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PP 10551/10/2009 (022563) April 3, 2009

MALAYSIA EQUITY Investment Research Daily News STRATEGY


Jeffrey Tan +60 (3) 9207 7633 jeffrey.tan@osk.com.my Jason Yap +60 (3) 9207 7698 jason.yap@osk.com.my Mervin Chow +60 (3) 9207 7668 mervin.chow@osk.com.my Norfauzi Nasron +60 (3) 9207 7644 norfauzi.nasron@osk.com.my Law Mei Chi +60 (3) 9207 7621 law.meichi@osk.com.my
Private Circulation Only

OSK JEWELS - 2009 Edition


The Spirit of Investing
We held an exclusive launch of the Top Malaysian Small Cap Companies Book (2009 Edition) at the Mandarin Oriental on March 31. As with previous launches, the Top 5 companies were invited for presentations in the morning followed by break-out sessions in the second half of the day. The five top companies selected for the latest edition are KPJ Healthcare, Kossan Rubber Industries, QL Resources, Wah Seong Corporation and Hektar REIT. KPJ was represented by Alvin Lee, its Chief Financial Officer, Kossan by Edward Yip, its Senior Manager, Corporate Affairs, Wah Seong by Deputy Managing Director Giancarlo Maccagno, and Hektar by Lim Ye Jhen, GM Strategy, Hektar Asset Management. The companies form part of the 50 small cap stocks with market capitalisation of under RM1bn featured in our popular investment compendium, now in its 5th year of publication.

Fig. 1: Registration and meet the corporates session

Fig. 2: Clients listening attentively during the corporate presentations

Source : OSK

Capacity crowd. The response for the event was overwhelming as more than 80 participants comprising portfolio managers and members of the buy-side community turned up. Most of our clients came by to gather fresh ideas and to learn how the companies are weathering the slowdown in the context of their respective industries. Most of the clients we acquainted with were very supportive of our continued commitment in the small cap space and like our Top 5 picks given their safe haven characteristics, supported by promising dividends and resilient business models. The selection this year provides exposure to the consumer, oil & gas, rubber gloves and healthcare sectors.
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KEY HIGHLIGHTS
Table 1: OSK Top 10 Small Cap Companies 2009 Edition Companies Alam Maritim Hai-O Enterprise Hektar REIT Kossan Rubber KPJ Healthcare Malaysia Steel Works Mudajaya Group New Hoong Fatt QL Resources Wah Seong Sector Oil & Gas Consumer REIT Rubber Glove Healthcare Steel Construction Automotive Consumer Oil & Gas

PP 10551/10/2009 (022563) April 3, 2009

Target price BUY (RM) 1.40 4.16 0.99 4.48 4.00 1.03 1.58 1.80 3.32 1.93

Companies in bold denote OSK Top 5 picks for 2009

The 50 jewels. We reduced the number of companies featured in the latest edition to 50, which in our opinion make up the best-of-breed that are able to endure the economic storm and emerge from a position of strength. The 50 stocks, ranked according to their market capitalisation, ROE, FY09 PER and FY09 dividend yields, are depicted in Appendix 1-4 of this report. The majority of companies have market capitalisation ranging from RM100m-RM500m, which is not surprising considering that their share prices have lost an average of 36% over the past 12 months. Based on our earnings universe, their PER valuations are at an attractive 5-6x FY09/10 EPS. Nine companies belong to the top quadrant, returning in excess of 20% in terms of ROE while slightly more than half of the 50 stocks command dividend yields of over 5%. The top dividend yielding stocks (>10%) - Hektar REIT and Hai-O - are in our Top 5 and Top 10 picks respectively, with the latter providing one of the highest ROE in the consumer sector at 32%. We view the choice of the Top 5 companies as befitting the current uncertain economic environment as their business models are robust enough to withstand external pressures. All companies have been screened based on quantitative and qualitative scorecards with due consideration accorded to their financial and execution track records, and with focus on the quality of earnings. We believe the list of companies would appeal to a broad spectrum of investors with differing risk appetite and risk-reward profiles. Fig. 3: Group luncheon Fig. 4: Corporate presentation

Source : OSK

Good mix of consumer, oil & gas and thematic plays. Of the Top 5 companies, QL and Kossan Rubber are widely followed by the investment community given their recession-proof businesses consisting of mainstream consumables and essential goods. QL is poised for another year of uninterrupted revenue growth, repeating its untarnished 20-year track record since listing, buoyed by the extended growth of its marine product manufacturing (MPM) segment. Our consumer analyst, Law Mei Chi, has a BUY recommendation on the stock with a target price of RM3.32, valuing QL at 12.5x FY09 EPS. Kossan remains one of the most efficient manufacturers of nitrile rubber gloves (NRG) for the medical industry and among the biggest in the world. The focus on higher margin NBR gloves would underpin its growth going forward with margins set to further expand. Our analyst, Jason Yap, has a BUY recommendation on the stock with a target price of RM4.48. KPJ is OSKs top exposure to the healthcare sector given its expanding portfolio of hospitals nationwide and overseas. It currently operates the largest network of hospitals in the country (19 in total) and is looking to
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acquire more to drive longer term growth. We feel that the prospects of the healthcare sector in the country remains bright due to the scarcity of medical services. Our healthcare analyst, Norfauzi Nasron, is of the view that KPJ is a good BUY based on its undemanding and attractive prospective PERs of 6-7x with a target price of RM4.00. KPJ remains a sound and compelling exposure for investors looking for a strategic long-term investment. Our thematic exposure this year is Hektar REIT, the countrys maiden retail focused real estate investment trust (REIT). Our analyst, Mervin Chow, feels that Hektars fundamentals are under-appreciated as its business model is inherently more defensive (focusing on the non-discretionary consumer retail segment). Hektar is well supported by a generous dividend yield of 12% and trades at a 30% discount to its net asset value (NAV). He values the stock at RM0.99. As for Wah Seong, our oil and gas analyst, Jason Yap sees it as being well poised to capture a bigger slice of the worldwide pipe coating and compressor business, with a success rate of 30%-50% Its tenderbook currently stands at US$4bn. Jasons target price on the stock is RM1.93 or 9x FY10 EPS. Strong interest for KPJ, Wah Seong and QL. KPJ, Wah Seong and QL attracted the best response for their individual break-out sessions. While the sessions for Kossan and Hektar were more subdued, we gather that some fund managers had obtained updates from Kossans management through recent visits while clients were understandably more apprehensive over Hektars outlook given the slowdown in the economy. The investment community may also be more cautious on the Malaysian REIT setting given the flak received by some REITs in the region, specifically over re-financing, recapitalisation and revaluation risks. That said, the clients who booked their slots with the company were generally positive on its generous dividend yield and relatively more resilient earnings compared with other real estate asset classes. We append the key highlights and major takeaways on our Top 5 picks in the following section.

KPJ HEALTHCARE (BUY, TP- RM4.00)


Good response. The overall response to KPJ Healthcares breakout sessions had been above our expectation as the stock has generated great interest among the investment community. Given its strong fundamentals and relatively defensive business, investors are keen to better understand the companys business model, especially amid the current economic slowdown. This is in line with our view that KPJ is an excellent choice for strategic longer term investment and portfolio balancing, especially during the current economic landscape where investors are looking for more conservative and defensive investments. Fig. 5: Mr. Alvin Lee addressing the crowd of KPJ

Source : OSK

Hospitals network expansion on track. Part of KPJs expansion strategy is to add at least one new hospital every year, either by building new hospitals or via acquisitions of existing hospitals. It has been actively looking for acquisition targets and has so far identified some potential candidates with focus in Johor and East Malaysia due to large untapped market potential in those locations. In line with its last two acquisitions, KPJ is planning to acquire small or medium-sized hospitals with capacity of 30 to 60 beds. Meanwhile, construction on
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Seberang Perai Specialist centre to replace the Bukit Mertajam Specialist centre has been completed. It will start operation in a few months, while the previous centre would be converted into a nursing college for the northern region. The construction of the new building for Tawakal Hospital will be completed in September, with the existing building to be converted into a day-care and outpatient centre. This will increase its operating capacity and positively impact on its earnings. Healthy patient growth in 1QFY09. Despite the gloomy economic outlook, KPJ still managed to register healthy growth in the number of in-patients and out-patients for 1QFY09. According to the management, based on past experience, the impact of a downturn on the healthcare sector lags by about 6 months and it believes that the full impact of the slowdown would only be reflected in the 2HFY09. Nevertheless, KPJ believes its business will be relatively resilient due to factors such as the scarcity of medical services and the long waiting list in public hospitals. This is backed by its strong brand name and growing medical insurance coverage in Malaysia. KPJ believes the possible downtrading among consumers from private hospital to public hospitals would only prolong the waiting list, which in turn puts more pressure on the public hospitals, which are already feeling the strain. This will result in patients requiring immediate treatment and who can afford treatment in private hospitals to opt for a private hospital instead. Headache in Indonesia to go away soon. In our previous October 08 report, we stated that KPJs 75% owned hospital in Jakarta, RS Bumi Serpong Damai, was facing difficulty in starting up operation due to friction with the minority interest shareholder and red tape on foreign ownership rules in Indonesia. However, in updating fund managers, KPJ said it is at the final stage of negotiations to acquire the remaining stake in this hospital, which will pave the way for the group to either start operating the hospital or to sell it to a third party. Apart from its Indonesia operation, KPJ is eyeing more management contracts for hospitals in the Middle East after having secured two contracts in Saudi Arabia in 2007. Maintain BUY. As we mentioned earlier, despite its low liquidity we believe KPJ is an excellent choice for portfolio re-balancing and a strategic long-term investment given its steady dividend payout and relatively resilient earnings. We maintain our forecast and BUY recommendation at an unchanged target price of RM4.00 based on 10x PER of FY09 EPS. KPJ is still among the cheapest healthcare stocks in the region, trading at a single digit PER compared to its peers double-digit PER.

FYE Dec (RMm) Turnover EBITDA PBT Net Profit EPS (sen) DPS (sen) Margin EBITDA PBT Net Profit ROE ROA Balance Sheet Fixed Assets Current Assets Total Assets Current Liabilities Net Current Assets LT Liabilities Shareholders Funds

FY06 831.5 105.6 60.1 41.3 19.9 15.0 13% 7% 5% 12% 3% 846.3 255.6 1101.9 250.7 4.9 363.9 442.6

FY07 1108.0 135.3 85.2 74.2 35.8 17.0 12% 8% 7% 20% 4% 771.6 433.1 1204.7 286.3 146.8 332.2 508.8

FY08 1270.2 153.3 114.1 78.4 37.9 28.2 12% 9% 6% 18% 6% 676.2 586.7 1262.9 285.9 300.8 359.4 569.3

FY09f 1388.1 157.3 122.3 84.4 40.3 20.1 11% 9% 6% 18% 6% 704.0 572.9 1276.9 250.8 322.1 366.3 611.5

FY10f 1542.9 174.2 137.2 94.6 45.1 22.5 11% 9% 6% 18% 7% 711.2 618.7 1330.0 252.8 365.9 370.1 658.8

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QL RESOURCES (BUY, TP- RM3.32)


Good response to breakout sessions. We received good response to QLs breakout sessions as all three were fully attended. Clients with different fund sizes posed questions on the impact on QL Resources from the drastic fall in surimi prices. Doubts clarified. The management was able to address concerns over recent rumours of a meltdown in surimi prices. The strong demand from Japan had earlier pushed surimi prices to a peak in mid-2008. As there was overstocking in Japan from April to October 2008, the demand slowdown had precipitated a drastic drop in surimi prices. However, management assured our clients that surimi prices would not fall further as prices have now reverted to the normal level of RM8000/tonne. Hence, we do not think the price plunge would have a significant impact on QLs earnings. Fig. 6: Mr. Freddie Yap of QL

Source : OSK

Surimi expansion. QL is currently expanding surimi production by installing new lines to produce frozen surimi-based products at its plant in Hutan Melintang in Perak, which will double the plants current capacity of an average 10,000 tonnes of surimi per year. The company has also invested in a new cold room in Endau, Johor, which will be in operation in 2HFY09. Its cold rooms store unprocessed fish for the low season, which ensures the production of surimi during this period. Targeting 3m eggs by 2011. QL is also looking to expand its egg business as the group is targeting 3m eggs per day by 2011. The group is currently undergoing expansion in Kota Kinabalu, Tawau and Kuching. It is also moving into Vietnam, a step it is targeting to complete later in 2009. Moreover, the group expects a larger flow of palm oil earnings from its Indonesian operation beyond FY2012 as more than 30,000 acres of oil palm trees will be planted by 2012. Maintain BUY. We recommend a BUY on this stock as we believe that the business model is fairly resilient given QLs integrated role and its ability to grow during times of crisis. Hence, our BUY recommendation, with an unchanged target price of RM3.32 based on the 3-year average of 12.5x PER and 2.4x PBV.

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FYE Mar (RMm) Turnover EBITDA PBT Net Profit EPS (sen) DPS (sen) Margin EBITDA PBT Net Profit ROE ROA Balance Sheet Fixed Assets Current Assets Total Assets Current Liabilities Net Current Assets LT Liabilities Shareholders' Fund Net Gearing (%)

FY06 1,010.5 89.8 59.1 48.3 14.6 6.0 8.9% 5.8% 4.8% 23.6% 8.3% 308.9 274.8 583.7 222.4 52.3 90.5 250.0 -81%

FY07 1,118.5 113.2 77.1 63.2 19.2 6.7 10.1% 6.9% 5.7% 23.1% 9.4% 367.2 304.9 672.1 261.9 43.0 87.8 296.9 -80%

FY08 1,302.0 137.7 95.8 80.8 24.5 6.7 10.6% 7.4% 6.2% 24.5% 9.9% 446.3 368.0 814.2 308.4 59.5 110.2 361.1 -74%

FY09f 1,425.9 151.9 106.2 90.1 27.3 8.0 10.7% 7.4% 6.3% 22.7% 10.5% 495.5 364.3 859.9 283.5 80.8 110.2 431.7 -55%

FY10f 1,582.3 169.5 118.5 101.3 30.7 10.0 10.7% 7.5% 6.4% 21.5% 10.9% 540.3 391.0 931.3 278.0 113.0 110.2 508.6 -43%

WAH SEONG (BUY, TP- RM1.93)


Eyeing mergers and acquisitions (M&As). Management said it is open to M&A activities but the prospective companies should either be in the pipe coating or gas compressor business so that there is group synergy. Also, there should preferably be strategic benefits in terms of geographical location and new customer base. Fig. 7: Mr. Giancarlo Maccagno of Wah Seong

Source : OSK

Orderbook replenishment still good. Currently its orderbook stands at RM1.4bn, which is enough to keep the company busy over the next 6 months. Going forward, Wah Seong is expected to replenish its orderbook, whereby the pipe coating and gas compressor business in the global market combined would total some US$4bn. To date, Wah Seong has only tendered for up to RM4bn worth of jobs, with a success rate of 30%50% since there are only 3 major players in the market - Bredero Shaw, Socotherm and Wah Seong.

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Table 2: Potential jobs for tender for Wah Seong Project Value Pipe Coating Above US$100m Above US$50m Above US$10m Gas Compressor Jobs Total US$m 2,650 404 253 700 4,000

Source: Wah Seong

Expanding gas compressor rental business. Currently, the rental and fabrication of gas compressors is in the ratio 15%:85% and going forward to 2011, management expects the rental portion to increase to 50%. From a customers perspective, renting is more favourable because: 1) it is getting more difficult to obtain new financing in the current economic environment, and 2) it is less risky to rent than own the gas compressor. However, from Wah Seongs perspective, rental income yields a higher gross margin of about 40% versus 15%-20% for fabrication; and 2) rentals provide a recurring income since most of the contracts are locked in for more than 2 years. Disposing of non-core assets. Although this is not a priority for Wah Seong given that all its business units are profitable, management would still continue to concentrate on its core businesses and dispose of non-core ones if the offer price is attractive. Having said that, we understand that management has no intention of liquidating its industrial services division, which contributed close to 40% of total revenue. Examples of businesses that Wah Seong may consider liquidating are the drill bits business and a few others. Maintain BUY. Our target price for Wah Seong is RM1.93 based on PER of 9x FY10 earnings. We like the company for its market leadership in the pipe coating and corrosion protection: it is No. 1 in Asia and No. 3 in the world. This increases its tender success rate to 30%-50%.

FYE Dec (RMm) Turnover EBITDA Depreciation Net Interest Income Exceptional Items Associates PBT Net Profit EPS (sen) DPS (sen) Margin EBITDA PBT Net Profit ROE ROA Balance Sheet Fixed Assets Current Assets Total Assets Current Liabilities Net Current Assets LT Liabilities Shareholders Funds Net Gearing (%)

FY06 1624.3 160.3 -35.4 -10.9 -29.5 1.8 86.4 37.3 5.7 5.0 9.9% 6.2% 4.1% 10.5% 2.7% 571.2 813.3 1384.4 602.6 210.7 287.2 372.0 101.5%

FY07 1950.1 183.8 -37.4 21.3 0.0 -5.7 162.0 86.0 13.1 6.0 9.4% 5.9% 4.4% 20.4% 5.8% 554.1 1006.0 1560.1 724.6 281.4 234.0 470.0 75.2%

FY08 2343.2 224.4 -46.9 -6.3 0.0 5.7 176.9 115.6 17.6 6.0 9.6% 6.5% 4.9% 18.3% 6.3% 853.1 1276.1 2129.2 811.5 464.6 364.3 790.8 62.2%

FY09f 2306.8 239.3 -56.2 -6.6 0.0 7.0 183.4 122.1 18.6 7.5 10.4% 6.9% 5.3% 14.6% 5.8% 729.9 1364.9 2094.9 725.7 639.3 324.6 876.4 32.6%

FY10f 2413.6 258.8 -59.7 -1.3 0.0 10.0 207.8 141.0 21.5 7.5 10.7% 7.6% 5.8% 15.2% 6.7% 720.2 1407.8 2128.0 646.3 761.5 332.6 980.9 19.2%

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HEKTAR REIT (BUY, TP- RM0.99)


Fair degree of interest. Hektar REIT received a fairly good response from the invited guests, particularly the insurance funds. As expected, despite its lip-smacking valuation and dividend yield, questions were raised as to how well the trust would be able to at least maintain most of this dividend payout especially in the face of the current economic downturn. Those who were more familiar with Subang and Mahkota Parades since many years ago openly expressed how impressed they were to the improvements done by the management to the malls since they were acquired in recent years. Fig. 8: Mr. Lim Ye Jhen of Hektar Asset Management

Source : OSK

Relatively more defensive earnings model. Answering the question on how well the trust will continue to be able to maintain most of its current attractive dividend payout hinges on its relatively more resilient earnings model vis--vis those of other non-residential real estate classes during a downturn, as summarised in the following: ! Shopping malls a safer bet? Unlike other real estate sub-segments, retail tenants usually have relatively lower bargaining power because their main business, i.e. retailing, and prospects depend very much on being in a particular shopping mall. Moving premises, or even to another shopping lot, may significantly disrupt business as customers may not necessarily follow. Plus, a lower-grade shopping mall may not attract clientele with the same buying power. Hence, the rental rates of shopping malls, at least those in prime locations, should hold up better relative to those in other real estate sub-segments. Consumer-driven tenants and diversified tenant base. It has a well-diversified tenant base and a healthy mix of consumer-driven tenants who are more focused on providing daily necessities to the residents in their vicinity. During a downturn, consumers may cut down on discretionary items but are unlikely to do the same for essentials and daily consumables. With the exception of Parkson, no other tenant contributes >3.0% of the REITs total monthly income. Well-managed tenancy expiry dates. Hektar REIT has a reasonably well-managed distribution of tenancy expiry dates. All assets combined its tenancy expiry dates make up no more than 23% of its monthly rental income for CY09.

Ability to pre-empt most adverse situations. The incorporation of turnover rents (a tenancy model which entails fixing a certain percentage of a tenants monthly or periodic sales turnover, usually with a specified sales threshold), which account for >90% of its tenants in Subang and Mahkota Parades, compels a retailer to provide management with info on their monthly turnover. This indirectly allows management to analyse the
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occupancy cost (i.e. rental income over tenancy sales) of its tenants. According to the management, once the occupancy cost hits 20%, there is a likelihood of a retailer becoming unprofitable with further rental increases and this limits their future participation in the mall as well as constrain managements ability to raise rental rates. Thus, this enables Hektar to pre-empt any situation that may adversely affect profitability. Further assets acquisition unlikely in the near-term. Given its current gearing level of 40.8%, Hektar REIT can only leverage a further RM67.6m before hitting the statutory gearing limit of 50%, which is insufficient to acquire a decent size neighbourhood shopping mall. The possibility of being able to acquire a yield-accretive asset by way of raising capital from the equity market could be very slim, given its current depressed share price and high dividend yield of approximately 12%. Maintain BUY. Given its relatively more defensive earnings and attractive dividend yield of 11.7%, representing a 747 basis point spread over the 10-year MGS yield of 4.23%, we continue to advocate a BUY on Hektar. We are not concerned over any refinancing risks as all its borrowings are for the long-term and will only mature post 2010.

FYE Dec (RMm) Turnover EBITDA PBT Net Profit EPS (sen) DPS (sen) Margin EBITDA PBT Net Profit ROE ROA Balance Sheet Fixed Assets Current Assets Total Assets Current Liabilities LT Liabilities Shareholders Funds Gearing (%)

*FY07 78.33 44.89 80.52 80.52 25.16 10.71 57.30 102.80 102.80 43.02 27.40 559.40 28.40 587.80 29.41 184.00 374.39 31.30

FY08 84.09 47.45 60.34 60.34 18.86 10.20 56.43 71.75 71.75 15.54 9.10 713.40 24.71 738.11 34.51 301.50 402.10 40.85

FY09f 86.19 51.96 37.96 37.96 11.86 10.70 60.28 44.04 44.04 9.40 5.14 713.40 26.56 739.96 32.75 301.50 405.82 40.75

FY10f 88.40 53.09 39.09 39.09 12.21 11.00 60.05 44.21 44.21 9.59 5.28 713.40 27.58 740.98 29.95 301.50 409.71 40.69

FY11f 90.44 54.36 40.36 40.36 12.61 11.40 60.11 44.63 44.63 9.81 5.44 713.40 29.27 742.67 27.89 301.50 413.59 40.60

*13 months results. FY07 and FY08 Net profit include exceptional gains of RM43.8m and RM24.1m respectively from revaluation of investment properties. **Gearing is equivalent to Borrowings over Gross Asset Value

KOSSAN (BUY, TP- RM4.48)


Concentrating on nitrile gloves. We understand that the total nitrile glove production in 2008 came in at 2.7bn pieces, representing only 25% of its product mix. However, with the commissioning of 22 new lines capable of adding another 2.0bn pieces of nitrile gloves, this effectively increases Kossans product mix of nitrile glove to 40%. Other than yielding a higher margin of 2%-3%, nitrile gloves are preferred in the medical industry because they are more chemical and oil resistant, and are also protein-free. Increasing production of higher value products. Kossan is striving to produce better nitrile gloves thorough continuous improvements in technology. For example, its new nitrile glove, Chemax, provides better protection and possesses a feel that is closer to that of natural rubber gloves than entry level nitrile gloves. Also, it is lighter and uses less raw material (i.e. latex), which brings down the cost of production and in turn boosts gross margin. As it also fetches a higher price (about US$1 higher to US$27-29), it contributes to margin improvement. No major line expansion. Since the 22 new lines will only start to contribute from January 2009, management does not intend to pursue further expansion this year. As for 2010, new lines would only be set up if there is recovery in global economy and firmer demand for gloves. However, management prefers to refurbish its existing lines, especially those with a length of 60m to 130m, which could effectively improve their production
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by 50%-60%. The advantage of refurbishing is that it requires minimal capex spending of RM3m-RM35m compared to setting up a new plant, which would require a minimum capex of RM50-RM60m. Fig. 9: Mr. Edward Yip of Kossan

Source : OSK

Maintain BUY. Our target price for Kossan of RM4.48 is based on PER of 9x FY10 earnings. We like the company for its manufacturing efficiency, with an average utilisation rate of above 90% over the past 5 years. Also, the company has the technology and capacity to go up the value chain to produce more nitrile gloves, which yield margins that are higher than that from conventional natural rubber gloves.
FYE Dec (RMm) Turnover EBITDA PBT Net Profit EPS (sen) DPS (sen) Margin EBITDA PBT Net Profit ROE ROA Balance Sheet Fixed Assets Current Assets Total Assets Current Liabilities Net Current Assets LT Liabilities Shareholders' Fund Net Gearing (%) FY06 573.9 74.4 48.6 39.6 24.8 6.5 13.0% 8.5% 6.9% 22.6% 10.5% 232.0 202.7 434.8 185.5 17.3 57.9 190.9 71.8% FY07 702.6 90.3 58.3 55.1 34.5 8.0 12.9% 8.3% 7.8% 24.9% 11.3% 284.9 252.0 536.9 242.8 9.2 42.3 251.4 57.6% FY08 893.1 107.1 73.1 59.3 37.1 10.0 11.5% 8.2% 6.6% 21.5% 10.0% 362.3 291.2 653.5 288.9 2.3 64.7 299.5 54.3% FY09f 977.5 122.8 82.6 67.8 42.4 12.0 12.6% 8.5% 6.9% 20.8% 10.2% 321.7 348.1 669.8 300.7 47.4 37.0 353.1 42.3% FY10f 1,061.8 139.6 97.0 79.6 49.8 13.0 13.1% 9.1% 7.5% 20.7% 11.2% 338.2 407.6 745.9 312.6 95.1 37.0 417.2 31.4%

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APPENDIX 1-4
Market Capitalisation of the Top 50 (RMm) Return on Equity (ROE) of the Top 50 (%)

Litrak CCM QL!Resources Wah!Seong! MBM!Resources KPJ!Healthcare! Kian!Joo Hartalega! Kossan! Mudajaya! Lion!Industries! Alam!Maritim! Naim!Cendera! Progressive!Impact! NTPM! Padini! Coastal!Contracts! CCM!Duopharma! Hektar!REIT Hai"O! Hock!Seng!Lee Pelikan! Tanjung!Offshore! TMC!Life!Sciences! Plenitude! Sino!Hua"An TRC!Synergy! Petra!Energy! EPIC Leader!Universal! NV!Multi Eng!Kah! Pantech! Frontken!Corp! Can"One! Adventa! New!Hoong!Fatt! MaSteel! Favelle!Favco! Kawan!Food! Help!International! Yi"Lai! Ajiya! Freight!Management Efficient!E"Solutions! Cheetah! Century!Logistics! TASCO LTKM! CBS!Technology 0 300 600 900

Hai"O! Hartalega! Pantech! Padini! CCM!Duopharma! Coastal!Contracts! QL!Resources Mudajaya! Kossan! NTPM! TRC!Synergy! Hock!Seng!Lee KPJ!Healthcare! Efficient!E"Solutions! Help!International! Alam!Maritim! Freight!Management Progressive!Impact! CBS!Technology Litrak Petra!Energy! Kawan!Food! Wah!Seong! Eng!Kah! Ajiya! Cheetah! MBM!Resources Adventa! New!Hoong!Fatt! Naim!Cendera! Can"One! NV!Multi Kian!Joo Plenitude! Frontken!Corp! Century!Logistics! Hektar!REIT Pelikan! Favelle!Favco! EPIC TMC!Life!Sciences! Tanjung!Offshore! TASCO MaSteel! Leader!Universal! LTKM! Yi"Lai! CCM Sino!Hua"An Lion!Industries! 0% 5% 10% 15% 20% 25% 30% 35%

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11 OSK Research

OSK Research

PP 10551/10/2009 (022563) April 3, 2009

FY09 PER of the Top 50 (x)

FY09 Dividend Yields of the Top 50 (%)

Coastal!Contracts! Pantech! Ajiya! Leader!Universal! MaSteel! TASCO Can"One! Petra!Energy! TRC!Synergy! Efficient!E"Solutions! Naim!Cendera! New!Hoong!Fatt! Freight!Management Pelikan! Alam!Maritim! Cheetah! Adventa! Plenitude! MBM!Resources Century!Logistics! Hai"O! Hock!Seng!Lee Padini! KPJ!Healthcare! Wah!Seong! Mudajaya! Hartalega! EPIC Frontken!Corp! Yi"Lai! Kossan! Help!International! Favelle!Favco! Hektar!REIT LTKM! Kian!Joo NV!Multi CCM!Duopharma! CBS!Technology QL!Resources Sino!Hua"An Tanjung!Offshore! NTPM! Kawan!Food! Litrak Eng!Kah! CCM Progressive!Impact! TMC!Life!Sciences! Lion!Industries! 0 10 20 30 40

Hektar!REIT Hai"O! CCM!Duopharma! Yi"Lai! LTKM! Pantech! NTPM! Padini! Freight EPIC CCM Kian!Joo KPJ!Healthcare! TASCO New!Hoong!Fatt! Century!Logistics! Adventa! Leader!Universal! Wah!Seong! Plenitude! Cheetah! Eng!Kah! NV!Multi Naim!Cendera! Ajiya! Hock!Seng!Lee MBM!Resources Hartalega! Can"One! MaSteel! Kossan! TRC!Synergy! Favelle!Favco! Pelikan! Litrak QL!Resources Kawan!Food! Tanjung!Offshore! Help!International! Progressive!Impact! Coastal!Contracts! Petra!Energy! Lion!Industries! Alam!Maritim! Mudajaya! TMC!Life!Sciences! Sino!Hua"An Frontken!Corp! Efficient!E" CBS!Technology 0% 2% 4% 6% 8% 10% 12% 14%

See important disclosures at the end of this publication


See important disclosures at the end of this report

12 OSK Research

OSK Research

PP 10551/10/2009 (022563) April 3, 2009

OSK Research Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage All research is based on material compiled from data considered to be reliable at the time of writing. However, information and opinions expressed will be subject to change at short notice, and no part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. We do not accept any liability directly or indirectly that may arise from investment decision-making based on this report. The company, its directors, officers, employees and/or connected persons may periodically hold an interest and/or underwriting commitments in the securities mentioned. All Rights Reserved. No part of this publication may be used or re-produced without expressed permission from OSK Research. Published and printed by :OSK RESEARCH SDN. BHD. (206591-V) (A wholly-owned subsidiary of OSK Investment Bank Berhad)

Chris Eng

Kuala Lumpur
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Hong Kong

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See important disclosures at the end of this publication


See important disclosures at the end of this report

13 OSK Research