CPI

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Disinflation momentum continues…
Consumer Price Index (CPI, 2005=100) moderated further in Mar ’09 to 3.5% YoY (Maybank IB estimate: 3.7% YoY; Consensus estimate: 3.6% YoY) from 3.7% YoY in Feb 09 and the peak of 8.5% YoY in Jul-Aug ‘08. This marked the seventh consecutive month of disinflation. MoM, inflation rate was down by 0.2%, the sixth sequential drop over the past seven months. Led by “disinflation” in Food and Non Alcoholic Beverages (FNAB) prices and “deflation” in Transport costs... The YoY increase in FNAB prices slowed for the sixth straight month while Transport costs declined for the fourth month in a row. Both account for 47.3% of CPI’s basket of goods and services and ¾ of last month inflation rate. There were no significant movements or notable changes in the price trends of other goods and services. Consequently, our measure of CPI ex-FNAB and Transport was little changed at 2.1% YoY last month compared with 2.2% YoY in the preceding month. Technical deflation is on the card as % YoY monthly inflation rate may turn negative between mid-year up to late-3Q09 or early-4Q09 due to the high-base from last year’s sharp hike in fuel and energy prices, as well as taking cue from the producer price index (PPI) which has turned negative since Nov ‘08. Therefore, maintaining our 2009 and 2010 inflation rate forecasts of 1% and 1.5% respectively, which is a marked deceleration from 5.4% in 2008 amid the environment of global/local economic downturn and lower commodity prices. Year-to-date inflation rate is 3.7%.

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CPI

  1. 1. Equity Research PP11072/03/2010 (023549) Economics 23 April 2009 CPI, Mar 09 Disinflation momentum continues… Consumer Price Index (CPI, 2005=100) moderated further in Mar Suhaimi Ilias ’09 to 3.5% YoY (Maybank IB estimate: 3.7% YoY; Consensus Suhaimi_ilias@maybank-ib.com estimate: 3.6% YoY) from 3.7% YoY in Feb 09 and the peak of 8.5% (603) 2297 8682 YoY in Jul-Aug ‘08. This marked the seventh consecutive month of disinflation. MoM, inflation rate was down by 0.2%, the sixth sequential Ramesh Lankanathan drop over the past seven months. ramesh@maybank-ib.com Led by “disinflation” in Food and Non Alcoholic Beverages (603) 2297 8685 (FNAB) prices and “deflation” in Transport costs... The YoY increase in FNAB prices slowed for the sixth straight month while Transport costs declined for the fourth month in a row. Both account for 47.3% of CPI’s basket of goods and services and ¾ of last month inflation rate. There were no significant movements or notable changes in the price trends of other goods and services. Consequently, our measure of CPI ex-FNAB and Transport was little changed at 2.1% YoY last month compared with 2.2% YoY in the preceding month. Technical deflation is on the card as % YoY monthly inflation rate may turn negative between mid-year up to late-3Q09 or early-4Q09 due to the high-base from last year’s sharp hike in fuel and energy prices, as well as taking cue from the producer price index (PPI) which has turned negative since Nov ‘08. Therefore, maintaining our 2009 and 2010 inflation rate forecasts of 1% and 1.5% respectively, which is a marked deceleration from 5.4% in 2008 amid the environment of global/local economic downturn and lower commodity prices. Year-to-date inflation rate is 3.7%. Table 1: Malaysia: Consumer Price Index (CPI, 2005=100) (% YoY) YTD Dec-08 Jan-09 Feb-09 Mar-09 2008 09 Total 4.4 3.9 3.7 3.5 3.7 5.4 Food and Non-Alcoholic 10.4 9.8 9.2 8.8 9.2 8.8 Beverages Alcoholic Beverages 8.4 8.3 8.2 8.3 8.3 7.3 and Tobacco Clothing and Footwear (0.5) (0.8) (0.6) (0.6) (0.8) (0.5) Housing, Water, Electricity, Gas and 1.8 1.7 1.5 1.4 1.6 1.6 Other Fuels Furniture, Household Equipment and Routine 4.6 4.9 4.7 4.5 4.6 3.0 Household Maintenance Health 2.6 2.6 2.7 2.6 2.6 2.2 Transport (0.3) (2.1) (2.1) (2.1) (2.1) 8.8 Communication (0.6) (0.5) (0.5) (0.6) (0.5) (0.6) Recreation Services 1.3 1.1 1.0 1.0 1.0 1.8 and Culture Education 2.8 3.0 2.5 2.5 2.7 2.3 Restaurants & Hotels 5.2 4.6 4.3 4.2 4.4 6.6 Miscellaneous Goods & 2.6 2.7 3.8 3.6 3.4 3.3 Services Source: Dept. of Statistics
  2. 2. Consumer Price Index Malaysia: Consumer Price Index (% YoY) 14 25 12 20 10 15 Transport (RHS) 8 10 6 FNAB 5 4 CPI 0 2 Utilities, Housing & Other Fuels 0 (5) Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 May-02 May-03 May-04 May-05 May-06 May-07 May-08 Source: Department of Statistics CPI: Contribution to Growth (percentage points) 4.0 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 3.0 2.0 1.0 0.0 Food and Non-Alcholic Restautants & Hotels Alcoholic Beverages & Housing, Water, Electricity, G Others Transport (incl. fuel) (1.0) Beverages as & Other Fuels Tobacco Source: Maybank-IB Malaysia: Consumer Price Index and Producer Price Index (% YoY) 9 15 8 10 7 PPI (RHS) 6 5 5 4 0 3 2 (5) 1 CPI (LHS) 0 (10) Nov-00 Nov-05 Jan-00 Jun-00 Jan-05 Jun-05 Jul-02 Jul-07 May-03 May-08 Feb-02 Mar-04 Feb-07 Mar-09 Apr-01 Oct-03 Apr-06 Oct-08 Sep-01 Dec-02 Aug-04 Sep-06 Dec-07 (1) (2) (15) Source: Maybank-IB 23 April 2009 Page 2 of 4
  3. 3. Consumer Price Index Global: Consumer Price Index (% YoY) Dec-08 Jan-09 Feb-09 Mar-09 YTD 09 2008 UK 3.1 3.0 3.2 2.9 3.0 3.6 Eurozone 1.6 1.1 1.2 0.6 1.0 3.3 Germany 1.1 0.9 1.0 0.4 0.8 2.8 US 0.1 0.0 0.2 (0.4) (0.1) 3.9 Japan 0.4 0.0 (0.1) - (0.1) 1.4 OECD 1.6 1.3 1.3 - 1.3 3.6 Russia 13.3 13.4 13.9 14.0 13.8 14.1 Brazil 5.9 5.8 5.9 5.6 5.8 5.7 India 5.9 4.4 2.4 0.3 2.2 9.1 China 1.2 1.0 (1.6) (1.2) (0.6) 5.9 S. Korea 4.1 3.7 4.1 3.9 3.9 4.7 Hong Kong 2.1 3.1 0.8 - 2.0 4.3 Singapore 4.3 2.9 1.9 - 2.4 6.5 Taiwan 1.3 1.5 (1.3) (0.2) 0.0 3.5 Vietnam 19.9 17.5 14.8 11.3 14.5 23.1 Indonesia 11.1 9.2 8.6 7.9 8.6 10.3 Philippines 8.0 7.1 7.3 6.4 6.9 9.3 Malaysia 4.4 3.9 3.7 3.5 3.7 5.4 Thailand 0.4 (0.4) (0.1) (0.2) (0.2) 5.5 Source: Bloomberg Global Inflation Rate (% YoY) 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 Oct-01 Apr-05 Oct-08 Aug-00 Dec-02 Sep-04 Nov-05 Aug-07 Jan-00 Jun-06 Jan-07 Jul-03 May-02 Mar-01 Feb-04 Mar-08 Note: Weighted Average CPI of OECD, BRIC, Asian NIEs and ASEAN Source: Maybank-IB 23 April 2009 Page 3 of 4
  4. 4. Consumer Price Index Definition of Ratings Maybank Investment Bank Research uses the following rating system: STRONG BUY Total return is expected to exceed 20% in the next 12 months; high conviction call BUY Total return is expected to be above 10% in the next 12 months HOLD Total return is expected to be between above 0% to 10% in the next 12 months FULLY VALUED Total return is expected to be between -10% and 0% in the next 12 months SELL Total return is expected to be below -10% in the next 12 months TRADING BUY Total return is expected to be between 10-20% in the next 6 months arising from positive newsflow e.g. mergers and acquisition, corporate restructuring, and potential of obtaining new projects. However, the upside may or may not be sustainable Applicability of Ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Some common terms abbreviated in this report (where they appear): Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Ratio To Growth CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax Disclaimer This report is for information purposes only and under no circumstances is it to be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Bhd and consequently no representation is made as to the accuracy or completeness of this report by Maybank Investment Bank Bhd and it should not be relied upon as such. Accordingly, no liability can be accepted for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Maybank Investment Bank Bhd, its affiliates and related companies and their officers, directors, associates, connected parties and/or employees may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice. This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward- looking statements. Maybank Investment Bank Bhd expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. This report is prepared for the use of Maybank Investment Bank Bhd's clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of Maybank Investment Bank Bhd and Maybank Investment Bank Bhd accepts no liability whatsoever for the actions of third parties in this respect. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Published / Printed by Maybank Investment Bank Berhad (15938-H) (Formerly known as Aseambankers Malaysia Berhad) (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888; Fax: (603) 2078 4194 Stockbroking Business: Level 8, MaybanLife Tower, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888; Fax: (603) 2282 5136 http://www.maybank-ib.com 23 April 2009 Page 4 of 4

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