Market Dateline PP 7767/09/2011(028730)

RHB Research Institute

RHB Equity 360°

19 October 2010 (ILB, Public Bank; Technical: Ann Joo)

Top Story : ILB – Named partner in Hong Leong Asia's new warehouse project in China Outperform
Company Update
- Hong Leong Asia revealed recently that its refrigeration and cooling products division under Frestech/Xinfei
in China has formed a "partnership with Integrated Logistics China to build and operate a central
distribution centre".
- Frestech/Xinfei is a high-growth blue-chip client of which ILB can piggy-back on to expand its presence and
scale of operation in China.
- Based on our estimate, the first full-year contribution from the US$25m (RM77.5m) warehouse will boost
ILB's FY12/12 net profit by 20%.
- We are cutting FY12/10 net profit forecast by 42% largely to reflect: (1) A 3-month delay in the completion
of the disposal of its Malaysian assets; and (2) A higher tax. FY12/12 net profit forecast is raised by 20%
largely to reflect the contribution from the new Frestech/Xinfei warehouse.
- Fair value is kept relatively unchanged at RM1.47. Maintain Outperform.

Corporate Highlights

Public Bank : 9MFY10 net profit rises 19.7% yoy Outperform

3QFY10 Results
- Public Bank’s 3QFY10 results were within our and consensus expectations with 9MFY10 net profit of
RM2.2bn (+19.7% yoy) accounting for 75.5-76.5% of our and consensus full-year estimates.
- Annualised loan growth stood at 13.7% and on track to achieve our FY10 growth assumption of 14%. This
was led by the domestic segment (annualised rate of 16.1%) but the overseas loan book contracted by an
annualised rate of 9.2% mainly due to adverse exchange rate impact.
- Total deposits grew by a slower rate of 2.8% (annualised), although this largely reflects a drop in wholesale
deposits. Core deposits (which is the focus of the group), however, grew at an annualised rate of 12.2%.
- NIM expanded by 6bps qoq (+17bps yoy), supported by the three rounds of OPR hikes YTD. Meanwhile,
non-interest income stayed healthy as its mutual fund operations benefited from stronger equity markets
and better contribution from the foreign exchange business. CIR improved further to 30.4% (2Q10: 33.6%;
3Q09: 34.2%).
- Asset quality remains strong with new impaired loan formation (annualised) falling to 56bps during the
quarter, as compared to 79bps in 2Q10 and 70bps in 3Q09. Consequently the gross impaired loans ratio
improved slightly to 1.16% as at end-3Q from 1.21% as at end-2Q10.
- Our earnings forecasts are unchanged.
- Fair value of RM14.70 (16x CY11 EPS) and Outperform call maintained.

Technical Highlights

Daily Trading Strategy : The index must reclaim the 10-day SMA soon!
- With more investors taking profit following the uninspired 2011 Budget announcement on Friday, coupled
with the weakness in the regional markets, the FBM KLCI eased lower on follow-through profit-taking
momentum on Monday.
- From the technical perspective, the closing to below the important 10-day SMA of 1,485 and the poorer
momentum readings, are suggesting more downside potential for the FBM KLCI in the near term.
- And if there is no immediate rebound to above the 10-day SMA today, the index could retrace towards the
recent technical gap at 1,472.32 - 1,476.05, and even towards the key pivotal point of 1,450 next.
- However, as reiterated earlier, the medium- to long-term technical outlook will remain positive if the index
manages to sustain at above the 1,450 level and the 40-day SMA near 1,453.
- Therefore, in other for it to stay positive, the index must quickly reclaim the 10-day SMA, and to push over
the 1,500 psychological level in the next few sessions to end the current profit-taking leg.
 Daily Technical Watch: Ann Joo Resources – Forming support near SMAs prior to any technical recovery…
- 10-day SMA: RM2.89
- 40-day SMA: RM2.734
- Support: IS = RM2.98 S1 = RM2.70 S2 = RM2.40
- Resistance: IR = RM3.38 R1 = RM3.66 R2 = RM3.98

Bulletin Board

Co/Sector News Impact Recom

Construction TRC Synergy is believed to the front runner for We assume the contract refers to “Kelana Jaya OW
the main contract for the Kelana Jaya LRT line Package A”. Given the size of the LRT line
extension project, with UEM lobbying hard to extension project, we believe there will be
wrest the job from it. (Financial Daily) enough jobs to go around, and as such, it will
benefit the entire industry. There will still be
“Kelana Jaya Package B”, “Ampang Package A”
and “Ampang Package B”. In addition, we
understand that the main contractors are also
obliged to share the work with “nominated
subcontractors” recommended by Prasarana.
Plantations According to Murali Krishna PV, CEO of India- Neutral, as it appears there are very conflicting N
based Transgraph Consulting Pvt Ltd, a speaker views on the CPO price trend, coming out from
at a Palm Oil Conference, CPO prices could hit the conference. We are reviewing our CPO price
RM3,300/tonne in the next four to six months, assumptions, but maintain our overall Neutral
due to tight production and strong demand view on the sector, with an emphasis on stock
growth. Another speaker, Lan Chen from LMC picking. KLK (FV = RM22.05) remains our top
International however, disagreed with the bullish pick for the sector.
view and expects CPO prices to fall back down to
RM2,500-2,600/tonne in 2011, on the back of
strong CPO production growth and a potential
downward pressure to come for soybean oil
prices. (Financial Daily)
PLUS The Government will have to fork out just under Neutral. Details are lacking on how the RM5bn UP, FV =
RM5bn in compensation to PLUS following its figure in compensation came about. Besides that, RM4.60
decision not to raise toll rates over the next five the high likelihood that the proposed takeover by
years, according to UEM Group Bhd’s group UEM and EPF will take place means the impact of
MD/CEO Datuk Izzaddin Idris. He said this was in the five-year toll hike freeze and RM5bn
addition to RM2.5bn which the Government owed compensation will not be material to minority
PLUS in compensation thus far for having deferred shareholders. Except for KWAP which holds 5.5% in
toll rate hikes. (StarBiz) PLUS, no other minority shareholder holds >1%
equity stake. This makes it somewhat difficult for the
minorities to collectively vote against the proposed
takeover, if they want a higher takeover price.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Impressive Edge Group Selective capital reduction and repayment exercise 29-Oct-10 -
Zhulian Corporation Third interim single tier dividend of 3 sen 10-Nov-10 29-Nov-10

Going “ex” on 20 Oct

Brem Holding Final dividend of 5 % less 25% tax 20-Oct-10 10-Nov-10
Eksons Corporation Final dividend of 3 sen single tier 20-Oct-10 18-Nov-10

...For more details, see individual reports attached

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