Company Focus IOI Corporation

Bloomberg: IOI MK

|

Reuters: IOIB.KL

Malaysia Equity Research PP 11272/04/2010(023521)

12 Aug 2009

FULLY VALUED RM5.12 KLCI : 1,186.28
Price Target : 12-month RM 4.65 (Prev RM 4.40) Reason for Report : 4QFY09 results preview Potential Catalyst: Analyst Malaysia Research Team +603 2711 2222 general@hwangdbsvickers.com.my

Expect lower FX loss in 4QFY09
• 4QFY09 FFB volume fell 17.1% y-o-y, but IOI may book much lower translational FX loss • FY09-10F net profit is raised by 18.1% and 2.4% • Property segment valuation now based on RNAV; TP raised to RM4.65; Maintain Fully Valued. Still reeling from a wet 3QFY09. In 4QFY09, IOI’s own FFB production slid from an already low 3QFY09 when heavy rains in Sabah hampered harvesting and washed away pollen. We expect FFB yields to recover only in 1QFY10F, in line with seasonal peak productivity. Hence, for IOI, the 32% q-o-q jump in CPO prices in 4QFY09 was partially offset by lower volume. But margins for resourcebased manufacturing should have normalized in 4QFY09. Lower FX losses expected. We understand that IOI has close to RM1b in outstanding forward FX sale contracts from resource-based manufacturing. And since these were sealed when the Ringgit was stronger, the recent appreciation may not produce FX gains in 4QFY09. However, the group should book translational FX gains qo-q from its USD denominated debts. Reflecting this, FY09F translational FX losses are cut to RM79m from RM246m. Based on revised FY09F net profit of RM1,162m, 4QFY09 net profit should jump to RM666m. Property segment valuation revised. In our previous SOP valuation, IOI’s property segment was valued based on 8x PE. But we now believe this underestimates the market value of the group’s Singapore property developments. Consequently, we changed to RNAV valuation methodology to derive a revised target price of RM4.65. Reiterate Fully Valued rating. Despite the upgrade, we believe the stock price movement YTD has outpaced the anticipated 43% rebound in FY10F earnings. Coupled with potential dilution from a rights issue, the stock price is fundamentally demanding. We recommend waiting for a more attractive entry level.
At A Glance Issued Capital (m shrs) Mkt. Cap (RMm/US$m) Major Shareholders Progressive Holdings (%) EPF (%) Commonwealth Bank (%) Free Float (%) Avg. Daily Vol.(‘000) 6,268 32,094 / 9,145 39.2 9.3 5.1 46.4 10,009

Price Relative
RM 9 .0 0 8 .0 0 240 7 .0 0 6 .0 0 5 .0 0 4 .0 0 3 .0 0 2 .0 0 2005 90 2009 140 190 R e la tiv e In d e x 290

2006

2007

2008

IO I C o r p o r a t io n (L H S )

R e la t iv e K L C I IN D E X ( R H S )

Forecasts and Valuation
FY Jun (RM m) 2008A 2009F 2010F 2011F

Turnover EBITDA Pre-tax Profit Net Profit Net Pft (Pre Ex.) EPS (sen) EPS Pre Ex. (sen) EPS Gth Pre Ex (%) Diluted EPS (sen) Net DPS (sen) BV Per Share (sen) PE (X) PE Pre Ex. (X) P/Cash Flow (X) EV/EBITDA (X) Net Div Yield (%) P/Book Value (X) Net Debt/Equity (X) ROAE (%) Earnings Rev (%): Consensus EPS (sen):

14,665 3,428 3,095 2,232 2,232 36.9 36.9 53 36.2 14.8 136.7 13.9 13.9 12.9 10.2 2.9 3.7 0.3 27.7

14,462 2,123 1,779 1,162 1,162 19.3 19.3 (48) 18.9 8.1 131.5 26.5 26.5 22.5 16.5 1.6 3.9 0.3 13.9 18.0 21.9

15,318 2,748 2,356 1,658 1,658 27.4 27.4 42 27.0 10.6 148.1 18.7 18.7 16.6 12.5 2.1 3.5 0.2 18.7 2.2 27.4

16,899 2,801 2,414 1,696 1,696 28.0 28.0 2 27.6 10.8 164.1 18.3 18.3 16.1 12.1 2.1 3.1 0.1 17.1 (1.3) 30.2

ICB Industry : Consumer Goods ICB Sector: Food Producers Principal Business: IOI is an integrated plantation, with one of the highest yields in Malaysia, one of the largest oleochemical manufacturing capacities in the world, and a growing land bank.

Source of all data: Company, DBS Vickers, Bloomberg

Refer to important disclosures at the end of this report

HWANGDBS

Company Focus IOI Corporation

Investment summary We reiterate our Fully Valued call for IOI with a revised RM4.65 target price (proposed rights issue could reduce TP to RM4.35). This mainly reflects a change in property segment valuation based on RNAV, and higher contribution from the group’s resource-based manufacturing segment, although this is offset by lower plantation valuation due to smaller planting in Indonesia and higher beta (based on 2year historical estimate taken from Bloomberg). Despite our upgrade, we believe the counter has priced in the anticipated 43% recovery in FY10F earnings. Our recommendation is based on the following: 1. Limited growth until FY15F. IOI’s estates are almost fully planted, which means there will be limited volume growth and it could be prone to weather disruptions like in 2HFY09. The group’s expansion into Indonesia will not contribute meaningfully until FY15F. Between FY10F and FY15F, IOI’s earnings growth is expected to range between –3.1% and +6.3%. Insignificant value-add from Singapore properties. The group’s foray into the Singapore property market needs resources that could otherwise be allocated to expand its manufacturing business or for aggressive new planting. In total, we estimate the Sentosa Cove projects to add only RM73m to IOI’s value (assuming selling prices of S$2,500-2,600 psf), based on c.RM5.4b total project cost (IOI portion only). Potential dilution from rights issue. The group had previously been able to enhance shareholder value through capital repayment, special dividend and share buybacks. But its recent rights issue announcement will now be dilutive. If we include the additional 421m new shares, our target price would be reduced to RM4.35. We did not include the group’s remaining US$600m CB, as they are still comfortably out of the money given the exercise price of RM11.00/share.

7,000 ha in the current calendar year, from 10,000 ha planned earlier. Hence, we lowered group FY10F new planting assumption to 10,000 ha from 15,000 ha previously, as we expect the group to expedite new planting in 2H09 and 1H10F. We are retaining our 15,000 ha new planting assumption for FY11F. 2. Resource-based manufacturing. We understand that EBIT/MT for most of the group’s resource-based manufacturing businesses have recovered. While FY09F assumptions are unchanged; we upgraded FY10F refining sub-segment margin to 3.8% from 3%, and specialty-fats margin to 10% from 9%. However, we reduced capacity utilization rate for oleochemicals subsegment to 80% from 90%, as demand has not fully recovered for this sub-segment. Property. We revised our assumptions for selling prices at the group’s Sentosa Cove projects from S$1,600 psf to US$2,500 psf (Seascape – assumed to be launched in CY10F), and from S$1,700 psf to S$2,600 psf (Pinnacle – assumed to be launched in CY11F), in line with our Singapore property analyst forecasts. We also changed our valuation methodology for the group’s property holdings to RNAV (applied 30% discount). This resulted in the property fair value rising to RM0.65/share from RM0.17/share (based on 8x CY10F PE).

3.

2.

Upside risk to plantation segment contribution IOI’s FFB production in 4QFY09 fell 17% y-o-y, indicating that yields have yet to recover following heavy rains in Sabah in the last two quarters. With rains washing away pollen, new flowers would still need c.6 months to bear fruit. Assuming similar conditions prevail in most of Sabah, yield recovery could be slower than normal. While yields should recover over the next two quarters due to seasonality, we understand that the recent dryness could still result in smaller fruits. Based on a recent report by NOAA, dry conditions are expected to continue for the remainder of the year, peaking in Nov 09 and Feb 10. Potentially higher CPO prices in 1HFY10F would lift IOI’s selling prices. However, as we have seen, IOI may not benefit fully by boosting volume.

3.

Forecasts revised We made the following changes to our forecasts to account for recent developments as well as changes to our property assumptions: 1. Plantations. We understand that the group is scaling down new planting in Indonesia to between 5,000 and

Page 2

HWANGDBS

Company Focus IOI Corporation

Valuation updated After imputing lower FFB volume assumption for this quarter and slower expansion in Indonesia, we cut our plantation DCF value (WACC 10.6%, terminal growth rate 3%) by 16% to RM23.1b. To arrive at the DCF valuation, we employed the group’s consolidated debts less property segment debts. Based on 30% discount to RNAV, we now value the group’s property segment (Malaysia and Singapore) at RM5.7b. We also raised EV/planted value of the group’s 33% stake in BGA Group in Indonesia to US$9,000 from US$6,000, based on average value of Indonesian estates EV/ planted. These changes produced a revised target price of RM4.65. Given the potential issue of additional 421m shares under its recently proposed rights issue, our target price could be lowered to RM4.35.

DCF valuation of plantations segment
Cost of debt Tax rate Kd Cost of equity Risk free rate (Rf) Market return rate (Rm) Beta (ß) Risk premium (Rm-Rf) Ke Free cash flow (RM m) Operating profit Tax Op. profit after tax Amortisation & depreciation Gross cash flow Capital expenditures Incremental working capital Free cash flow 25.0% 2.4% WACC (%) Equity portion of capital Ke Debt portion of capital Kd WACC Terminal value Implied perpetual growth rate 85.4% 12.0% 14.6% 2.4% 10.6%

5.0% 10.0% 1.4 5.0% 12.0% 2010 2,068.8 -517.2 1,551.6 259.1 1,810.7 -137.7 -110.5 1,562.6 2011 2,146.5 -536.6 1,609.9 283.9 1,893.8 -164.2 -265.3 1,464.3 2012 2,121.1 -530.3 1,590.9 301.7 1,892.5 -195.3 -98.2 1,599.0

3.0%

2013 2,149.7 -537.4 1,612.3 314.3 1,926.6 -216.8 -143.2 1,566.5

2014 2,232.0 -558.0 1,674.0 319.8 1,993.7 -148.7 95.6 1,940.6

2015 2,402.3 -600.6 1,801.8 330.6 2,132.3 -91.3 -5.7 2,035.4

2016 2,638.7 -659.7 1,979.0 336.3 2,315.3 -41.6 -10.5 2,263.2

2017 2,903.5 -725.9 2,177.6 342.8 2,520.4 -34.6 -19.4 2,466.5

2018 3,144.6 -786.2 2,358.5 286.4 2,644.9 -26.4 -24.4 2,594.1

2019 3,404.7 -851.2 2,553.5 152.9 2,706.4 -26.5 -18.4 2,661.5

2020 3,603.7 -900.9 2,702.8 152.5 2,855.3 -28.4 -19.3 2,807.6

growth
PV of free cash flow Total PV of free cash flow PV of residual value Corporate value Shareholder value 1,562.6 13,590.0 13,479.3 27,069.3 23,110.8

-6.3%
1,323.9

9.2%
1,307.1

-2.0%
1,157.8

23.9%
1,296.8

4.9%
1,229.7

11.2%
1,236.3

9.0%
1,218.2

5.2%
1,158.4

2.6%
1,074.5

5.5%
1,024.8

Source: DBS Vickers estimates

HWANGDBS

Page 3

Company Focus IOI Corporation
RNAV of property segment
Dev. properties - Malaysia 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Lot 281, Bandar KL Bandar Puchong Jaya A, Petaling Bandar Puchong Jaya B, Petaling Bandar Puteri, Petaling IOI Resort, Sepang Dengkil, Sepang Bandar Putra, Senai-Kulai Tanjung Tokong, Penang Desaria, Penang Taman Lagenda Putra, Senai-Kulai Taman Kempas Utama, JB Others Usage Future dev. land Mix dev. Project Mix dev. Project Mix dev. Project Condo & bungalow Fuuture dev. land Mix dev. Project Residential dev. Residential dev. Mix dev. Project Mix dev. Project Various Land area Land area (ha.) (acres) 1.5 3.8 4.0 9.9 25.0 61.8 98.0 242.2 14.0 34.6 217.0 536.2 808.0 1,996.6 1.8 4.4 21.0 51.9 37.0 91.4 47.0 116.1 1,646.1 4,067.7 2,920.4 7,216.5 Land area (sf) 163,934 430,556 2,690,973 10,548,616 1,506,945 23,357,650 86,972,262 189,628 2,260,418 3,982,641 5,059,030 177,188,568 314,351,219 Fair mkt value (RMm) 98.4 21.5 134.5 527.4 37.7 280.3 608.8 28.4 45.2 89.8 101.4 157.3 2,130.8 Fair mkt value (RM/sf) 600.0 50.0 50.0 50.0 25.0 12.0 7.0 150.0 20.0 22.6 20.0 0.9 NBV (RMm) 50.6 1.3 117.9 280.1 48.8 177.0 306.1 15.3 4.7 89.8 101.4 157.3 1,350.3

Dev. properties - Singapore 50% 65% Seascape, Sentosa Cove Pinnacle, Sentosa View

Usage Residential dev. Residential dev.

Net saleable Total land area cost (sf) RM 320,893 1,101.3 572,240 2,628.5 893,133

Effective fair mkt value (RMm) 702.6 1,629.2 2,331.8

GDV (RMm) 1,908.6 3,540.9 5,449.5

GDC (RMm) 1,604.7 3,663.0 5,267.7

Surplus (RMm) 304.0 -122.1

Effective Surplus (RMm) 152.0 -79.4 72.6

Investment properties 100% 100% 100% 100% 100% 100% 100% 100% IOI Mall Puchong IOI Business Park Puchong One & Two IOI Square IOI Plaza Singapore IOI Resort Sepang IOI Resort Putrajaya IOI Mall, Bandar Putra Kulai Others

Usage Retail 37 commercial lot 12-story office 12 storey office Hotel & office 33 res. bungalows 3 storey retail Various

Net Net leaseable leaseable Net leaseable area area area (sqm) (acres) (sf) 58,507 14 629,764 34,111 8 367,168 30,969 8 333,348 8,658 2 93,194 60,000 15 645,835 24,718 6 266,062 22,642 6 243,716 1,962,365 485 21,122,721 2,201,970 544 23,701,808 Fair mkt value of property assets Discount applied Shares in issue (net of treasury) Fair mkt value/IOI share

Fair mkt value (RMm) 377.9 165.2 150.0 200.9 119.0 75.0 61.6 117.3 1,266.9 5,729.5 30.0% 6,150.4 0.65

Fair mkt value (RM/sf) 600.0 450.0 450.0 2,155.5 184.3 281.9 252.8

NBV (RMm) 260.0 25.4 113.0 270.6 119.0 75.0 61.6 122.1 1,046.8

Source: Company, DBS Vickers

SOP valuation
Planted hectareage Plantation & resource-based manufacturing Properties 33% stake in BGA Add: Cash (consolidated) - end 03/09 Less: Debts (net of plantation & mfg) - end 03/09 SOP valuation Number of shares (m) Valuation method DCF RNAV US$9k EV/ha Value RM m 23,110.8 4,010.7 646.2 2,515.6 1,765.3 28,517.9 6,150.4 Value RM/share 3.76 0.65 0.11 0.41 0.29 4.65

65,300.0

Source: DBS Vickers estimates

Page 4

HWANGDBS

Company Focus IOI Corporation
Peer comparison
10F planted (own) (hectares) 256,159 103,476 Adjusted Adjusted 10F Market cap plantation EV EV/planted (m) (m) (own) US$ 3,507 US$ US$ 1,032 US$ 3,395 US$ 1,000 US$ 13,253 9,668 Target price

Land bank (hectares) Indonesia Astra Agro Lestari London Sumatra* Malaysia Genting Plantations IJM Plantations IOI Corporation** KL Kepong Sime Darby TH Plantation TSH Resources Singapore First Resources Indofood Agri R. Kencana Agri N/A 134,499

Share price per 11/08/09 Rp Rp 22,150 7,650

Rec.

Basis

Hold Hold

Rp 16,525 DCF Rp 6,650 DCF

164,264 63,490 220,593 244,857 553,786 29,211 82,841

78,437 30,120 192,397 221,934 540,810 29,802 21,181

RM RM RM RM RM RM RM

5.89 2.80 5.12 12.78 8.31 1.57 1.80

US$ 1,270 US$ 512 US$ 8,596 US$ 3,888 US$ 14,230 US$ 218 US$ 212

US$ US$ US$ US$ US$ US$ US$

905 498 4,018 2,624 8,051 251 234

US$ US$ US$ US$ US$ US$ US$

11,535 16,548 20,884 11,825 14,887 8,413 11,059

Fully Valued Fully Valued Fully Valued Buy Sell Hold Fully Valued

RM 5.15 DCF RM 2.30 DCF RM 4.65 SOP RM 13.80 DCF RM 6.00 SOP RM 1.60 DCF RM 1.65 DCF

263,115 541,224 174,979

94,076 265,051 26,828

S$ S$ S$

0.96 1.67 0.31

US$ 976 US$ US$ 1,664 US$ US$ 214 US$

1,045 US$ 2,002 US$ 234 US$

11,109 Buy S$ 7,553 Buy S$ 8,733 Fully Valued S$

0.80 DCF 1.75 DCF 0.24 DCF

* Including rubber and other crops ** Excluding effective stake in associates land bank
FY07 Indonesia Astra Agro Lestari (Rp) London Sumatra (Rp) Simple average Malaysia Genting Plantations (sen) IJM Plantations (sen) IOI Corporation (sen) KL Kepong (sen) Sime Darby (sen) TH Plantation (sen) TSH Resources (sen) Simple average Singapore First Resources (Rp) Indofood Agri (Rp) Kencana Agri (US cents) Simple average 1,253 413 FY08 1,671 692 EPS FY09F 1,268 484 FY10F 1,325 590 FY11F 1,387 687 FY07 17.7 18.5 18.1 FY08 13.3 11.1 12.2 PER (x) FY09F 17.5 15.8 16.6 FY10F 16.7 13.0 14.8 FY11F 16.0 11.1 13.6

45.5 8.0 24.1 65.0 39.7 12.6 23.0

49.3 22.3 36.9 97.5 58.4 17.2 14.5

32.4 19.2 19.3 48.8 30.5 13.0 12.7

33.7 14.3 27.4 69.5 39.3 14.1 12.3

33.6 17.9 28.0 71.6 39.9 14.5 16.2

13.0 34.9 21.2 19.7 20.9 12.5 7.8 18.6

11.9 12.6 13.9 13.1 14.2 9.1 12.4 12.5

18.2 14.6 26.5 26.2 27.2 12.1 14.2 19.9

17.5 19.6 18.7 18.4 21.2 11.2 14.6 17.3

17.5 15.7 18.3 17.9 20.8 10.9 11.1 16.0

294 614 3.9

743 549 1.0

546 772 1.2

625 843 1.6

706 969 2.6

22.5 18.7 5.5 23.5

8.9 20.9 20.8 17.1

12.1 14.9 18.3 16.0

10.6 13.6 13.3 13.7

9.4 11.9 8.4 11.3

FY07 Indonesia Astra Agro Lestari London Sumatra Malaysia Genting Plantations IJM Plantations IOI Corporation KL Kepong Sime Darby TH Plantation TSH Resources Singapore First Resources Indofood Agri Kencana Agri 58.0 30.8

FY08 57.1 33.7

ROE (%) FY09F 35.8 19.2

FY10F 32.7 20.5

FY11F 30.5 20.5

FY07 1.9 1.0

Dividend yield (%) FY08 FY09F FY10F 4.4 2.0 3.3 3.0 3.8 4.0

FY11F 4.0 5.0

18.0 7.7 21.5 14.7 n/a 34.1 17.4

16.9 20.6 27.7 19.9 18.0 28.0 9.3

10.1 15.3 13.9 9.4 8.5 13.2 7.9

9.8 10.8 18.7 12.9 10.7 11.9 7.3

9.0 12.5 17.1 12.5 10.3 11.5 9.1

1.7 1.3 1.0 2.9 0.0 4.0 2.8

1.9 3.5 2.9 4.3 5.7 5.5 3.6

1.2 2.9 1.6 2.0 1.8 4.1 2.8

1.3 1.6 2.1 2.8 2.4 4.5 1.4

1.3 1.3 2.1 2.9 2.4 4.6 1.4

20.6 17.9 61.6

29.6 10.5 10.9

17.8 13.2 10.2

17.4 12.6 12.7

16.9 12.8 17.3

0.0 0.0 0.4

1.4 0.0 1.4

0.0 0.0 0.0

0.0 0.0 0.0

0.0 0.0 0.0

HWANGDBS

Page 5

Company Focus IOI Corporation
Peer comparison (continued)
FY07 Indonesia Astra Agro Lestari London Sumatra Malaysia Genting Plantations IJM Plantations IOI Corporation KL Kepong Sime Darby TH Plantation TSH Resources Singapore First Resources Indofood Agri Kencana Agri 8.6 4.5 FY08 6.8 3.2 P/BV (x) FY09F 5.8 2.9 FY10F 5.2 2.5 FY11F 4.6 2.1 FY07 NC 9.4% Net gearing (%) FY08 FY09F FY10F NC NC NC NC NC NC FY11F NC NC

2.2 2.5 4.1 2.8 2.9 3.8 1.2

1.9 2.3 3.7 2.5 2.3 1.9 1.1

1.8 2.2 3.9 2.5 2.3 1.4 1.1

1.6 2.1 3.5 2.3 2.2 1.3 1.0

1.5 1.9 3.1 2.2 2.1 1.2 1.0

NC 13.0% 9.5% 10.0% 2.2% NC 23.6%

NC NC 24.7% 9.8% NC NC 37.8%

NC NC 25.6% 9.8% 4.8% NC 40.6%

NC NC 17.9% 7.4% NC NC 42.3%

NC NC 12.8% 5.1% NC NC 41.1%

3.0 0.0 2.7

2.3 0.0 1.9

2.0 0.0 1.8

1.7 0.0 1.6

1.5 0.0 1.3

11.1% 37.1% 26.9%

17.6% 35.1% 15.1%

15.1% 37.1% 16.2%

6.7% 32.3% 13.0%

NC 26.9% 4.7%

Source: DBS Vickers estimates

Page 6

HWANGDBS

Company Focus IOI Corporation
Income Statement (RM m)
FY Jun 2008A 2009F 2010F 2011F

Balance Sheet (RM m)
FY Jun 2008A 2009F 2010F 2011F

Turnover Cost of Goods Sold Gross Profit Other Opng (Exp)/Inc Operating Profit Other Non Opg (Exp)/Inc Associates & JV Inc Net Interest (Exp)/Inc Exceptional Gain/(Loss) Pre-tax Profit Tax Minority Interest Preference Dividend Net Profit Net Profit before Except. EBITDA Sales Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Effective Tax Rate (%)
FY Jun

14,665 (10,705) 3,960 (788) 3,172 0 46 (123) 0 3,095 (683) (181) 0 2,232 2,232 3,428 63.8 39.8 54.1 50.6 22.1
2008A

14,462 (11,747) 2,715 (837) 1,878 0 18 (117) 0 1,779 (545) (72) 0 1,162 1,162 2,123 (1.4) (38.1) (40.8) (47.9) 30.6
2009F

15,318 (11,859) 3,459 (1,021) 2,438 0 50 (132) 0 2,356 (596) (103) 0 1,658 1,658 2,748 5.9 29.4 29.9 42.6 25.3
2010F

16,899 (13,311) 3,588 (1,122) 2,466 0 51 (104) 0 2,414 (612) (105) 0 1,696 1,696 2,801 10.3 1.9 1.1 2.3 25.4
2011F

Net Fixed Assets Invts in Associates & JVs Other LT Assets Cash & ST Invts Inventory Debtors Other Current Assets Total Assets ST Debt Other Current Liab LT Debt Other LT Liabilities Shareholder’s Equity Minority Interests Total Cap. & Liab. Non-Cash Wkg. Capital Net Cash/(Debt)

4,519 542 4,700 2,889 2,448 1,693 470 17,261 1,097 1,313 4,867 628 8,391 965 17,261 3,298 (3,075)

4,603 560 5,457 2,021 2,049 1,772 451 16,913 1,090 1,633 4,166 640 8,347 1,037 16,913 2,640 (3,235)

4,656 610 5,473 2,992 2,069 1,877 460 18,137 1,090 1,647 4,207 653 9,400 1,140 18,137 2,759 (2,305)

4,677 662 5,662 3,598 2,322 2,071 469 19,460 1,090 1,828 4,217 666 10,414 1,245 19,460 3,033 (1,710)

Cash Flow Statement (RM m)
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

Rates & Ratio
FY Jun 2008A 2009F 2010F 2011F

3,095 210 (683) (46) (1,274) 75 1,377 (290) (139) (215) 0 (1,427) (2,072) (315) 2,333 (1,244) 81 855 161

1,779 227 (545) (18) 640 19 2,101 (311) 0 0 0 (756) (1,067) (945) (708) (262) 13 (1,902) (868)

2,356 259 (596) (50) (111) (9) 1,850 (312) 0 0 0 (17) (328) (604) 41 0 13 (551) 971

2,414 284 (612) (51) (265) (9) 1,760 (305) 0 0 0 (189) (494) (683) 10 0 13 (660) 606

Quarterly / Interim Income Statement (RM m)
FY Jun 4Q2008 1Q2009 2Q2009 3Q2009

Gross Margins (%) Opg Profit Margin (%) Net Profit Margin (%) ROAE (%) ROA (%) ROCE (%) Div Payout Ratio (%) Net Interest Cover (x) Asset Turnover (x) Debtors Turn (avg days) Creditors Turn (avg days) Inventory Turn (avg days) Current Ratio (x) Quick Ratio (x) Net Debt/Equity (X) Net Debt/Equity ex MI (X) Capex to Debt (%) Z-Score (X) N. Cash/(Debt)PS (sen) Opg CFPS (sen) Free CFPS (sen)
FY Jun

Segmental Breakdown / Key Assumptions
2008A

27.0 21.6 15.2 27.7 14.4 17.2 40.6 25.8 0.9 36.0 34.2 65.7 3.1 1.9 0.3 0.4 4.9 4.2 (50.1) 43.8 17.9

18.8 13.0 8.0 13.9 6.8 8.3 44.2 16.1 0.8 43.7 41.5 64.9 2.3 1.4 0.3 0.4 5.9 4.2 (51.0) 24.3 29.7
2009F

22.6 15.9 10.8 18.7 9.5 11.5 40.6 18.4 0.9 43.5 46.5 64.8 2.7 1.8 0.2 0.2 5.9 4.3 (36.3) 32.4 25.4
2010F

21.2 14.6 10.0 17.1 9.0 10.8 40.6 23.8 0.9 42.6 44.1 61.5 2.9 1.9 0.1 0.2 5.8 4.5 (26.9) 33.4 24.0
2011F

Turnover Cost of Goods Sold Gross Profit Other Oper. (Exp)/Inc Operating Profit 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. EBITDA Sales Gth (%) EBITDA Gth (%) Opg Profit Gth (%) Net Profit Gth (%) Gross Margins (%) Opg Profit Margins (%) Net Profit Margins (%)

4,560 N/A N/A N/A 1,029 N/A 3 (39) N/A 994 (200) (59) 735 735 1,069 29.3 19.0 25.0 22.1 100.0 22.6 16.1

4,655 N/A N/A N/A 489 N/A 13 (39) N/A 463 (141) (31) 291 291 558 2.1 (47.8) (52.5) (60.5) 100.0 10.5 6.2

3,727 N/A N/A N/A 386 N/A (13) (39) N/A 333 (151) (14) 169 169 426 (19.9) (23.7) (21.0) (42.0) 100.0 10.4 4.5

3,096 N/A N/A N/A 198 N/A (10) (46) N/A 141 (83) (21) 37 37 249 (16.9) (41.5) (48.7) (77.8) 100.0 6.4 1.2

Revenues (RM m) Plantation Property Resource-based Others Total EBIT (RM m) Plantation Property Resource-based Others Total EBIT Margins (%) Plantation Property Resource-based Others Total Key Assumptions CPO price (RM/MT) Mature palm oil hectarage CPO sales volume (MT) Oleochem revenue (RMm) Average MYR/USD

236 826 13,479 124 14,665 1,836 552 658 126 3,172 66.1 66.8 4.9 N/A 21.6

327 607 13,402 126 14,462 1,624 261 196 (203) 1,878 64.0 43.0 1.5 N/A 13.0

293 637 14,260 129 15,318 1,332 240 737 129 2,438 58.8 37.7 5.2 N/A 15.9

298 934 15,536 131 16,899 1,282 242 865 78 2,466 55.5 25.9 5.6 N/A 14.6

Source: Company, DBS Vickers

2,582.2 2,300.0 2,315.0 2,300.0 139,097. 137,616. 137,940. 139,558. 848,119. 777,312. 835,192. 853,690. 2,557.3 2,385.2 2,385.2 2,436.8 3.3 3.5 3.6 3.5

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Company Focus IOI Corporation

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