KENANGA RESEARCH Result Note

1 July 2010

HOLD
RM1.63
Supportive Int’l Holdings
Target Price: RM1.00 1Q11 below, but margin recovery seen
Stock data
Market cap (RMm): 356.2 l 1Q11 net profit of RM 1.4m was below expectations , accounting for 8% of our
Issued shares (m): 218.5 FY11E net profit of RM17.3 m. Supportive Int’l Holdings (SIH) experienced
52-week range: RM0.66-RM1.78 seasonally weaker quarter in the plastics segment. Notably, the group has
3-mth avg daily volume: 1,175,892 shrs received about RM120.0m of funds via private placement of up to 43.7m SIH
Bloomberg code: SIHB MK shares from GEM Investment Advisors, Inc and GEM Investment Advisors;
YTD price chg: +21.8% shareholders approval will be sought during upcoming EGM. The financing will
YTD KLCI chg: +3.2% serve as working capital and to finance China operations with Digital China.
Est. free float: 33.5%
Major shareholders:
SuppTech Holdgs. Sdn l YoY, 1Q11 net profit fell 138%. The dip is caused by 1Q10’s high base effect
66.5%
Bhd vs. 1Q11’s normalized plastic operating margins of 16%. 1Q10 saw sale of
plastic injection moulds which carry significantly higher margins compared to its
usual manufacturing of plastics .
KLCI FBM70 FBM100 Syariah Hijrah
No No No Yes No l QoQ, 1Q11 pretax improved 308 % to RM1.8m. Besides one-off costs in
Consensus preceding quarter, 1Q11 experienced significantly better property development
FYE 31 Jan 2011E 2012E operating margins of 20%, although the segment’s revenue was 60% lower QoQ
Net profit (RMm): n.a. n.a. to RM2.5m. The group is changing its Aman Bayu sales strategy to a Buil t-Then-
EPS (sen): n.a. n.a. Sell one in anticipation of IFRIC 15. 1Q11 property development revenue came
Forecast revision from previous signed SPAs which is minimal.
FYE 31 Jan 2011E 2012E
Prev. net profit (RMm): 17.3 23.3 l Increasing FY11E net profit by 47% to RM25.5m on the back of tax refunds
Revision (%): +47% -
amounting to RM9m, recognizable in FY11. The current launches of Aman Bayu
Revised net profit (RMm): 25.5 23.3
Share price chart project is 85% completed and should be ready for BTS sale by 2H11; recall that
>60% take-up rates has been achieved and will be recognizable upon converting
the take -ups to SPA sales. Hence, no material changes to our property
development estimates.

l Unchanged fair value of RM1.00 based on blended 9.4x PER (E&E/EMS sector
PER of 9 x applied on 62% of our FY12E EPS of 10.6sen, and 10 x peer PER on
the remaining from property segment). Reiterate HOLD as SIH is a potential
proxy to Digital China . SIH is also in net cash position and the upcoming
The Research Team Tel: 603-2713 2292 RM120m equity injection positions the group to embark on its China project.
research@kenanga.com.my

Result summary
FYE: 31 Jan (previously: 30 Sep) 1Q10 2Q10 3Q10 4Q10 1Q11 QoQ% YoY%
Revenue 15.2 13.3 18.9 17.4 12.8 -26% -18%
Op costs w/o depn/amort (11.0) (10.9) (15.8) (18.1) (10.3) 43% 6%
Other Op Income 0.6 0.0 0.0 0.8 0.2 -71% -2165%
EBITDA 4.8 2.4 3.2 0.1 2.7 4108% -87%
Interest expense (0.2) (0.2) (0.2) (0.2) (0.2) 1% 19%
Pretax profit 3.8 1.4 2.3 (0.9) 1.8 308% -143%
Taxation (1.2) (0.5) (0.7) (0.0) (0.4) -3536% 67%
Net profit 2.6 0.9 1.5 (0.9) 1.4 259% -138%
EPS (sen) 1.21 0.42 0.70 -0.39 0.63 262% -138%
Diluted EPS (sen) 1.21 0.42 0.70 -0.39 0.63 262% -138%
NTA/share (RM) 0.32 0.32 0.33 0.32 0.33 2% 4%
Net gearing/(cash) (x) 0.18 0.11 0.02 (0.03) (0.02)
EBITDA margin 32% 18% 17% 0% 21%
Pretax margin 25% 11% 12% -5% 14%
Recurring Pretax Margin 25% 11% 12% -5% 14%
Effective tax rate 31% 37% 33% -1% 23%

PP7004/02/2011(029201)
 Result Review
QoQ 4Q10 1Q11 Chg Comments
(RMm)
Revenue 17.4 12.8 -26% Weaker due to seasonally weaker plastics income
and lower property development contributions.
PBT (0.9) 1.8 308% Sharp rise attributed to recovery in operating
margins for both property development and plastics.

YoY 1Q10 1Q11 Chg Comments

(RMm)
Revenue 15.2 12.8 -18% Softer as plastic revenue has decline due to lower
number of units sold.
Net Profit 2.6 1.4 -138% Dip cause by 1Q10’s high base effec t.

Earnings Estimates
2009A-
FYE: 31 Jan (previously: 30 Sep) 2007A 16mths 2010A 2011F 20012F
Revenue 53.9 90.8 64.7 97.7 116.0
Pretax profit 0.5 14.2 6.7 22.9 32.3
Net profit 0.4 13.1 4.2 25.5 23.3
EPS (sen) 0.2 6.0 1.9 11.7 10.6
Recur. EPS (sen) 0.2 2.7 1.9 7.5 10.6
Recur. EPS growth (%) 104% 1473% -30% 291% 41%
NTA/ share (RM) 0.21 0.30 0.32 0.40 0.50
PER (x) 933.9 27.2 84.5 14.0 15.3
P/NTA (x) 7.9 5.4 5.0 4.1 3.2
EV/EBITDA (x) 180.9 47.0 33.9 13.2 9.7
ROE % 0.9% 25.3% 6.9% 35.9% 25.6%
Dividend Yield (%) 0.0% 0.0% 0.0% 0.0% 0.0%

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Supportive International Holdings – 1 July 201001 July 2010 Page 2 of 2