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

RHB Research Institute

RHB Equity 360°

11 March 2010 (Digi, Plantation, Gamuda; Technical: Berjaya Corp)

Top Story : Digi – iPhone a potential game changer? Outperform

Visit Note
- We recently met management and sensed that Digi could be willing to adopt a more aggressive stand in
terms of handset subsidies for the iPhone (as well as other smartphones).
- We suspect this could be due to potential factors such as its smaller subscriber base and 3G coverage. If
Digi decides to become aggressive in handset subsidies, we believe the other operators would likely follow
suit, potentially leading to a shift in the industry landscape. For now, we await further details on pricing.
- Meanwhile, management remained upbeat with the recent iPhone deal and believes that the rising
adoption of smartphones and wireless broadband would help drive data traffic ahead.
- Digi’s data revenue currently accounts for around 20% of mobile revenue, behind peers Celcom and Maxis
where the contribution is about 30-32.5%. This low base, however, suggests strong upside potential and
growth ahead for Digi.
- Finally, further details on Digi’s capital management would only be forthcoming in the coming quarters. In
the meantime, Digi’s move towards the payment of quarterly dividends should help provide investors a
steady and attractive income stream.
- We have fine-tuned our earnings forecasts, although the impact is relatively insignificant. DCF-derived fair
value of RM23.90 and Outperform call maintained.

Sector Update

Plantation : Neutral price forecasts amid positive monthly plantation statistics Overweight
Sector Update
- As expected, Malaysia’s CPO production continued to fall in Feb 10 by 12.4% mom and 2.6% yoy. Exports
also fell 11.6% mom but rose 2.7% yoy, resulting in lower closing CPO stock levels (-10.9% mom) to 1.78m
tonnes. Stock/usage ratio fell back to 9.5% (from 9.8% in Jan 10), nearing the 7-year average of 9.1% and
is expected to moderate further going forward.
- The speakers on second day of the 2010 POC proved to be more bearish than the first, with the exception
of one speaker, who had the most bullish forecast of all the speakers in the conference, expecting CPO
prices to touch RM3,500/tonne in 2010 and 2011/12, although he expects volatility to be seen in both
directions. We note that most of the price forecasts today are in line with our forecasts.
- Five recent developments affecting the palm oil industry last month: (1) South American soybean crops still
on track; (2) Eight vegetable oil production forecasts; (3) Supply problems for palm oil continue; (4) Crude
oil price on rising trend again; and (5) Further narrowing of discounts with soyoil and rapeseed oil.
- We maintain our average CPO price assumptions of RM2,500 for 2010 and RM2,700 for 2011. We
maintain our Overweight stance on the sector as a whole and reiterate our recommendation for investors to
stick with the more liquid stocks given the anticipated volatile market conditions in 2010. We maintain our
Outperform on IOIC, KLK, Sime Darby and CBIP, and Underperform on Genting Plantations and IJMP

Corporate Highlights

Gamuda : Acquiring a 60% stake in a property project in HCMC, Vietnam, for US$82.8m Underperform
Briefing Note
- Gamuda is acquiring a 60% stake in Tan Thang from Sacomreal for US$82.8m (RM273m). Tan Thong
holds the development rights for a piece of land measuring 204 acres in HCMC, Vietnam. The land will be
developed into a township with a total GDV of RM6bn over seven years.
- Gamuda is getting itself a much better deal as compared with Yenso Park as it only signed on the dotted
line after key approvals for the project from the authority were secured. Sacomreal will plough back
US$66.2m as “shareholders loan” to the venture for working capital.
- We are positive on the latest development but we do not believe it is the re-rating catalyst the market is
looking for. We believe investors still want to first see the “first oil” from Gamuda’s investment in Vietnam,
 that has so far still been elusive.
- We continue not to reflect in our numbers any earnings contribution from both the property projects in
Vietnam as their maiden launches may still subject to delays due to various issues.
- Fair value is RM2.12. Maintain Underperform.

Technical Highlights

Daily Trading Strategy : Resumption of upswing momentum …

- Surprisingly, the FBM KLCI resumed its rally with a fresh buying momentum on firm rotational play, and
pumped up to a fresh 2-year high.
- With the resumption of strong bullish momentum, the index could head north instead of pulling back to
cover the technical gap near 1,300.
- In fact, it is due to cover the upper technical gap near 1,354.79 formed in Feb 2008.
- If the index removes the gap on strong follow-through buying momentum, it will challenge the next upside
target at 1,390.
- For now, we see the immediate support near the lower technical gap at the 1,300.74 - 1,312.18 region,
followed by the 1,300 psychological level.

Daily Technical Watch: Berjaya Corporation – Further rally if it removes RM1.55 soon …
- 10-day SMA: RM1.345
- 40-day SMA: RM1.286
- Support: IS = RM1.33 S1 = RM1.20 S2 = RM1.06
- Resistance: IR = RM1.55 R1 = RM1.78 R2 = RM1.98

Bulletin Board

Co/Sector News Impact Recom

FDI HK’s Sun Bear Solar will reportedly invest
RM5.2bn on a solar glass manufacturing plant in
Kota Kinabalu Industrial Park, Sabah. The plant
is expected to be operational in 1Q2012. The
company will invest RM2.2bn on the first phase,
and a further RM3bn on expansion to house
bigger lines. The plant will eventually sit on a
120ha site. (Starbiz, Business Times)
TM TM will officially launch its HSBB retail service on
24 Mar. The initial four areas that will be covered
are Shah Alam, Subang Jaya, TTDI and
Bangsar. (Financial Daily)
Astro According to a reliable source, Usaha Tegas’
sale of its shares in Overseas Union Enterprise
to the Lippo group would not mean an amicable
deal for the Astro-Lippo case. (StarBiz)
While this appears positive for FDI, and would -
add to the significant investments already
committed to the solar cell industry (led by four of
the world’s largest solar cell manufacturers), we
are nevertheless concerned that the project may
be hampered by two issues i.e. Sabah’s labour
shortage and insufficient power generation
capacity.
This is within the time frame management had MP, FV =
guided. Our forecasts do not include revenue RM3.55
contribution from HSBB pending pricing details,
which would be announced on 24 Mar. In any
case, management had previously said that near-
term contribution from HSBB would not be
significant.
Neutral. We had previously expressed our UP, FV =
reservations whether Astro would be able to RM3.10
collect the arbitration award of US$230m in
proceedings against a number of entities in the
Lippo Group.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
None
 Going “ex” on 12 Mar
Goh Ban Huat Renounceable two-call rights issue with detachable warrants 12-Mar-10 -
Ho Wah Genting Renounceable rights issue with detachable warrants 12-Mar-10 -
Scomi Group Loan stock interest of 4% for ICSLS 12-Mar-10 -
Litrak Single tier interim dividend of 7 sen 12-Mar-10 23-Mar-10
IOI Corporation Interim single tier dividend of 7 sen 12-Mar-10 25-Mar-10
Mikro MSC 2nd interim single tier dividend of 1 sen 12-Mar-10 29-Mar-10
Efficient E-Solutions Special div of 1.35 sen + 2nd interim div of 0.15 sen, tax exempt 12-Mar-10 2-Apr-10
Cocoaland Holdings Interim dividend of 2.5 sen less 25% tax 12-Mar-10 6-Apr-10
Naim Holdings 2nd interim single-tier dividend of 5 sen 12-Mar-10 14-Apr-10

...For more details, see individual reports attached

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