The majority down. 62% of our 72-stock universe suffered lower sequential quarterly net profits, with 24% surprising on the downside. The combined 1Q09 net profit of our research universe fell by just 3.5% QoQ. But stripping out 5 large gainers, net profits fell a larger 13.6% QoQ. Consumers and glove manufacturers’ defied gravity, but net profits of virtually all stocks in nine sectors fell quarter-on-quarter. A surprising combined result, but the devil is in the details. The combined net profit of our research universe declined just 3.5% QoQ despite an overwhelming 62% of companies reporting a sequential quarterly decline. But excluding five companies, combined net profit fell 13.6% QoQ, an acceleration from previous quarters. A broad-based earnings decline is being masked by a few companies, including some monopolies. Declines in nine sectors, but consumer sector unscathed. Every stock in nine sectors, excluding monopolies Petronas Gas and KLCCP, experienced a drop in quarterly sequential earnings. The sectors are gaming, oil & gas, property, REITs, construction, building materials, semi-conductors, plantations and toll roads. Consumer stocks and glove manufacturers showed particular resilience. An ‘energy dividend’ took effect; monopolies fared well. Lower oil prices benefited heavy fuel users AirAsia and Tenaga. Their gains were only partially offset by lower earnings at the oil & gas services companies. Net profits of Telekom, Tenaga and Petronas Gas, all effectively monopolies, improved on a quarterly basis although only Petronas Gas raised prices in 1Q09. The biggest disappointment and downgrade: 1Q GDP. First quarter 2009 GDP fell 6.2% YoY, against consensus expectations of a 3-4% drop. We have revised our GDP forecasts to -3.8% in 2009 and +4.0% YoY in 2010 (previously -1.3% and +3.5% respectively). The government, to be ahead in the expectations game, is projecting 2009 GDP growth of -4% to -5%. The silver lining is the government is now under greater pressure to implement its fiscal stimulus plans quickly. A reversal of fortune ahead for construction, building materials. Despite uniformly lower earnings this 1Q, we believe the construction and building materials sectors are only 2-3 quarters away from improved revenues. Share prices of stocks in these sectors will likely be driven by newsflow from the fiscal stimulus rather than earnings.

1. Equity Research
PP11072/03/2010 (023549)
Market Strategy 2 June 2009
1Q earnings wrap A few big winners, many losers
KLCI: 1,061.8
The majority down. 62% of our 72-stock universe suffered lower
YE Target: 990 sequential quarterly net profits, with 24% surprising on the downside.
The combined 1Q09 net profit of our research universe fell by just 3.5%
Andrew Lee, CFA QoQ. But stripping out 5 large gainers, net profits fell a larger 13.6%
andrew.lee@maybank-ib.com QoQ. Consumers and glove manufacturers’ defied gravity, but net
(603) 2297 8680 profits of virtually all stocks in nine sectors fell quarter-on-quarter.
A surprising combined result, but the devil is in the details. The
combined net profit of our research universe declined just 3.5% QoQ
despite an overwhelming 62% of companies reporting a sequential
quarterly decline. But excluding five companies, combined net profit fell
13.6% QoQ, an acceleration from previous quarters. A broad-based
earnings decline is being masked by a few companies, including some
monopolies.
Declines in nine sectors, but consumer sector unscathed. Every
stock in nine sectors, excluding monopolies Petronas Gas and KLCCP,
experienced a drop in quarterly sequential earnings. The sectors are
gaming, oil & gas, property, REITs, construction, building materials,
semi-conductors, plantations and toll roads. Consumer stocks and
glove manufacturers showed particular resilience.
1Q results of our Research Universe An ‘energy dividend’ took effect; monopolies fared well. Lower oil
Rising Falling
prices benefited heavy fuel users AirAsia and Tenaga. Their gains were
% of coys with rising/falling 38 62
only partially offset by lower earnings at the oil & gas services
QoQ Net Profit
Above Below companies. Net profits of Telekom, Tenaga and Petronas Gas, all
% of coys with 1Q Net 11 24 effectively monopolies, improved on a quarterly basis although only
Profit above/below Petronas Gas raised prices in 1Q09.
expectations
The biggest disappointment and downgrade: 1Q GDP. First quarter
2009 GDP fell 6.2% YoY, against consensus expectations of a 3-4%
drop. We have revised our GDP forecasts to -3.8% in 2009 and +4.0%
YoY in 2010 (previously -1.3% and +3.5% respectively). The
government, to be ahead in the expectations game, is projecting 2009
GDP growth of -4% to -5%. The silver lining is the government is now
under greater pressure to implement its fiscal stimulus plans quickly.
A reversal of fortune ahead for construction, building materials.
Despite uniformly lower earnings this 1Q, we believe the construction
and building materials sectors are only 2-3 quarters away from
improved revenues. Share prices of stocks in these sectors will likely
be driven by newsflow from the fiscal stimulus rather than earnings.
Top Stock Buys
Price EPS (sen) PE EPS Growth (%) Net Yield (%)
TP Jun-1 2009F 2010F 2009F 2010F 2009F 2010F 2009F
IJM Corp 6.30 5.75 26.8 34.3 21.5 16.8 -27.8 28.1 4.6
Kinsteel 1.30 0.91 5.9 16.4 15.3 5.5 72.1 176.5 0.0
Lafarge 5.60 5.05 38.1 47.2 13.3 10.7 -12.0 23.9 3.0
SunCity 3.70 2.92 29.8 30.4 9.8 9.6 5.5 2.0 2.1
Telekom 3.54 2.65 18.6 19.6 14.3 13.5 -9.6 5.5 7.7
Resorts 3.10 2.85 21.7 18.4 13.1 15.5 -7.7 -15.2 1.7
Source: Maybank-IB

2. Market Strategy
62% reported lower quarterly profits
The big picture surprise. The main surprise this quarter is that
aggregate recurring net profits (NP) of the 72 stocks we cover fell by
only 3.5% between 4Q08 and 1Q09, compared to a 10.6% QoQ drop in
4Q08, and 17.6% QoQ drop in 3Q08. This is despite the fact that within
our research universe of 72 stocks that reported earnings in April and
May, 62% reported lower quarterly sequential NP.
Combined Net Profit of Maybank-IB coverage, 1Q09 (RM m)
16000
14,317 14,811 % chg refers to QoQ change
13,586
14000
12,210
12000 10,911
10,531
10000
5.4% 3.5% -17.6% -10.6% -3.5%
8000
6000
4000
2000
0
CY 4Q07 CY 1Q08 CY 2Q08 CY 3Q08 CY 4Q08 CY 1Q09
Source: Maybank-IB
5 large capitalization stocks made the difference. Three monopolies
and two other stocks, Axiata and Air Asia, explain the anomaly of more
companies with declining earnings, but total quarterly NP falling by a
smaller percentage. Axiata’s NP reversed from a RM117m loss to a
RM101m net profit due mainly to its Indonesian operations. Air Asia’s
RM46m NP growth to RM167m was driven by air-travellers shifting to
low-cost flights and lower fuel costs.
Monopoly profits were sustained. Telekom Malaysia, Tenaga,
Petronas Gas, KLCCP and MAHB continued to report higher quarterly
profits. Telekom saw non-voice revenue grow in double digits and
higher margins as high speed broadband roll-out slowed in the quarter.
Tenaga benefited from lower coal costs and a shift to cheaper gas in
the fuel mix while tariffs were unchanged. Petronas Gas’s Utilities
division raised gas prices to its industrial users. KLCCP raised some
rental rates at its ExxonMobil and Dayabumi buildings.
Excluding the NP of 5 companies (Telekom, Tenaga, PGas, Axiata,
Airasia) combined recurring NP plunged 13.6% QoQ, an acceleration
from previous quarters. This gives us a more accurate picture as both
Axiata and Air Asia experienced their earnings collapses in earlier
quarters (third or fourth quarter of calendar year 2008) and their profit
recovery distorts the bigger picture. A 13.6% QoQ drop in combined
NP is also the highest rate of decline in the past three quarters.
2 June 2009 Page 2 of 8

3. Market Strategy
Combined NP excluding monopolies, Axiata & AirAsia, 1Q09 (RM m)
% chg refers to QoQ change
14000
12,214 13,098
11,118 11,510
12000
10,307
10000 8,906
8000
9.9% 7.2% -12.1% -10.5% ‐13.6%
6000
4000
2000
0
CY 4Q07 CY 1Q08 CY 2Q08 CY 3Q08 CY 4Q08 CY 1Q09
Source: Maybank-IB
The Energy Dividend (RM m) Lower oil prices are a double-edged sword, but are net positive.
QoQ chg in NP Two substantial beneficiaries of lower oil prices in 1Q were AirAsia and
Higher NP from Tenaga, A’Asia 421.8 Tenaga, whose NP rose by RM422m in total. Offsetting that was lower
Lower O&G services NP -79.5 NP from the oil and gas services companies, which lost an aggregate
342.3 RM79.5m QoQ. But if one considers the lower plantation earnings to be
Lower plantation NP -285.4 related to the lower oil price (due to the correlation of CPO prices to oil)
Net oil price dividend 56.9 then the lower plantations NP almost fully offsets the ‘energy dividend’.
Looking ahead, Air Asia and MAS will have to deal with more
expensive jet fuel in the current quarter. Tenaga, however, will continue
to benefit as coal prices have not followed crude oil prices up.
Furthermore, any tariff review which could reduce electricity tariffs will
be implemented in July or August at the earliest. The entire plantations
sector will likely report sequential quarterly profit growth as CPO prices
are so far 35% above the RM1,929/t average price in 1Q09.
2 June 2009 Page 3 of 8

4. Market Strategy
Sector comments
Across-the-board decline in 9 sectors. Every single stock under our
coverage in 9 sectors saw reduced profits – plantations, REITs,
gaming, property (except KLCCP), construction, building materials,
semi-conductors, toll roads and oil & gas (except Petronas Gas).
The consumer sector was largely unscathed. Net profits in our
consumer sector coverage fell just 2.6% QoQ. Strong consumer
franchises such as Carlsberg, Nestle, JT International and British
American Tobacco continued to show QoQ profit growth.
The full tally of sector profits and QoQ changes is listed on page 8.
Rubber gloves – positive outlook reaffirmed
The result season reaffirmed our positive outlook on the rubber gloves
manufacturing industry. Top Glove, Hartalega and Kossan’s resilient
businesses stand out in the midst of the global economic slowdown.
Sales volume and earnings continued to rise YoY, driven by capacity
expansion programs. EBIT margins also expanded, testament to the
ability to pass on costs (i.e. energy, latex).
Malaysia’s gloves manufacturers, especially the established players
with >1b gloves capacity p.a. will continue to dominate the global OEM
market, growing organic and inorganically. Their advantages –
engineering capability, product-quality, pricing-strategy, economies of
scale, operational efficiencies and balance sheet strength – will prove
difficult for new and small players to emulate and replicate.
Hartalega (HART MK; Buy; TP: RM4.00) is our top pick in the sector. It
is the most efficient with the best profit margin in the gloves
manufacturing industry. Kossan (KRI MK; Buy; TP: RM4.00) is also on
our Buy list. As for Top Glove (TOPG MK; TP: RM6.00), we advocate
a switch to Hartalega on valuation grounds as the stock price is
approaching our TP. Maintain Overweight on the sector.
Combined NP of Rubber gloves manufacturing sector 1Q09 (RM m)
80 76
% chg refers to QoQ change
68
70
59 58
60
51 52
50
40 -13.8% 3.1% 11.2% 15.9% 11.9%
30
20
10
0
CY 4Q07 CY 1Q08 CY 2Q08 CY 3Q08 CY 4Q08 CY 1Q09
Source: Maybank-IB
2 June 2009 Page 4 of 8

5. Market Strategy
Telecommunications – TM preferred
Earnings recovered QoQ. NP spiked 93% QoQ to RM576m after the
low 4Q08. Axiata was the star performer, reversing its RM117m loss to
a RM101m NP, citing the end of a price war in Indonesia and the
benefits of strengthened foreign currencies, primarily the Indonesian
Rupiah as drivers. Telekom Malaysia raised NP 49% QoQ as it
mitigated a 6.5% drop in voice revenues by registering resilient data
and Internet revenues (-1.3% QoQ only) and cost savings that raised
EBITDA margins by 8.3%-pts QoQ to 38.8%.
Still just halfway there. 1Q09 NP, however, is only 64% of the 1Q08
level. Although 1Q09 NP at both DiGi.Com (-6.3% YoY) and Telekom
Malaysia (-17.2% YoY) were slightly weaker YoY, the main culprit,
contributing 82% of the decline, was Axiata. It will be a challenge for
Axiata to return to 1H08 NP levels as the competitive intensity in
Indonesia and Sri Lanka continues to ratchet up.
Asian celcos’ worst nightmare – more funds needed. Axiata and its
Indonesian subsidiary Excelcomindo confirmed our contention that the
latter requires a further infusion of capital. Excelcomindo believes it
should add USD300-600m (RM1.5-2.1b) in new funds, of which 83.8%-
owner Axiata’s share would be RM1,257-1,760m.
EBITDA/sub is falling. DiGi and Celcom displayed continued
EBITDA/sub declines. DiGi managed to post flat QoQ EBITDA/sub at
just over RM75 but this was well below 1Q08’s RM85. Celcom posted
its largest QoQ EBITDA/sub decline of 4.5% in 1Q09 to RM72 – raising
fears that future EBITDA growth could be muted. At Axiata (i.e. Celcom
and other operating subsidiaries), EBITDA/sub declined from a high of
RM34 in 4Q07 to RM26 in 1Q09. Axiata’s earnings growth rates need
to pick up substantially and swiftly to attract more investor attention
given its low absolute EBITDA/sub level.
Back the quasi-monopoly. We remain upbeat on TM’s prospects,
taking a contrarian stand against consensus expectations. First, we
expect core data and internet revenue growth (+17% YoY in 1Q) will
off-set expected voice revenue declines. Second, TM offers a minimum
RM700m p.a. net dividend that offers a 10.2% gross dividend yield,
ahead of DiGi’s 8.3%. This contrasts starkly to the expected earnings
stagnation or disappointments that DiGi and Axiata offer.
Telecommunications: Local Celcos’ EBITDA/sub (RM)
Digi.Com Celcom Axiata
RM
100
80
60
40
20
4Q07 1Q08 2Q08 3Q08 4Q08 1Q09
Source: Maybank-IB
2 June 2009 Page 5 of 8

6. Market Strategy
Combined NP of Telco sector 1Q09 (RM m)
930
1000
907
% chg refers to QoQ change
900
830
800 693
700
576
600
500 -2.5% -8.4% -16.5%
400
299 92.7%
300
200
-56.9%
100
0
CY 4Q07 CY 1Q08 CY 2Q08 CY 3Q08 CY 4Q08 CY 1Q09
Source: Maybank-IB
THE BUY LIST THE SELL LIST
Name Mkt Cap TP Name Mkt Cap TP
AEON Credit 354 3.16 AirAsia 3,087 1.12
AEON Co 1,481 4.70 Asiatic 4,088 3.80
Alam Maritim 680 1.55 Axiata 19,339 2.18
Axis REIT 371 1.78 BCHB 30,615 6.80
Bintulu Port 2,400 6.70 Bursa 3,765 3.76
Sports Toto 6,377 5.40 Digi.Com 18,038 19.60
CB Ind Product 406 3.60 Dialog 1,597 1.20
Guinness 1,843 6.50 EON Capital 2,704 3.40
Hartalega Hldgs 804 4.00 F&N Hldgs 3,173 6.70
HSL 484 1.17 Genting 20,186 4.40
IJM Corp 5,322 6.30 IOI Corp 28,232 3.50
KFC 1,368 7.90 KL Kepong 12,276 9.80
KLCC Prop 2,914 3.60 KNM Group 3,572 0.80
Kossan Rubber 560 4.00 MISC 31,247 7.50
Kinsteel 830 1.30 MPI 1,081 4.20
Litrak 1,140 2.88 Media Prima 990 1.00
MAHB 3,960 4.00 Public Bank 30,375 7.60
Petra Perdana 771 3.24 Proton 1,637 2.50
PLUS 16,500 3.80 Petronas Gas 19,392 8.80
QL Resources 898 3.46 SapCrest 1,853 1.00
Quill Capita 341 1.10 Shell 3,270 7.80
RCE Capital 395 0.85 SP Setia 3,823 2.00
JTI 1,182 5.30 Star 2,334 2.54
Resorts World 16,289 3.10 Tan Chong 1,142 1.05
SunCity 1,353 3.70 TH Plantations 809 1.38
Sunrise 827 1.90 Tj Offshore 338 1.30
Telekom 9,373 3.54 Unisem 570 0.77
Tanjong 5,444 17.60 Wah Seong 1,223 1.80
Lafarge 4,164 5.60
Top Glove 1,768 6.00
WCT 1,622 2.20
Sunway Hldgs 647 1.55
Total mkt cap 92,867 250,756
Source:Maybank-IB
2 June 2009 Page 6 of 8

7. Market Strategy
Sector Quarterly Recurring Net Profit, Maybank-IB research universe
Sector CY 4Q07 CY 1Q08 CY 2Q08 CY 3Q08 CY 4Q08 CY 1Q09
Financials 2332.2 2441.1 2723.0 2229.3 2289.2 2182.3
Plantations 1928.2 2153.6 2134.4 1908.6 868.6 583.2
Energy utilities 959.8 788.2 515.1 16.6 499.5 802.6
Telcos 929.6 906.6 830.4 693.4 299.0 576.3
Transport 623.4 833.3 632.4 384.9 386.6 488.6
Construction, infra., Bldg mat 821.6 713.3 852.4 921.2 752.0 414.4
Oil & gas 393.0 516.6 587.1 378.3 535.3 579.9
Property & REIT 159.9 164.7 183.8 170.7 174.7 165.5
Consumer and autos 4346.4 4930.8 5504.5 4690.2 4310.7 4197.3
Gaming 826.8 718.0 657.4 622.5 649.3 531.5
Media 96.9 68.6 85.6 84.1 81.1 10.7
Technology 109.2 31.3 52.9 52.4 -2.9 -77.0
Manufacturing 59.0 50.9 52.5 58.3 67.6 75.6
Sum RM (m) 13586.2 14316.9 14811.4 12210.4 10910.7 10530.9
QoQ changes (%)
Financials 4.7% 11.6% -18.1% 2.7% -4.7%
Plantations 11.7% -0.9% -10.6% -54.5% -32.9%
Energy utilities -17.9% -34.7% -96.8% 2908.2% 60.7%
Telcos -2.5% -8.4% -16.5% -56.9% 92.7%
Transport 33.7% -24.1% -39.1% 0.4% 26.4%
Construction, infra., Bldg mat -13.2% 19.5% 8.1% -18.4% -44.9%
Oil & gas 31.4% 13.6% -35.6% 41.5% 8.3%
Property & REIT 3.0% 11.6% -7.1% 2.4% -5.3%
Consumer and autos 13.4% 11.6% -14.8% -8.1% -2.6%
Gaming -13.2% -8.4% -5.3% 4.3% -18.1%
Media -29.2% 24.9% -1.9% -3.5% -86.8%
Technology -71.4% 69.0% -0.9% -105.5% 2568.1%
Manufacturing -13.8% 3.1% 11.2% 15.9% 11.9%
Sum 5.4% 3.5% -17.6% -10.6% -3.5%
Total excl 3 monopolies 11748.1 12630.3 13482.5 11569.0 10236.3 9173.3
QoQ changes (%) 7.5% 6.7% -14.2% -11.5% -10.4%
Total excl 3 monopolies, Airasia, Axiata 11118.2 12214.3 13098.3 11510.4 10307.1 8905.6
QoQ changes (%) 9.9% 7.2% -12.1% -10.5% -13.6%
Source:Maybank-IB
2 June 2009 Page 7 of 8

8. Market Strategy
Definition of Ratings
Maybank Investment Bank Research uses the following rating system:
BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between -5% to 10% in the next 12 months
SELL Total return is expected to be below -5% in the next 12 months
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
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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
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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
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2 June 2009 Page 8 of 8