Francis Yeoh Sock Ping Dato Yeoh Seok Kian Tan Sri Datuk Dr. Aris Bin Osman @Othman Tan Sri Dato Lau Yin Pin Dato (Dr) Yahya Bin Ismail Mej Jen (B) Dato Haron Bin Mohd Taib Dato Yeoh Soo Min Dato Yeoh Seok Hong Dato Micheal Yeoh Sock Sing Dato Yeoh Soo Keng Dato Mark Yeoh Seok Kah Syed Abdullah Bin Syed Abd. Kadir Source: Company Designations Executive Chairman Managing Director Deputy Managing Director Director Director Director Director Director Director Director Director Director Director

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YTL Power

Income Statement (RM m) FY Jun 2007A 2008F 2009F 2010F

Balance Sheet (RM m) FY Jun Net Fixed Assets Invts in Assocs & JVs Other LT Assets Cash & ST Invts Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholders Equity Minority Interests Total Cap. & Liab. 2007A 2008F 2009F 2010F

Turnover 4,068.0 4,085.2 4,221.1 4,338.5 Cost of Goods Sold (2,013.5) (1,618.7) (1,694.5) (1,772.3) Gross Profit 2,054.5 2,466.6 2,526.5 2,566.2 Other Opg (Exp)/Inc (203.0) (665.1) (730.7) (802.9) EBIT 1,851.3 1,801.5 1,795.8 1,763.4 Other Non Opg (Exp)/Inc 0.0 (25.9) (25.9) (25.9) Associates & JV Inc 185.1 239.9 244.1 251.1 Net Interest (Exp)/Inc (739.7) (572.2) (513.0) (463.4) Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 Pre-tax Profit 1,296.8 1,443.3 1,501.1 1,525.2 Tax (27.5) (346.4) (390.3) (396.6) Minority Interest 0.0 0.0 0.0 0.0 Preference Dividend 0.0 0.0 0.0 0.0 Net Profit 1,269.2 1,096.9 1,110.8 1,128.7 Net profit before Except. 1,084.4 1,096.9 1,110.8 1,128.7 EBITDA Sales Gth (%) EBITDA Gth (%) EBIT Gth (%) Effective Tax Rate (%) FY Jun Pre-Tax Profit Dep. & Amort. Tax Paid Assoc. & JV Inc/(loss) Chg in Wkg.Cap. Other Operating CF Net Operating CF Capital Exp.(net) Other Invts.(net) Invts in Assoc. & JV Div from Assoc & JV Other Investing CF Net Investing CF Div Paid Chg in Gross Debt Capital Issues Other Financing CF Net Financing CF Net Cashflow 2,624.9 8.2 13.8 15.2 2.1* 2007A 2,662.8 0.4 1.4 (2.7) 24.0 2008F 2,726.2 3.3 2.4 (0.3) 26.0 2009F 2,771.9 2.8 1.7 (1.8) 26.0 2010F

14,885.8 15,238.4 15,576.3 15,895.5 863.1 1,005.0 1,146.3 1,289.3 1,109.6 1,109.6 1,109.6 1,109.6 6,010.8 6,252.5 7,006.4 7,758.9 1,134.0 2,388.7 2,443.1 2,493.1 24,002.9 25,994.3 27,281.7 28,546.5 1,033.0 1,325.0 1,632.0 1,954.0 1,063.9 1,910.7 2,050.3 2,158.0 13,022.0 13,522.0 13,997.0 14,448.2 2,756.8 2,756.8 2,756.8 2,756.8 6,127.1 6,479.3 6,845.3 7,229.2 0.0 0.0 0.0 0.0 24,002.9 25,994.3 27,281.7 28,546.5

Non-Cash Wkg. Cap Net Cash/(Debt)

70.1 478.0 392.8 335.1 (8,044.2) (8,594.5) (8,622.6) (8,643.4)

Cash Flow Statement (RM m) 1,296.7 1,443.3 1,501.1 1,525.2 588.5 647.4 712.1 783.3 27.5 (27.5) (346.4) (390.3) (185.1) (239.9) (244.1) (251.1) 0.0 (726.8) 41.4 51.4 (498.1) 0.0 0.0 0.0 1,229.6 1,096.5 1,664.1 1,718.5 (1,097.6) (1,000.0) (1,050.0) (1,102.5) 278.2 292.1 306.7 322.0 0.0 0.0 0.0 0.0 93.3 98.0 102.9 108.0 327.4 0.0 0.0 0.0 (398.7) (609.9) (640.4) (672.4) (746.7) (744.8) (744.8) (744.8) 2,113.8 500.0 475.0 451.3 0.0 0.0 0.0 0.0 (927.8) 0.0 0.0 0.0 439.3 (244.8) (269.8) (293.5) 1,270.2 241.7 753.8 752.5

Rates & Ratios FY Jun Gross Margin (%) EBITDA Margin (%) EBIT Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Interest Cover (x) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Capex to Debt (%) N.Cash/(Debt)PS (sen) Opg CFPS (sen) Free CFPS (sen) PE Chart (x) 2007A 50.5 64.5 45.5 31.2 21.4 5.5 13.1 58.7 2.5 48.1 219.1 28.5 3.4 3.3 1.3 7.8 (120.4) 18.4 2.0 2008F 60.4 65.2 44.1 26.9 17.4 4.4 9.4 67.9 3.1 52.1 285.2 46.5 2.7 2.6 1.3 6.7 (128.7) 27.3 1.4 2009F 59.9 64.6 42.5 26.3 16.7 4.2 8.7 67.0 3.5 102.4 338.8 55.9 2.6 2.5 1.3 6.7 (129.1) 24.3 9.2 2010F 59.1 63.9 40.6 26.0 16.0 4.0 8.3 66.0 3.8 102.7 344.0 56.8 2.5 2.4 1.2 6.7 (129.4) 25.0 9.2

Quarterly / Interim Income Statement (RM m) FY Jun 2Q2007 3Q2007 4Q2007 1Q2008 Turnover Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc EBIT Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Net Profit Net profit bef Except. 976.6 (523.1) 453.5 (55.4) 398.1 0.0 49.9 (161.4) 0.0 286.7 (64.5) 0.0 222.2 222.2 964.6 (542.3) 422.3 103.1 525.4 0.0 48.3 (191.8) 0.0 381.9 (76.2) 0.0 305.7 305.7 1,167.5 (437.1) 730.4 (208.9) 521.5 0.0 42.7 (218.4) 0.0 345.7 174.8 0.0 520.5 520.5 1,038.3 (555.4) 482.9 (21.6) 461.3 0.0 45.6 (189.1) 0.0 317.8 (82.7) 0.0 235.1 235.1

18.0 16.0 14.0 12.0 10.0 8.0 2004

EBITDA 448.1 573.8 564.1 506.9 Sales Gth (%) 1.8 (1.2) 21.0 (11.1) EBITDA Gth (%) (1.3) 28.1 (1.7) (10.1) EBIT Gth (%) (2.9) 32.0 (0.8) (11.5) Gross Margins (%) 46.4 43.8 62.6 46.5 EBIT Margins (%) 40.8 54.5 44.7 44.4 Source: Company, DBS Vickers *due to deferred tax adjustment in FY07

2005

2006

2007

2008

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Company Focus

YTL Power

This document is published by HWANGDBS Vickers Research Sdn Bhd (HDBSVR) (formerly known as HwangDBS Vickers Research Sdn Bhd), a subsidiary of HWANGDBS Investment Bank Berhad (HDBS) (formerly known as Hwang-DBS Securities Berhad) and an associate of DBS Vickers Securities Holdings Pte Ltd (DBSVH). The research is based on information obtained from sources believed to be reliable, but we do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. HDBSVR accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. DBS Vickers Securities Holdings Pte Ltd is a wholly-owned subsidiary of DBS Bank Ltd. DBS Bank Ltd along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. HDBSVR, HDBS, DBSVH, DBS Bank Ltd, and their associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other banking services for these companies. HDBSVR, HDBS, DBSVH, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc (DBSVUSA), a U.S.-registered broker-dealer, may beneficially own a total of 1% or more of any class of common equity securities of the subject company mentioned in this document. HDBSVR, HDBS, DBSVH, DBS Bank Ltd and/or other affiliates of DBSVUSA may, within the past 12 months, have received compensation and/or within the next 3 months seek to obtain compensation for investment banking services from the subject company. DBSVUSA does not have its own investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively. DBS Vickers Securities (UK) Ltd is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in the UK is intended only for institutional clients.

Wong Ming Tek, Head of Research

Published and Printed by HWANGDBS Vickers Research Sdn Bhd (128540 U) (formerly known as Hwang-DBS Vickers Research Sdn Bhd) Suite 26-03, 26th Floor Menara Keck Seng, 203, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia. Tel.: +603 2711-2222 Fax: +603 2711-2333 email : general@hwangdbsvickers.com.my

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Traders Spectrum Wired Daily Daily Focus

Malaysia Equity Research PP 12941/7/2008 30 Jan 2008

Wired Daily
Previous days action: Malaysia Market Roundup
Index Performance

KLCI FBM30 FBM Emas FBM Second Board FBM Mesdaq Leading KLCI Movers RHB Capital Public Bank Astro Trading Activity

High 1394.41 9162.08 9464.53 6552.82 5788.03

Low 1382.41 9062.75 9375.10 6449.87 5687.99

Volatility (pts) 12.00 99.33 89.43 102.95 100.04

Close 1388.50 9117.58 9430.57 6552.82 5740.64 Lagging KLCI Movers

Chg (pts) 7.96 54.83 55.47 102.95 25.09

Chg (%) 0.6 0.6 0.6 1.6 0.4

Close (RM) 5.50 11.30 3.70

Chg (%) 7.8 1.8 8.8

Index point 1.59 1.31 1.07

Sime Darby Petronas Gas YTL Corp Market Breadth

Close (RM) 11.60 10.40 7.55

Chg (%) -2.5 -1.9 -1.9

Index point -3.34 -0.73 -0.46

Volume (m units) Value (RMm) Avg price/unit(RM)

Previous day 787.4 1454.6 1.85

2 days before 727.2 1395.0 1.92

5-day mov average 1139.9 2432.1 2.13

Gainers: Losers: Unchanged:

Previous day 463 301 259

2 days before 168 665 186

Top gainers (by %) over the past 5 market days Close (RM) Chg (%) Silver Bird 1.00 44.9 Microlink Solution 0.40 33.3 Formis Resources 0.75 32.7 MMS Ventures 0.25 22.5 FACB Industries 0.85 21.4 KLCI Futures Close Spot month Feb-08 Mar-08 Jun-08 1385.00 1383.00 1380.00 1369.50 Previous day 1383.50 1384.00 1383.50 1375.00 Chg (%) 0.1 -0.1 -0.3 -0.4

Top 5 losers (by %) over the past 5 market days Close (RM) Chg (%) Nikko Electronic 0.22 -37.7 mTouche Tech 0.51 -34.0 Binaik Equity 0.67 -30.9 Key West Global 0.09 -26.1 Vitrox Corp 0.65 -24.6 Currencies & Commodities Close RM per 1 USD RM per 1 Euro RM per 100 Yen CPO 3-mth fwd (RM/t) Crude Oil (US$/b) 3.24 4.78 3.02 3,200 95.49 Previous day 3.24 4.79 3.03 3,150 94.94 Chg (%) -0.1 -0.2 -0.3 1.6 0.6

Today's Market Preview The benchmark Kuala Lumpur Composite Index or KLCI on our Malaysian bourse will likely stage another attempt to challenge the 1,400 resistance level today. With speculation of general election getting hotter by the day and against a backdrop of stable overseas performances, we reckon bargain hunters may be tempted to come in and provide short-term market support. Overnight, key equity bellwethers on Wall Street extended their recoveries, adding between 0.3% and 0.8% at the closing bell. While there was disappointment on the absence of fresh details on the proposed US$150b economic stimulus package in the State of the Union address by the U.S. President, investors are looking forward to an interest rate cut by the policy-makers later tonight to boost confidence in the economy as well as the financial markets.

Malaysia Research Team 603-2711 2222 Refer to important disclosures at the end of this report.

Wired Daily

Off-market Transactions on Bursa Malaysia (Top 10 Trades by Volume)

29-Jan-2008 Volume (units) Value (RM) Average price (RM) 1.50 3.80 0.73 1.00 5.60 0.35 0.85 0.43 2.45 1.44 Types

HDISPLY PELIKAN BJCORP-LC SIGN BJLAND WINSUN SDRED APLAND REXIT MAEMODE
Cn Crossings Co Crossings odd lots

5,888,000 3,304,400 3,000,000 2,349,441 2,000,000 1,676,471 1,420,000 1,208,700 1,000,000 776,500

8,832,000 12,556,720 2,190,000 2,349,441 11,200,000 586,765 1,199,900 519,741 2,450,000 1,117,333

Mn Mn Mn Mo Cn Mn/Mo Mn Mn Cn Cn

Mn Married deal Mo Married deals odd lots

IPO Corner
Stock Offer Closing Date
18-Jan-08

Issue Price Number of Shares (RM/share) Public Offer For Issue Sale
RM0.40 ^ 202.0m -

Listing Sought
Mesdaq

Expected Date of Listing

31-Jan-08

Principal Activity
Designs and manufactures IC for electronics or system companies. Manufacture plastic packages (for food and beverage, pharmaceutical, hardware, electronic and electrical industries) and extrusion or plastic sheets. Property developer. Provision of advance reproduction techniques, animal husbandry, farming proliferations and farm advisory to agriculture, food, biologics and pharmaceuticals industries as well as research institutions. Sarawak-based shipbuilder Sarawak-based shipbuilder Infrastructure construction. Gloves manufacturer. Manufacturer of hard disk components. Road maintenance unit of Bumi Highway Bhd.

Key ASIC Bhd

SCGM Berhad

15-Feb-08

RM0.78

12.0m

24.0m

Second

28-Feb-08

TTDI Development Sdn Bhd Genetic Improvement and Farm Technologies

t.b.a. t.b.a.

t.b.a. t.b.a.

t.b.a. t.b.a.

t.b.a. t.b.a.

t.b.a. Mesdaq

2008 2008

Nam Cheong Dockyard Sealink Sdn Bhd Bright Focus Hartalega Holdings JCY Holdings Mainfield Corp

t.b.a. t.b.a. t.b.a. t.b.a. t.b.a. t.b.a.

t.b.a. t.b.a. t.b.a. t.b.a. t.b.a. RM1.05

t.b.a. t.b.a. 104.0m t.b.a. t.b.a. 22.0m

t.b.a. t.b.a. t.b.a. t.b.a. 41.0m

t.b.a. t.b.a. Main Main Main Main

2008 2008 t.b.a. t.b.a. t.b.a. t.b.a.

^ Retail price is subject to a refund in the event that the final retail price is less than RM0.40. The final retail price will equal the institutional price, which will be determined by way of bookbuilding. t.b.a. to be advised

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Wired Daily

Regional Markets Snapshot

Indices Close as at % chg vs. 29-Jan-08 previous close 1,388.5 0.6 52-wk High 1,524.7 52-wk Low 1,090.4 YTD (%) (3.9)

Substantial Shareholders Transactions*

Co/Shldr Shares/Transaction Date/ Price 26.12.07 -22.01.08 n.a. 8.01.08 -22.01.08 n.a. 22.01.08 (4,920,200) (Sell) n.a. 17.01.08 -22.01.08 n.a. 16.01.08 -22.01.08 n.a. 2.01.08 -22.01.08 n.a. 17.01.08 -25.01.08 2,184,300 Buy n.a. 21.01.08 -22.01.08 n.a. 21.01.08 -22.01.08 n.a. 21.01.08 -22.01.08 n.a. 17.01.08 -18.01.08 n.a. 21.01.08 n.a. 16.01.08 -22.01.08 n.a. 21.01.08 -22.01.08 n.a. 25.01.08 n.a.

Malaysia KLCI Asian FSSTI Straits Times SET Jakarta Comp Philippines SE Hang Seng HS China Entr Taiex Kospi Nikkei 225 BSE Sensex U.S./Others DJIA S&P 500 Nasdaq FTSE 100

AMMB EPF Digi.com 3,049.9 754.9 2,607.8 3,224.2 24,291.8 13,379.2 7,576.4 1,637.9 13,478.9 18,091.9 0.3 1.4 1.0 0.6 1.0 0.4 1.2 0.7 3.0 (0.3) 3,831.2 924.7 2,838.5 3,896.7 31,958.4 20,609.1 9,859.7 2,085.5 18,300.4 21,206.8 2,746.7 650.1 1,663.4 2,875.0 18,659.2 8,426.8 7,306.1 1,357.9 12,572.7 12,316.1 (12.0) (12.0) (5.0) (11.0) (12.7) (17.0) (10.9) (13.7) (11.9) (10.8) EPF Gamuda FMR LLC & Fidelity Intl Ltd IJM Corp EPF IOI Corp 12,480.3 1,362.3 2,358.1 5,885.2 0.8 0.6 0.3 1.7 14,198.1 1,576.1 2,861.5 6,754.1 11,634.8 1,270.1 2,202.5 5,338.7 (5.9) (7.2) (11.1) (8.9) EPF KL Kepong EPF PPB Group Kuok Brothers Sdn Bhd Public Bank EPF SP Setia EPF Sunrise EPF Telekom EPF 3,109,200 Buy 2,294,000 Buy (2,386,000) (Sell) 10,701,000 Buy 3,214,800 Buy 3,209,700 Buy 2,745,400 Buy 3,606,600 Buy 6,693,237 Buy

Skim ASB Tenaga EPF Wah Seong EPF

(1,367,900)

(Sell)

3,991,300

Buy

2,300,000

Buy

Chan Cheu Leong ^ ^ Acquired shares via ESOS

2,000,000

Buy

*For stocks under our coverage only. 3 of 4

Wired Daily

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