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STRATEGY

                                                                                                                ...
Analysis of May reporting season
                                     Although the May corporate results season was poor, ...
Figure 4: Revisions up/revisions down (x)

   2.00
   1.80
                                                               ...
Figure 6: Qoq change in our KLCI earnings estimates for CY09 and CY10 post results seasons

 21.0%


                     ...
Figure 8: CIMB’s CY09 EPS estimates (indexed)

      100
        95
        90
        85
        80
        75
        70...
Figure 11: Consensus CY10 EPS estimates (indexed)


             100.0
               95.0
               90.0
           ...
4Q08).
Domestic demand shrank 2.9% yoy in 1Q09, with private consumption posting a small
decline of 0.7%, the slowest pace...
Although we were right on the second count as real GDP fell 6.2% vs. consensus
estimate of 3-4% contraction, the market to...
• Construction – We maintain our TRADING BUY stance on the construction
                                                  ...
Regional comparison
The resurgence of regional markets has reduced Malaysia’s P/E premium over the
region from 40-45% earl...
Figure 21: Recommendation changes over past 3 months
Upgrades
Alliance Financial Group (N to O) - undemanding valuation an...
Figure 23: Top picks by category

GROWTH                                                                                  ...
Appendix: Companies’ 1Q09 results and comments
Company                     Period Deviation in ann.            % growth in...
[ continued from the previous page… ]


 Appendix: Companies’ 1Q09 results and comments (continued)
 Company              ...
DISCLAIMER

This report is not directed to, or intended for distribution to or use by, any person or entity who is a citiz...
Not as bad as feared, worst over?
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Not as bad as feared, worst over?

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Not as bad as feared. Poor though the results were, the May results season was
not as bad as feared. In fact, there were reasons to be encouraged. The revision
ratio improved from 0.43x in Feb 09 to 0.6x, meaning that the earnings downgrade
momentum is not as lopsided as before. Some 60% of companies met
expectations (43% previously) and 25% failed to deliver (40% before). 15% did
better than expected, a slight pullback from 17% during the Feb results season. In
terms of sector performance, six disappointed while only two were above
expectations.
• EPS forecast surprisingly raised. More significant than the actual number of
companies that surpassed or missed expectations is the fact that 2009 and 2010
EPS have been raised, rather than cut. This is a pleasant surprise. Since the Feb
results season, 2009 EPS contraction has been reduced from 8% to around 6%
while 2010 EPS growth has been raised from 16% to 19%. Upgrades came largely
from the plantation sector due to firm CPO prices, as well as big caps such as
Axiata and Maybank, which more than offset letdowns from smaller caps.
• The worst could be over. In our Apr strategy when we upgraded Malaysia to
Overweight, we thought 2Q could provide a buying opportunity due to 1) the
expected poor results season, and 2) announcement of a sharp contraction in
1Q09 GDP. We were only partially right on the first count as 1Q09 results have
turned out to be not as bad as expected and did not present any major shocks or
earnings downgrades. This means that there is a good chance we are past the
worst as upcoming quarters may be more balanced and EPS cuts could have
bottomed out. Fundamentally, this is hugely positive for the market.
• New KLCI target of 1,220. Although our economics team was spot on about 1Q
GDP being weak – it sank 6.2% – the market took the bad news in its stride. This
is an indication of how far market confidence has improved in the past two
months. We continue to believe the gradual reinvestment of institutional funds’
spare cash will sustain the market rebound in 2H09. In view of the better-thanexpected
1Q results season, continued positive newsflow during PM Dato’ Sri
Najib Razak’s first 100 days in office and the gradual return of foreign funds to the
market, we upgrade our year-end KLCI target from 1,060 to 1,220 points after
removing the 10% discount to its 3-year moving average P/E of 15x. We maintain
our OVERWEIGHT stance on Malaysia and our preference for cyclical bombedout
sectors including construction, building materials, property and oil & ga

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Transcript of "Not as bad as feared, worst over?"

  1. 1. STRATEGY 2 June 2009 CIMB Research Report MALAYSIA OVERWEIGHT Maintained 1Q09 results round-up 1,044 @29/05/09 Not as bad as feared, worst over? Target Index: 1,220 KLCI INDEX Terence Wong, CFA +60 (3) 2084-9689 – terence.wong@cimb.com • Not as bad as feared. Poor though the results were, the May results season was not as bad as feared. In fact, there were reasons to be encouraged. The revision ratio improved from 0.43x in Feb 09 to 0.6x, meaning that the earnings downgrade momentum is not as lopsided as before. Some 60% of companies met expectations (43% previously) and 25% failed to deliver (40% before). 15% did better than expected, a slight pullback from 17% during the Feb results season. In terms of sector performance, six disappointed while only two were above expectations. • EPS forecast surprisingly raised. More significant than the actual number of companies that surpassed or missed expectations is the fact that 2009 and 2010 EPS have been raised, rather than cut. This is a pleasant surprise. Since the Feb results season, 2009 EPS contraction has been reduced from 8% to around 6% while 2010 EPS growth has been raised from 16% to 19%. Upgrades came largely from the plantation sector due to firm CPO prices, as well as big caps such as Axiata and Maybank, which more than offset letdowns from smaller caps. • The worst could be over. In our Apr strategy when we upgraded Malaysia to Overweight, we thought 2Q could provide a buying opportunity due to 1) the expected poor results season, and 2) announcement of a sharp contraction in 1Q09 GDP. We were only partially right on the first count as 1Q09 results have turned out to be not as bad as expected and did not present any major shocks or earnings downgrades. This means that there is a good chance we are past the worst as upcoming quarters may be more balanced and EPS cuts could have bottomed out. Fundamentally, this is hugely positive for the market. • New KLCI target of 1,220. Although our economics team was spot on about 1Q GDP being weak – it sank 6.2% – the market took the bad news in its stride. This is an indication of how far market confidence has improved in the past two months. We continue to believe the gradual reinvestment of institutional funds’ spare cash will sustain the market rebound in 2H09. In view of the better-than- expected 1Q results season, continued positive newsflow during PM Dato’ Sri Najib Razak’s first 100 days in office and the gradual return of foreign funds to the market, we upgrade our year-end KLCI target from 1,060 to 1,220 points after removing the 10% discount to its 3-year moving average P/E of 15x. We maintain our OVERWEIGHT stance on Malaysia and our preference for cyclical bombed- out sectors including construction, building materials, property and oil & gas. Figure 1: 1Q09 results by sector and for the KLCI Rec 1 Q0 9 pe rforma nce Res ul ts vs. Comme nts qoq cha nge yoy cha nge e xpec ta tions A uto motive NEUTRA L -3 4. 8% -8 9.0 % B elow Lo we r sa les vo lume a nd ma rgin p ressure fr FX. B an king & Fin an ce NEUTRA L -1 8. 5% -2 1.5 % In line Expe cting furth er incre ase in cred it costs B uilding m ate rials OVE RW EIG HT -149. 5% -6 6.9 % In line Bet ter AS Ps a nd expe ct dem and to imp rove in 2H Food & b evera ge NEUTRA L 1 7. 2% 2.6% In line Rising cost p ressures m itiga ted by dece nt d ivid en ds G am in g OVE RW EIG HT -4 3. 4% -2 6.7 % B elow Ca sino in lin e but NFO affecte d b y luck In du stria l OVE RW EIG HT 26 3. 1% -1 1.2 % B elow Ma rg ins susta ina ble In frastructu re TRADING BUY -0. 6% -2 7.1 % In line Expe ct pu mp p rim in g to pick u p In surance TRADING BUY NM -20 3.9% A bove Bet ter invest ment in com e a nd imp rovin g cla ims ratio M ed ia NEUTRA L -7 1. 7% -18 9.0% B elow Ad volum e co uld de ce lerate O il & gas OVE RW EIG HT 10 6. 7% 2.7% In line Ben eficiary of recovery in cru de oil price P lanta tion s UNDERW EIGHT -2 4. 2% -5 6.2 % In line Expe ct be tte r earn in gs in futu re q uarte rs P ro pe rtie s TRADING BUY -1 8. 4% -1 9.2 % B elow Ma rg in sq uee ze f or de velop ers Techn olog y NEUTRA L -264. 9% -17 1.5% In line Sem icon s we re a bo ve ; Uchi a nd Jobstre et belo w Tele comm unica tio ns NEUTRA L 9 7. 0% -1 9.1 % In line Axiata be at expectatio ns, DiGi a nd TM in lin e Toba cco UNDERW EIGHT 3 1. 0% -1.4% In line We ak volume and tou gh er op eratin g e nviro nme nt. Tran spo rt & log istics UNDERW EIGHT 0. 4% -6 1.3 % B elow Ship ping be low, A irAsia abo ve Utilit ie s NEUTRA L 4 3. 0% -3.3% A bove Lo we r-th an-e xpect ed coal u sage Source: Company, CIMB estimates Please read carefully the important disclosures at the end of this publication.
  2. 2. Analysis of May reporting season Although the May corporate results season was poor, there were some bright spots. Out of the 75 companies that we track, only 25% fell short of expectations, a big improvement on the 40% that failed to deliver in Feb. The percentage of companies that outdid expectations, however, edged down from 17% to 15% while the proportion of those that lived up to expectations jumped from 43% to 60%. The number of sectors that missed the mark fell from seven to six, i.e. auto, gaming, media, oil & gas, plantations and property. Again, no sector performed convincingly above expectations though defensive sectors such as telco and utilities again performed commendably. Figure 2: 1Q09 results vs. our forecasts Sector Vs. our forecasts % Above In line Below Total Above In line Below Automotive 0 1 2 3 0 33 67 Banking & Finance 2 6 1 9 22 67 11 Buildings materials 1 1 0 2 50 50 0 Conglomerates 0 0 1 1 0 0 100 Food & beverage 0 5 0 5 0 100 0 Gaming 0 1 4 5 0 20 80 Industrial 0 6 0 6 0 100 0 Infrastructure 1 7 1 9 11 78 11 Insurance 1 0 0 1 100 0 0 Media 0 1 4 5 0 20 80 Oil & gas 0 4 1 5 0 80 20 Plantations 0 3 1 4 0 75 25 Properties 0 2 1 3 0 67 33 Technology 2 2 0 4 50 50 0 Telecommunications 1 2 0 3 33 67 0 Tobacco 0 2 0 2 0 100 0 Transport & logistics 2 1 3 6 33 17 50 Utilities 1 1 0 2 50 50 0 Total 11 45 19 75 15 60 25 Source: Company, CIMB estimates Figure 3: Performance relative to expectations in the reporting seasons 80% 75% 71% 69% 70% 63% 63% 71% 63% 60% 59% 56% 59% 60% 54% 53% 52% 52% 47% 46% 42% 50% 40% 43% 43% 44% 40% 33% 33% 34% 34% 38%40% 28% 29% 26% 26% 30% 24% 23% 25% 18% 17% 21% 19% 19% 20% 19% 18% 18% 15% 20% 11% 13% 13% 15% 12% 17% 14% 14% 14% 16% 17% 15% 7% 7% 14% 10% 0% 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 Companies beating expectations Companies meeting expectations Companies coming below expectations Source: Company, CIMB estimates Revision ratio The revision ratio (number of forecasts revised upwards vs. number of forecasts revised downwards) improved from 0.43x in 4Q08 to 0.6x in 1Q09. This is a considerable improvement and means that earnings momentum is not so negative that downgrades overwhelm upgrades. As the ratio has improved after staying within the 0.3-0.4x range for the previous three results seasons, it suggests that analysts’ earnings numbers are beginning to catch up with reality. However, we do note that the ratio remains well below 1x, the level at which the earnings upgrade momentum turns positive. [ 2 ]
  3. 3. Figure 4: Revisions up/revisions down (x) 2.00 1.80 Positive momentum for market 1.60 1.40 1.20 1.00 0.80 0.60 Negative momentum for market 0.40 0.20 0.00 3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 Source: Company, CIMB estimates KLCI EPS growth The yoy EPS growth rate for the KLCI fallen from the 20-30% range in 2006-early 08 to -27% in 4Q08 and an even worse -36% in 1Q. On qoq basis, the EPS compression improved from 10.6% in 4Q08 to 4.9% in 1Q09. Sectors that pulled down qoq earnings in 4Q were autos, building materials, industrial, insurance, plantations and technology. The previous negative trend in 2005/6 lasted five straight quarters from 1Q05 to 1Q06. Should it last just as long this time, EPS growth would only return to positive territory in 3Q09, meaning that we could see one more quarter of earnings slippage. Figure 5: Qoq and yoy growth rates in core EPS for Bursa sample 40.0% Strong rebound in EPS 29.9% 30.9% 30.0% 25.6% 27.6% 27.2% 25.9% 22.8% 18.3% 20.0% 14.0% 10.6% 12.6% 11.0% 6.8% 7.8% 10.0% 22.5% 1.6% 0.4% -2.2% 0.0% -10.0% -5.3% -3.0% 4.3% -3.9% -4.9% -6.3% -8.7% -7.2% -8.4% -9.0%-10.6% -20.0% -13.2% -14.6% -19.7% Q-o-Q change -30.0% Y-o-Y change -27.4% -35.9% -40.0% KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI KLCI 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 Source: Company, CIMB estimates Change in our estimates The three-month period including the May results season was actually positive, a big reversal from previous results seasons. While our 0.6% upgrade of 2009 core EPS is marginal, it is nonetheless significant as it is the first upward revision since the Feb 08 results season. FY10 EPS was raised a higher 3.3%. In total, we upped our forecasts for eight companies (11 in Feb), i.e. Maybank, Hong Leong Bank, Kurnia Asia, MPI, Lafarge M Cement, Axiata, AirAsia and Tenaga (see Appendix). The number of companies which saw earnings downgrades eased from 30 in Feb to 23, i.e. Proton, UMW, Sime Darby, B Toto, Dreamgate, Tanjong, MTD-ACPI, Astro, NST, MCIL, Star, Dialog, Petra Perdana, Hap Seng Plantations, IOI Corp, KL Kepong, SP Setia, Telekom, BAT, Bintulu Port, MISC, Maybulk and Suria Cap. [ 3 ]
  4. 4. Figure 6: Qoq change in our KLCI earnings estimates for CY09 and CY10 post results seasons 21.0% CY09 CY10 9.0% 3.3% 0.6% -3.0% -4.3% -7.2% -6.8% -15.0% -13.3% End Nov 2008 End Feb 2009 End May 2009 1Q05 results Source: Company, CIMB estimates Sectoral changes in EPS Looking at the sectoral changes for reported profits, the numbers were still mixed. CY09 reported earnings were cut for eight (10 previously) out of 18 categories. Earnings were reduced the most for the auto, media and transport sectors. We upped our forecasts for six sectors, the same as before, with the main earnings upgrades coming from technology and banking. For CY10, we scaled back our earnings numbers for four sectors while raising them for eight categories. Figure 7: Sector changes in reported EPS post 1Q09* CY09 CY10 Comments Automotive -38% -18% Lower sales volume but margin improved Banking & Finance 3% 2% Higher LLP and decline in non-interest income Building materials -1% 4% Lower domestic demand but better ASPs Conglomerates -2% 2% Strong plantation and industrial earnings Food & Beverage 0% 0% Defensive topline, but rising raw material costs Gaming -4% -3% Genting's numbers revised down for taxes & MI Industrial 3% 0% Demand for rubber gloves to remain resilient Infrastructure 1% 1% Pump priming to intensify in 2H09 Insurance 185% -100% Improved investment income and lower claims ratio. Media -10% -8% Greater earnings risks for newspaper companies Oil & Gas -3% -3% Players enjoy recovery in demand not just locally Plantations 1% 1% Lower CPO price and FFB yield Property 0% 0% Margin squeeze due to high material costs Technology 5% 5% Raised numbers for semicon players Telco -1% 0% Axiata exceeded expectations, TM and DiGi in line Tobacco 0% 0% Industry prospects continue to be pressured Transport & Logistics -8% 3% Shipping revised down, AirAsia revised up Utilities 0% 0% Adjust earnings for lower coal consumption * based on 1-month change in earnings from Apr 09 to May 09 Source: CIMB estimates CIMB’s core net profit estimates 2009 core net profit forecasts have been relatively stable since the last results season in Feb and have started to creep up on a monthly basis. This reprieve from the relentless cuts seen in the past year is reassuring. The raising of earnings forecasts estimates is more pronounced for 2010, which indicates that analysts are increasingly confident that earnings prospects will improve next year. Consensus forecasts for 2009, however, have continued to fall, with May being the lowest figure so far. [ 4 ]
  5. 5. Figure 8: CIMB’s CY09 EPS estimates (indexed) 100 95 90 85 80 75 70 65 60 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Source: CIMB estimates, Reuters estimates Figure 9: CIMB's CY10 EPS estimates (indexed) 100 95 90 85 80 75 70 65 60 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Source: CIMB estimates, Reuters estimates Figure 10: Consensus CY09 EPS estimates (indexed) 100.0 95.0 90.0 85.0 80.0 75.0 70.0 65.0 60.0 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Source: CIMB estimates, Reuters estimates [ 5 ]
  6. 6. Figure 11: Consensus CY10 EPS estimates (indexed) 100.0 95.0 90.0 85.0 80.0 75.0 70.0 65.0 60.0 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Source: CIMB estimates, Reuters estimates CIMB vs. consensus estimates We are forecasting EPS to fall by nearly 6% in CY09, slightly lower than consensus forecast of closer to 7%. We also expect EPS to rebound a stronger 19% against consensus’s 12%. We were ahead of the curve when it came to 2009 earnings cuts over the past year and we may again be ahead of the curve in terms of earnings upgrades, particularly for 2010. Figure 12: CIMB vs. consensus EPS growth CY09 CY10 CIMB -5.7% 19.0% Consensus -6.6% 12.3% CIMB/consensus (x) 1.01 1.06 Source: CIMB estimates, Bloomberg estimates Net profit to GDP growth ratio The KLCI net profit growth to nominal GDP growth ratio for 2009 appears to be in positive territory. This is because both net profit and GDP are forecast to contract. For 2010, GDP growth is expected to recover to 3.5% but we expect core EPS growth to jump to 19%. Although the net profit to GPD ratio appears high, we believe the figure is achievable as the same pattern was seen in 1999 after two consecutive years of earnings contraction. Figure 13: KLCI net profit growth to nominal GDP growth ratio (x) 9.0 8.0 2009 GDP and EPS both negative, 2010 EPS 8.0 forecast to rebound 7.0 1997-2000 exceptional years, throws out the 6.0 ratios (big -ve in 1998) Ratio in negative territory for first time 4.8 5.0 Ratio (x) 3.6 3.8 since Asian crisis 4.0 2.7 2.8 3.0 2.2 1.7 1.5 1.9 2.0 1.5 1.2 1.4 0.9 1.0 0.1 0.4 0.2 0.0 -1.0 (0.7) (0.9) 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009E (49.5) Source: Company, CIMB estimates, BNM GDP growth The external headwinds hit the economy with full force in 1Q09, with real GDP pulling back 6.2% yoy. This is the steepest decline since 4Q98 when GDP fell 11.2%. The first quarter GDP contraction came in worse than our (-5.0% to -5.5%) and market expectations (-3.5%). On a qoq basis, output declined by 7.7% in 1Q09 (-3.4% qoq in [ 6 ]
  7. 7. 4Q08). Domestic demand shrank 2.9% yoy in 1Q09, with private consumption posting a small decline of 0.7%, the slowest pace since 1Q99 (-2.7%). The spike in retrenchments and deteriorating labour market conditions led to concerns over job security and an erosion of consumer confidence. Fixed investment sank 10.8% for the second consecutive quarter in 1Q09 (-10.2% in 4Q08) as private investment plummeted in reaction to the fast-deteriorating global demand. Public development spending was higher. The global demand slump was a serious drag on GDP, with exports tumbling 15.2% yoy in 1Q09. Sluggish export income dented consumption and investment. However, given a sharper fall of 23.5% for imports, net exports added 6.1% pts to 1Q09’s GDP growth. Large inventory drawdown subtracted 9.7% pts from 1Q09’s GDP. The manufacturing sector suffered the biggest contraction of 17.6% yoy in 1Q09, largely dragged down by the slump in electronics demand and falling domestic demand. The services sector eased 0.1%, reflecting the sharp pullback in trade- related services. Mining contracted 5.2% while the agriculture sector shrank 4.3% yoy respectively. Only the construction sector was in positive territory with a small growth of 0.6% yoy, due to increased office space and high-end residential development. In our opinion, 1Q09 is the trough in terms of the GDP growth fallout. Judging from some tentative “green shoots” emerging in major economies and some sequential improvements in domestic loan indicators, industrial output, exports and leading indicators, we expect smaller declines in GDP of 2.5-4.5% in 2Q-3Q before a return to 1-2% growth in 4Q. As such, we continue to project a real GDP contraction of 3.0% for 2009. For 2010, we expect the economy to bounce back 3.5%, underpinned by the recovery of exports and the follow-through impact of fiscal spending and monetary easing. Figure 14: Quarterly real GDP growth vs. KLCI 1,600 Forecast period: quarterly GDP growth rates 15.0 (RHS) stable 1,400 10.0 1,200 5.0 1,000 KLCI level % change 800 0.0 600 KLCI (LHS) (5.0) 400 (10.0) 200 0 (15.0) 1Q92 3Q93 1Q95 3Q96 1Q98 3Q99 1Q01 3Q02 1Q04 3Q05 1Q07 3Q08 Source: Company, CIMB estimates, BNM Valuations and recommendations We upgraded Malaysia from neutral to OVERWEIGHT in early Apr after staying cautious for 13 months following the 8 Mar 2008 shocking general elections results and the subsequent global credit and financial meltdown. Our upgrade was premised on three key catalysts: 1) improving odds of a regional rebound on the back of aggressive fiscal and monetary policies, 2) likely stronger-than-expected political succession effect from the ascension of Dato’ Sri Najib Razak as the 6th prime minister, and 3) potential reversal of foreign funds net selling, which pushed foreign ownership in Malaysia to very depressed levels. Recall that we have been recommending investors to accumulate positions in 2Q due to 1) the expected poor results season in May due to the high base effect in 1Q08 and anticipated weak earnings for 1Q09 and 2) negative newsflow on the economic front including a sharp contraction in 1Q09 GDP. We were only partially right on the first count as 1Q09 results turned out to be not as bad as feared and did not present any major shocks or earnings downgrades. This means that there is a good chance we are past the worst as upcoming quarters may be more balanced and EPS cuts could have bottomed out. Fundamentally, this is hugely positive for the market. [ 7 ]
  8. 8. Although we were right on the second count as real GDP fell 6.2% vs. consensus estimate of 3-4% contraction, the market took the bad news in its stride. The KLCI, in fact, rebounded a day after the government announced its new 2009 GDP forecast of a steeper 4-5% contraction. This is an indication of how far market confidence has improved in the past two months. We continue to believe the gradual redeployment of excess cash held by domestic and foreign institutional funds will sustain the market rebound in 2H09. Also, we expect core EPS to expand a robust 19% in 2010 after falling 5.7% in 2009. In view of the better-than-expected 1Q results season, continued positive newsflow from the PM’s first 100 days in office and the return of foreign funds, we upgrade our year-end KLCI target from 1,060 points to 1,220 points after removing the 10% discount to its 3-year moving average P/E of 15x. We believe our new target is not overly aggressive as it is equivalent to the mid-cycle P/E and P/BV for the KLCI. At 1,220 points, the KLCI would trade at 1.9x P/BV, which is still at a 25% discount to its Dec 07 highs of close to 2.5x. However, we do not expect the market’s ascent to be a smooth one as the rebound so far has been faster and stronger than we expected. The market needs to catch its breath and a significant pullback is long overdue. Nonetheless, domestic catalysts from the succession effect and huge pools of liquidity not yet deployed by local and foreign funds should keep the medium-term momentum strong, at least in 2H09. If 1Q09 results are indeed the worst for the market, fundamentals could sustain the market longer than expectations. Figure 15: KLCI’s 12M forward core P/E (x) and standard deviation 22.0 20.0 KLCI's actual PER, now at 14.1 12M forward +3 S.D. 18.0 16.0 +2 S.D. P/E (x) +1 S.D. 14.0 -1 S.D. 12.0 -2 S.D. 10.0 8.0 -3 S.D. 3-year moving avg = 15.1x 6.0 Nov-03 Jul-04 Mar-05 Nov-05 Jul-06 Mar-07 Nov-07 Jul-08 Mar-09 Source: CIMB estimates Figure 16: KLCI’s historical P/BV (x) 2.5 1.9x 2.2 1.9 1.6 1.3 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Source: CIMB estimates Sectors to overweight Our preferred sectors are mostly cyclical sectors such as construction, property and oil & gas. Although the gaming sector does not fit the bill of high-beta sectors, it remains one of our favourites as valuations are attractive. We have taken the telco sector off our list after the downgrades of Telekom and DiGi. Furthermore, being a defensive and high-dividend yielding sector, it is likely to lag behind in the market rebound. [ 8 ]
  9. 9. • Construction – We maintain our TRADING BUY stance on the construction sector as the recent stimulus packages for infrastructure worth over RM20bn raise expectations of a sector recovery. The political transition is another positive factor for the sector as it could lead to policy measures aimed at reviving construction activities. We expect pump priming to intensify in 2H09. The continued softening of raw material prices will cap the deterioration in earnings and lead to a margin recovery, although the impact will not be immediate. • Gaming – The domestic casino segment remains resilient despite recessionary fears. The continued uptrend in casino patronage reflects the operator's emphasis on yield. Other catalysts include potential regional acquisitions and improved capital management initiatives on the back of a huge cash hoard. The mature NFO sub-sector is expected to sustain its single-digit growth trend, buoyed by its low entry point, the gaming habit and increasing popularity of lotto games. Sustainable dividend yields of circa 8% remain a key attraction. Gaming stocks are also expected to be beneficiaries of higher weightings following the shift to the FBM KLCI benchmark on 6 Jul. • Oil & gas – We remain OVERWEIGHT on the oil & gas sector. Rising crude oil price spurs exploration and production activities, which, in turn, increase the demand for service providers. Most of Malaysia's listed oil & gas companies are service providers. We expect local and regional newsflow to pick up in the coming months, fuelling the replenishment of service providers' order books, of which a few are already at record levels. Companies with strategic assets, i.e. drilling rigs, pipelay barges, AHTS vessels and fabrication yards, are expected to enjoy high utilisation rates. • Property – Despite the very challenging environment for properties, property shares should outperform as they tend to move in tandem with the stockmarket, but with higher swings on both the downside and upside. We believe they could outperform in this rebound as the sector was the worst-performing sector last year. Many property stocks, in fact, are still down more than 50% from their peaks and are trading at steep discounts to RNAV and book values. The sector is a TRADING BUY and our preferred pick is SP Setia for its astute management, size and liquidity. Figure 17: Sector reported net profit (including exceptional items) and related valuations Reported earnings growth (%) P/E (x) P/NTA (x) ROE (%) Div yld (%) CY08 CY09 CY10 CY08 CY09 CY10 CY09 CY09 CY10 CY09 Automobiles and Parts 47.2% -47.0% 63.6% 9.4 21.2 13.0 0.8 4.0% 6.4% 3.8% Conglomerates 30.2% -29.1% 21.9% 11.6 19.5 16.0 1.9 9.9% 11.5% 4.2% Construction and Materials 33.7% -8.6% 22.4% 12.0 15.6 12.8 1.7 10.8% 13.2% 3.6% Consumer -36.1% 21.1% 4.6% 15.4 15.1 14.4 6.4 42.2% 43.8% 7.8% Financial Services -6.1% 2.2% 18.9% 10.9 12.7 10.7 1.5 12.2% 13.1% 5.7% Forestry and Paper -13.7% -12.8% 7.9% 3.3 4.5 4.2 0.3 7.8% 7.8% 5.8% Industrial Goods and Services11.7% -21.0% 21.8% 6.4 9.7 8.0 1.4 15.7% 16.8% 3.1% Infrastructure -43.8% 5.3% 6.5% 13.8 15.6 14.6 2.9 18.8% 20.0% 6.6% Media 19.6% 18.5% 22.8% 16.9 17.0 13.8 2.2 13.4% 15.7% 5.4% Oil and Gas -33.5% 20.5% 7.0% 11.9 11.8 11.0 1.3 12.1% 11.3% 5.7% Oil Equipment and Services 73.6% -6.0% 14.5% 8.9 11.3 9.9 2.7 24.5% 26.8% 2.7% Plantations 24.2% -32.9% 29.4% 11.7 20.7 16.0 2.4 13.7% 14.3% 2.6% Property -21.3% 2.2% 7.7% 13.0 15.2 14.1 1.0 6.4% 6.6% 4.5% Technology -33.3% -50.0% 54.7% 10.3 24.5 15.8 1.3 5.3% 8.1% 4.6% Telecommunications -53.5% 5.1% 20.7% 14.2 16.1 13.3 1.8 11.8% 13.4% 12.8% Transportation -58.5% 11.3% 57.1% 18.9 20.2 12.9 1.5 6.9% 11.1% 4.5% Travel and Leisure 18.3% -22.0% 2.2% 9.6 14.7 14.4 1.8 12.9% 11.9% 2.7% Utilities -39.6% 2.3% 24.1% 12.0 14.0 11.3 1.4 11.2% 11.2% 3.3% Note: Numbers may not be comparable to KLCI data presented earlier as these numbers include exceptionals and non-KLCI companies Source: CIMB estimates Figure 18: KLCI statistics KLCI Statistics (@ 1044) 2006 2007 2008 2009F 2010F P/E (x, pre-EI) 15.7 16.9 12.4 15.6 12.7 P/E (x, after EI) 14.3 16.0 13.6 15.6 12.7 P/E (x, core) 16.7 17.7 12.1 15.2 12.8 Core EPS growth (% ) 19.2% 24.3% -10.9% -5.7% 19.0% P/BV (x) 2.0 2.5 1.5 1.7 1.6 Dividend yield (%) 5.3% 4.6% 6.1% 5.3% 5.1% EV/EBITDA (x) 8.6 10.0 7.1 8.1 7.1 P/FCF (x, equity) 27.4 19.9 16.6 22.1 17.0 P/FCF (x, firm) 24.4 17.8 1,153.1 14.0 14.6 Net gearing (%) 33% 23% 30% 24% 20% ROE (%, recurring) 13.2% 15.3% 12.9% 11.4% 12.6% Source: CIMB estimates [ 9 ]
  10. 10. Regional comparison The resurgence of regional markets has reduced Malaysia’s P/E premium over the region from 40-45% earlier in the year to 14-17%. Malaysia’s 2010 P/E is no longer the highest in the region. Its EPS contraction in 2009 is slightly below average but 2010 is slightly above average. This puts Malaysia’s valuations broadly in line with the region. Figure 19: Regional comparisons as at end-May 09 Core P/E (x) Core EPS growth 2008 2009 2010 2008 2009 2010 HK ( CIMB coverage) 12.2 12.8 10.6 30.9% -5.4% 21.6% JCI (ID) 12.0 12.5 11.1 6.4% -3.7% 12.9% KLCI (MY) 12.1 15.3 12.8 -10.9% -5.7% 19.0% FSSTI (SG) 14.0 17.1 13.6 -13.3% -17.8% 25.8% SET (TH) 10.9 10.9 9.5 -4.4% -0.6% 14.4% Simple Region x KL avg 12.3 13.3 11.2 4.9% -6.9% 18.7% KLCI PER premium vs region 17.3% 14.8% 14.3% Source: CIMB Portfolio investment flows Malaysia has suffered four consecutive quarters of outflows of portfolio investments. The outflows were heaviest from 2Q08 to 4Q08. 1Q09 still saw an outflow but the quantum has fallen substantially. We believe 2Q09 could reverse into positive territory should the markets hold up in June as Apr already enjoyed a net inflow of foreign funds, the first in 13 months. Figure 20: Quarterly net portfolio fund flows into Malaysia 30,000 Highest quarterly inflow on record in 1Q07 = RM25.6bn 20,000 10,000 0 RM million (10,000)1Q-95 1Q-96 1Q-97 1Q-98 1Q-99 1Q-00 1Q-01 1Q-02 1Q-03 1Q-04 1Q-05 1Q-06 1Q-07 1Q-08 1Q-09 (20,000) (30,000) Massive outflow in 4Q08= RM33.2bn (40,000) (50,000) Massive outflow in 3Q08= RM56.20bn (60,000) Source: BNM Recommendation changes For the first time in five quarters, we made almost as many recommendation upgrades as downgrades. This is a major improvement and ties in with our upgrade of Malaysia from neutral to Overweight on 2 Apr. After the upgrade, we also upgraded the banking and property sectors as well as other high-beta stocks such as Bursa Malaysia. Nonetheless, we made a sizeable number of downgrades as we downgraded low-beta defensive sectors and stocks that have outperformed such as the tobacco, brewery and consumer stocks. All in all, the number of stocks we upgraded jumped to 13 (three leading up to Feb 09 and eight up to Nov 08) while the number downgraded increased to 14 (11 leading up to Feb 09 and 16 up to Nov 08). The downgrade to upgrade ratio was only to 1.1;1, against the lopsided 3.7:1 in Feb 08, 2:1 in Nov 08 and 8.25:1 in Aug 08. [ 10 ]
  11. 11. Figure 21: Recommendation changes over past 3 months Upgrades Alliance Financial Group (N to O) - undemanding valuation and revival of loan growth in CY10. Astro (U to TB) - Upgraded due to diminishing risks from Indonesia and minimal exposure to adex. Axiata (N to O) - Overhang lifted, more positive view of Celcom and Idea. Bursa Malaysia (U to TB) - Positive market outlook and higher tradin g value to spur earnings. IOI Corp (U to N) - Easing forex loss concern and beneficiary of shift to new indices Kurnia Asia (U to TB) - Better underlying surplus and investment income. Lafarge M Cement (TB to O) - 1Q results beat expectations and we raised earinings forecasts and target prices. Mah Sing (U to N) - Property stocks possess high-beta features and Mah Sing is one of the favourites in the sector. Malayan Banking (U to N) - Strong earnings recovery in FY10 and better-than-expected loan growth and NPL ratio. Sime Darby (U to TB) - Beneficiary of move to new in dices and potential M&As SP Setia (U to TB) - Upgraded due to its status as the key proxy for the property sector due to its management, size and liq uidity. Supermax (N to TB) - Upgraded due to improvement in prospects with the write-off of APLI, better-than-expected 1Q results and improving demand. UM Land (U to TB) - Trading at steep discounts to RNAV and NTA. Downgrades ACPI (N to U) - Results were a big disappointment and we cut forecasts substantially. BAT (N to U) - Unexciting growth prospects, coupled with shift of preference to higher-beta pla ys. Bin tulu Port (O to N) - The stock's outperformance rela tive to KLCI could reverse due to its defensive qualities which are not favoured in rebounds. Carlsberg Brewery (TS to U) - Lost the assurance of attractive dividends. Cost pressures continue to weigh down operations. Dialog (OP to UP) - Limited upside to target price and demanding valuations DiGi (O to N) - Slowing growth momentum from foreign worker and low-end prepaid users, and weaker net adds. Hap Seng Plantations (N to U) - Share price outperformance after our recent upgrade has made valuations le ss attractive. Imaspro Corp (N to U) - Subdued outlook as demand for herbicide/pesticid e is unlikely to pick up strongly after CPO price skid from its Mar 08 highs. JT International (N to U) - Growth potential limited by tough operating environment, coupled with shift of preference to higher-beta plays. MCI (N to U) - Earnin gs are likely to be at risk due to deteriorating newspaper ad volume. Nestle (N to U) - Limited upside to target price and demanding valuations NSTP (N to U) - Earnings are likely to be at risk due to deteriorating newspaper ad volume. Star Publications (N to UP) - Earnings are likely to be at risk due to deteriorating newspaper ad volume. Telekom (O to N) - Share price nearing our target price and lacks catalysts. Source: CIMB estimates Figure 22: Top picks 29/05/09 Tgt. Price Basis of P/E EPS P/NTA ROE Yld Company (RM) (RM) Upside Target Price CY09 CY10 CAGR CY09 CY09 CY10 CY09 KLCI 1,044 1,220 16.8% 15x P/E 15.2 12.8 1.8% 1.7 11.4% 12.6% 5.3% Big Caps (mkt cap >RM5bn) Axiata 2.29 2.75 20.1% SOP based target price 11.9 11.2 -5.6% 1.8 8.6% 9.3% 0.0% Berjaya Sports Toto 4.72 5.65 19.7% 5% discount to DDM 14.9 14.3 2.2% (36.3) 106.3% 92.9% 7.1% Genting 5.45 6.80 24.8% 10% disc to SOP RNAV 16.8 18.1 -18.0% 2.1 8.6% 8.2% 1.3% Public Bank 8.60 11.40 32.6% 2-stage DDM 12.2 10.1 12.8% 3.5 24.0% 25.6% 8.7% Resorts 2.76 3.30 19.6% 10% disc to SOP RNAV 11.7 11.5 1.1% 1.6 14.8% 13.0% 2.6% RHB Cap 4.10 5.22 27.3% 2-stage DDM 11.8 10.3 19.4% 2.0 9.3% 10.1% 3.4% Tanjong 13.50 16.60 23.0% 20% discount to SOP 8.9 8.0 4.1% 1.5 17.8% 18.0% 7.0% YTL Power 2.11 2.61 23.7% SOP value 11.9 10.3 3.2% 1.8 14.4% 15.7% 7.3% Mid caps (mkt cap <RM5bn) Air Asia 1.30 1.80 38.5% P/E 7x 5.2 5.1 95.0% 2.0 36.4% 27.1% 0.0% Alliance Financial 2.17 2.40 10.6% 2-stage DDM 12.0 9.5 110.5% 1.3 10.0% 11.7% 2.5% Kencana 1.84 2.41 31.0% 13.5x CY10 P/E 11.6 10.3 24.7% 6.6 58.5% 42.7% 0.8% Lafarge MC 4.90 5.57 13.7% 13.5x P/E and 1.1x P/BV 11.4 9.6 9.4% 2.2 11.9% 13.6% 4.7% SapCrest 1.46 1.87 28.1% 13.5 CY10 P/E 13.1 10.6 23.8% 1.5 10.4% 12.1% 4.1% Tan Chong 1.70 2.00 17.6% 8x CY10 P/E 8.1 6.7 6.7% 0.7 9.5% 10.8% 5.9% Top Glove 5.85 6.39 9.2% 10% disc to 13.5x P/E 12.65 11.5 16.2% 2.1 18.6% 17.3% 2.6% Wah Seong 1.81 2.42 33.7% 13.5x CY10 P/E 8.9 8.0 10.7% 3.2 31.9% 34.1% 3.9% Small caps (mkt cap < RM1bn) Eksons 0.69 0.90 30.4% 0.5x Px/NTA 4.7 4.6 21.4% 0.4 8.3% 7.9% 5.9% Kossan 3.50 4.98 42.3% 30% disc to 13.5x P/E 7.8 6.6 15.3% 1.5 21.0% 19.8% 3.0% Petra Perdana 2.59 3.86 49.0% SOP value 12.3 5.9 34.1% 1.8 19.2% 26.3% 1.1% QSR Brands 2.89 5.54 91.7% 16x CY10 P/E 9.2 8.4 13.5% 2.1 22.1% 24.3% 4.2% Source: CIMB estimates [ 11 ]
  12. 12. Figure 23: Top picks by category GROWTH DIVIDENDS Kencana B Sports Toto Top Glov e Public Bank Tanjong Air Asia Kossan SapuraCrest Eksons Wah Seong Petra Perdana YTL Pow er Ax iata Tan Chong Lafarge Alliance Financial Resorts QSR Genting RHB Cap UNDEMANDING VALUATIONS Source: CIMB estimates Figure 24: Summary of earning outperformances / underperformances for stocks under coverage Above expectations Below expectations AirAsia Strong y ield AFG Bhd Higher impairment losses and LLP Ax iata Stronger performance at Celcom & TMIB. Astro Higher than ex pected content cost HL Bank Low er LLP and 5% rise in rev enue B Toto Poorer luck factor Kurnia Better inv est. income & underw riting surplus Dialog Margin pressure at ov erseas units Lafarge M Cement Boosted by better domestic & ex port prices Dreamgate Weak rev enue + still high costs MAS Demand w eakening Genting Higher MI and tax es May bank Higher LLP and low er inv estment income Hap Seng Plantation Low er FFB y ield MPI Economic headw inds buffeted rev JobStreet Topline fared relativ ely w ell; margins below ex p PLUS Strong traffic v olumes May bulk Low er dry bulk rates Tenaga Low er-than-ex pected coal usage MCI Ltd Deteriorating new spaper ad-v olume Unisem Economy battered top line MISC Large liner losses, low er tanker rates MTD ACPI India and Thai continue losses NSTP Deteriorating new spaper ad-v olume Proton Higher operating and input costs. Sime Darby Weak plantation and O&G SP Setia Margin squeeze due to material costs Star Deteriorating new spaper ad-v olume Suria Capital Weak port div ision and engineering div ision. Tanjong Pow er and TI disappointed Uchi Regulatory scheme affecting them UMW Weak auto div ision Within expectations Tan Chong Affin AMMB Bursa EON Capital Public Bank RHB Capital nn Joo A Carlsberg F&N Guinness Nestle QSR Brands Eksons Asia File Kossan Pelikan Top Glove Wellcall Ekovest Gamuda IJM LCL Puncak Niaga MRCB WCT Media Prima Kencana Petra Perdana etronas Dagangan Wah Seong P Asiatic IOI Corp KLK Hunza Prop KLCC PropertyDiGi.com Telekom BAT JTI Bintulu Port YTL Power Resorts Source: CIMB estimates [ 12 ]
  13. 13. Appendix: Companies’ 1Q09 results and comments Company Period Deviation in ann. % growth in net profit Comments Chg in EPS core net profit vs. yoy qoq YTD (forward yrs) CIMB Consensus Automotive -142.9% for FY10, and - Proton 4QFY09 nm nm 129 (17) (123) Higher operating and input costs. 76.4% for FY11 Tan Chong 1QFY09 19% 13% (23) 48 (23) None Expect weaker quarters ahead UMW 1QFY09 39% 43% (53) (43) (53) -6% to -26% for FY09-11 Weak auto division Banking & Finance Affin 1QFY09 68% 54% (1) 9 (1) No change 30% drop in non-int. and 14.8% rise in LLP Alliance 4QFY09 -28% -29% (99) (98) (40) No change Higher impairment losses and LLP AMMB 4QFY09 1% 3% (17) (28) 29 No change Lower MI and 33% drop in LLP Bursa 1QFY09 -60% -37% (63) 15 (63) No change 65% plunge in 1Q market trading value EON Capital 1QFY09 86% 47% 4 (11) 4 No change 58% drop in LLP offsetting lower NIM HL Bank 3QFY09 21% 16% 0 (20) 16 +10% Lower LLP and 5% rise in revenue Maybank 3QFY09 13% -2% (34) (31) (19) 5% to 9% Higher LLP and lower investment income RHB Capital 1QFY09 25% 4% 3 16 3 +2.1% RM20m write-back but LLP +15% Building materials Ann Joo 1QFY09 -154% -117% (140) (80) (140) No change Expect better quarters ahead. Lafarge M C 1QFY09 107% 111% 47 2 47 4 to 7% Boosted by better domestic & export prices Conglomerate Sime Darby 3QFY09 -10% -20% (85) 116 (45) +2% to -7% for FY09-11 Weak plantation and O&G Food & beverage Carlsberg 1QFY09 7% 11% (19) 123 (19) No change Stronger on seasonal factors. F&N 2QFY09 18% 14% 20 5 13 No change Soft drink sales gained from CNY timing Guinness 3QFY09 12% 12% (10) (6) 8 No change Stronger on seasonal factors. QSR Brands 1QFY09 -21% None (1) (7) (1) No change Same-store growth down on CNY timing Gaming B Toto 3QFY09 -10% -4% (1) (15) 5 -10% for FY09 Poorer luck factor Dreamgate 1QFY09 -537% -385% (268) 114 (268) -7% to -22% Weak revenue + still high costs Genting 1QFY09 -23% -12% (41) (63) (41) -4% to -6% Higher MI and taxes Resorts 1QFY09 -14% -2% 3 (18) 3 -2% to -3% Expect seasonally stronger 2H Tanjong 4QFY09 -15% -12% (53) (34) (8) -7% to -8% Power and TI disappointed Industrial Eksons 4QFY09 7% -12% (66) (40) (66) No change Weak plywood demand and prices Asia File 4QFY09 3% -10% 60 183 60 No change Slow Europe and US sales growth Kossan 1QFY09 -21% -22% 1 (11) 1 No change Expect improving earnings in future Pelikan 1QFY09 2% -10% na (118) na No change Slowdown in Europe sales Top Glove 2QFY09 2% 7% 28 4 22 No change Higher ASP and stronger USD Wellcall 2QFY09 0% -10% (55) (44) 4 No change Demand slowdown due to global crisis Infrastructure MTD ACPI 4QFY09 -50% -56% 197 145 197 -40 To -44% India and Thai continue losses Ekovest 3QFY09 -25% -25% (72) (38) (59) No change Diminishing orderbook Gamuda 2QFY09 -23% -24% (46) (11) (42) No change Construction and property weakness IJM 4QFY09 -0.01% -0.01% (24) (7) (1) No change Construction outlook improves LCL 1QFY09 -5% -8% (251) (13) (251) No change Furthe provision for Dubai jobs PLUS 1QFY09 +7% +1% 1 (6) 1 +1.8% to +1.9% Strong traffic volumes Puncak Niaga 1QFY09 -98% -98% (86) (138) (86) No change Better quarters ahead from tariff hike MRCB 1QFY09 -87% -97% (99) (101) (99) No change Construction and property to improve WCT 1QFY09 +18% 0.16 (29) 6 (29) No change Expecting a weak 4Q Insurance Kurnia Asia 3QFY09 120% 156% na. na. na. +90% to +200% Better invt income & underwriting surplus Source: Company, CIMB estimates [ continued on the following page… ] [ 13 ]
  14. 14. [ continued from the previous page… ] Appendix: Companies’ 1Q09 results and comments (continued) Company Period Deviation in ann. % growth in net profit Comments Chg in EPS Core net profit vs. yoy qoq YTD (forward yrs) CIMB Consensus Media Astro 4QFY09 -31% >+100% (116) 24 84 -30% to -65% Higher-than-expected content cost Media Prima 1QFY09 -70.6% -85 (80) (91) (80) No change 1Q09 is usually the weakest NSTP 1QFY09 <-100% <-100% (132) (140) (132) -30% Deterioratin g newspaper ad volume MCI Ltd 4QFY09 -22% -16% (164) (113) 56 -23% to -27% Deterioratin g newspaper ad volume Star 1QFY09 -60% -49% (57) (51) (57) -14% to -22% Deterioratin g newspaper ad volume Oil & gas Dialog 3QFY09 -25% -25% (7) (6) 4 -14% to -17% Margin pressure at overseas units Kencana 2QFY09 -8% -4% 26 (18) 52 None KM1 contributes for the first full year Petra Perdana 1QFY09 -49% -48% 4 188 4 -5% to -6% Expect stronger 2H due to a bigger fleet Petronas Dagangan 4QFY09 3% -1% 3 305 (13) No change Margin improvement & volume recovery Wah Seong 1QFY09 -22% -20% (10) 9 9 No change Expect more SSGP pipe shipments Plantations Asiatic 1QFY09 -34% -40% (68) 0 (68) No change Weak CPO price and output Hap Seng Plantation 1QFY09 -60% -68% - (53) - - 5% for FY09 Lower FFB yield IOI Corp 3QFY09 -1% -1% (58) (3) (30) 2% to -17% for FY09-11 Higher forex loss KLK 2QFY09 1% 0% -52 -50 -36 - 5% for FY09 Weak CPO price and output Property +1.1% to +1.3% for FY09- Hunza Prop 3QFY09 -4% -4% (40) (15) (52) Soft sales, but margins boost from Infinity 11 KLCC Property 4QFY09 3% 2% (2) (4) 4 No change Earnings growth from office and mall SP Setia 1QFY09 -44% -47% (36) (37) (36) -5% to -31% Margin squeeze due to material costs Technology JobStreet 1QFY09 -18.2% -16.1% (47) (21) (47) -9% to -20% Topline fared relatively well; margins below exp MPI 3QFY09 151% 122% (573) (911) (116) +47% to +148% Economic headwinds buffeted rev Uchi 1QFY09 -32% 145% (53) (20) (53) -28% to -36% Regulatory scheme affecting them Telecommunications DiGi.com 1QFY09 -4% 3% (6) (2) (6) -0.03 Slowing rev growth and net adds Axiata 1QFY09 -3% -6% (28) (1,424) (28) 7-10% Stronger performance at Celcom & TMIB. Telekom 1QFY09 53% 50% (20) 65 (20) -2% to -14% Lower opex and weakness in broadband Tobacco BAT 1QFY09 -1% -1% (3) 19 (3) -1.8% to -2.7% for FY09-11 Impact from illicit trade and brand migration JTI 1QFY09 28% 27% 7 251 7 No change Improved sales volu me. Transportation +8% FY09, +26% FY10, AirAsia 1QFY09 20% 62% 603 16 (27) Strong yield +19% FY11 Bintulu Port 1QFY09 27% 27% (3) 43 (3) -3.1% to -6.1% for FY09-10 Weaker 2H expected from dredging costs. MISC 4QFY09 -7% -12% (73) (27) (37) -6% FY10, -5% FY11 Large liner losses, lower tanker rates -30% FY09, -22% FY10, - Maybulk 1QFY09 -73% -69% (86) 73 (96) Lower dry bulk rates 28% FY11 -187% for FY09, +25% MAS 4QFY08 341% -32% (86) 130 (84) Demand weakening FY10 Suria Capital 1QFY09 -20% -7% (16) 215 (16) -5% to -14% for FY09-11 Weak port division and engineering division. Utilities +2.2 to +4.6% increase in Tenaga 2QFY09 16% 28% 3 60 (37) Lower-than-expected coal usage FY09-11 YTL Power 3QFY09 -5% -9% (20) 3 (19) No changes Expect stronger quarters ahead Source: Company, CIMB estimates [ 14 ]
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