Malaysia

PP 7767/09/2010(025354)

Corporate Highlights
New s Upda te

RHB Research 2 April 2010 Institute Sdn Bhd A member of the RHB Banking Group
Company No: 233327 -M

MARKET DATELINE

2 April 2010 Share Price Fair Value Recom : : : RM1.49 RM1.69 Outperform (Maintained)

Sunway Holdings
Secures RM88m KLCC Building Job

Table 1 : Investment Statistics (SUNWAY; Code: 4308) TurnFYE Dec 2009** 2010f 2011f over (RMm) 2,589.9 2,406.9 2,230.9 Net Profit (RMm 109.3 128.6 136.2 EPS# (sen) 13.6^ 21.4 22.7 Growth (%) (27.0)^ 69.8 5.9 PER (x) 11.8 7.0 6.6 FD EPS# (sen) 16.9 17.8 C.EPS (sen) 19.0 21.0

Bloomberg: SGW MK

Net P/CF (x)
8.7 13.4 17.6

P/NTA (x)
1.3 1.2 1.0

ROE (%)
9.5^ 15.4 14.0

Gearing (%)
0.6 0.6 0.5

GDY (%)
1.6 1.9 1.9

2012f 2,643.2 156.3 26.0 14.8 5.7 20.2 21.0 13.2 0.9 Main Market Listing /Non-Trustee Stock / Syariah-Approved Stock By The SC #Excluding EI **18M ^Annualised

13.9 0.4 1.9 * Consensus Based On IBES

Second project in FY12/10. Sunway has been awarded by KLCC Holdings a RM88m contract for the construction of Impiana KLCC (Phase 2), comprising a 3-storey car park podium and a 22-storey tower block. This is the second job Sunway has secured in FY12/10, boosting its outstanding construction orderbook by 4% to RM2.2bn (see Table 2). Assuming an EBIT margin of 5-7%, the latest contract will fetch a total EBIT of RM4.4-6.2m over the construction period of 19 months ending 2 Nov 2011. We are positive on the latest development.

Issued Capital (m shares) Market Cap(RMm) Daily Trading Vol (m shs) 52wk Price Range (RM) Major Shareholders: Tan Sri Jeffrey Cheah

600.9 895.3 1.0 0.63-1.56 (%) 43.3

♦ ♦ ♦

Forecasts. No change in our earnings forecasts that already assume Var to Cons (%) Sunway to secure RM1.5bn worth of new jobs in FY12/10. YTD, Sunway has PE Band Chart secured RM110m worth of new jobs. Risks to our view. The risks include: (1) New contracts secured in FY12/10-11 coming in below our target of RM1.5bn per annum; and (2) Rising input costs.
PER PER PER PER = = = =

FYE Dec EPS Revision (%)

FY10 +13

FY11 +8

FY12 +24

10x 8x 6x 4x

Risk appetite for construction stocks to improve. We are beginning to turn a little more upbeat on the sector, prompted largely by investors’ improving risk appetite for construction stocks following: (1) The massive underperformance of the sector vis-à-vis the market in 4Q2009 and 1Q2010; and (2) A better sector news flow and new expectations leading up to the announcement of the 10th Malaysia Plan (10MP) in June 2010. These may Relative Performance To FBM KLCI moderate negative elements such as: (1) The slow pace of the roll-out of public projects, shrinking margins and declining dominance of established players in large-scale projects locally; and (2) The not-so-rosy outlook and Sunway Holdings increased operating risks in key overseas markets (following the Dubai credit crisis, Dong’s devaluation and rising arbitration cases). Maintain Outperform. Indicative fair value is RM1.69 based on 10x fullydiluted FY12/10 EPS of 16.9sen, in line with our benchmark 1-year forward target PER for the construction sector of 10-14x.
FBM KLCI

Please read important disclosures at the end of this report.

Joshua CY Ng (603) 92802151 joshuang@rhb.com.my

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2 April 2010

Table 2: Outstanding Construction Orderbook Project Overseas Rihan Heights, Arzanah Development in Abu Dhabi, UAE (excluding M&E) Rihan Heights, Arzanah Development in Abu Dhabi, UAE (M&E) Pre-cast concrete components in Singapore Road projects in India Al Reem Island, Abu Dhabi Total Local Government office towers in Precinct 4, Putrajaya Hotel and office tower in Precinct 1, Putrajaya Impiana KLCC (Phase 2) South Klang Valley Expressway Piling & substructure works in Johor Bahru Others Total Grand Total ^60% share of RM925m Source: Company *75.1% share of RM314m 333 147 88 65 23 113 769 2,199 555^ 236* 398 138 103 1,430 Outstanding Works (RMm)

Table 3: Earnings Forecasts FYE Dec (RMm) FY09a* Turnover Turnover growth (%) EBITDA EBITDA margin (%) Depreciation Net Interest Associates EI 2,589.9 -5.3 178.8 6.9 -43.0 -54.0 72.2 0.0

FY10F 2,406.9 39.4 238.8 9.9 -45.1 -34.9 38.3 0.0

FY11F 2,230.9 -7.3 226.0 10.1 -47.4 -34.1 53.9 0.0 198.5 -45.3 153.2 -17.0 136.2

FY12F 2,643.2 18.5 250.0 9.5 -49.8 -33.1 53.9 0.0 221.0 -52.4 168.7 -12.3 156.3

Table 4: Forecast Assumptions FYE Dec FY10F Construction EBIT margin (%) New orderbook secured (RMm) 7.1 1,500

FY11F 6.9 1,500

FY11F 6.5 1,500

Pretax Profit 153.9 197.0 Tax -33.9 -42.0 PAT 120.1 155.0 Minorities -10.8 -26.4 Net Profit 109.3 128.6 *18M ^Annualised Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES
This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest in the securities mentioned by this report. This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report. RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any company that may be involved in this transaction. “Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors, officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

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2 April 2010
This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel. The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues. 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 strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks. Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months. Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months. Industry/Sector Ratings Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months. RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. securities, subject to the duties of confidentiality, will be made available upon request. Additional information on recommended

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