Thursday 9 April 2009

By: KAMEL BIN MOHD YUSOH
INSTITUTIONAL DEALER
KENANGA INVESTMENT BANK BHD
Tel : 03-21634549 / 03-21634550
H/P :013-6306544
WEBSITE : kamelresearch.blogspot.com
EMAIL : kamel88@streamyx.com or kamelmohdyusoh@ymail.com
THE YEAR 2009 2ND QUARTER MALAYSIAN STOCK MARKET OUTLOOK.

Table of Contents: -

1. Malaysia Political and Economic Outlook – Dawn of a New Era – Page 2.

2. How long and how deep is the Global Recession going to be ? – Page 3.
A. What went wrong and what were the problem ?
B. What event most likely to unfold in 2009 ?
C. How to avoid the recession from becoming a full blown depression ?

3. Checklists on what has been done by the policy makers worldwide to tackle the crisis ? Is it enough and is it working ? – Page 4.

A. For the World and Malaysian Financial System – Page 4.
1. Recapitalization of the Banks.
2. Financial Reform.
3. What to do with the globalize financial system ?
B. How to revive demand for the world’s products – Page 5.
1.Fiscal Stimulus (Keynesian Way).
2.Trade Finance or Letter of Credit to facilitate world trade.
3.Currency as a to revive world trade.

Appendix 1 – World Economies Forecast GDP, Policy Interest Rate and Fiscal Stimulus Plan – Page 6.
Appendix 2 - Excerpt Published on Jan. 5, 2009 – The real solutions to the problem – Page 7, 8 and 9.

4. Malaysia Key Economics and Financial Statistic Page 10, 11, 12,13, and 14.

5. Malaysia Economic Sector Outlook – Page 15.

6. Bursa Malaysia and The World Stock Market Outlook Page 16,17, 18 and 19.

7. Top 25 Stocks Recommendation – Page 20 to 72.

The Year 2009 KLCI Earnings Estimates, Net Assets, Prospective Dividend Yield, Prospective PER , Average PER and Div. Yield for 2009– P. 73 to 75.
WHAT’S IN STORE FOR THE 2nd QUARTER OF YEAR 2009.

ON TUESDAY MARCH 31 2009, KLCI CLOSED AT 872.55. DJIA CLOSED AT
7,608.92. CRUDE OIL AT US$49.66. JUNE FCPO AT RM2,000, RINGGIT AT
3.6430 AND BNM OVERNIGHT POLICY RATE AT 2.00%.


MALAYSIAN POLITICAL AND ECONOMIC OUTLOOK – DAWN OF A NEW ERA UNDER A NEW PREMIER NAJIB RAZAK.

The new Prime Minister in his first speech to the nation had promised a new approaches for new time in pursuing a national agenda that would not leave anyone behind. He asked all Malaysian to join him in this task of renewing Malaysia to rise to the challenge of building a One Malaysia, People First and Performance Now. His government has decided with immediate effect, to remove the temporary ban on two news publications, release 13 detainees from ISA detention, and conduct a comprehensive review of the Internal Security Act.

The recent smooth transition of power had suffered a set back after the Barisan Nasional lost 2 out of 3 seats in the 3 by-elections on April 7, 2009. The feel good momentum as a catalyst for a sustainable stock market rally and possibly testing the 1000 level on the CI has been lost. The CI trading range should remain between 800 to 920 level.

Now, the new PM and BN need to rebuild the trust of the ‘rakyat’ by having a credible cabinet ministers with an impeccable track records. This is to further strengthened the recovery effort considering the latest February 2009 Malaysian trade figures showing possible bottoming out of exports numbers, the archilles heel of our economy and positives development that came out from the recent G20 meetings and mixed economics numbers from the U.S. The latest US unemployment rate at 8.5% is pretty awful number considering unemployment drives losses on commercial loans, on mortgages and consumer loans, will be going up for considerable time. Consumers spending will be hard hit too when people were out of jobs.

This year, the Malaysian government again had revised the forecast GDP figures to between a contraction of 1% to a growth of 1% from a GDP growth of between 1 to 3%. Meanwhile, we revised our GDP forecast for 2009 from 1% to a contraction of between 1% to 3%.

The government had also unveiled a second stimulus package worth RM60.0 billion for the next two years on top of RM7.0 billion stimulus package announced earlier. The highlight of this fiscal stimulus is the setting up of RM25 billion guarantee funds under 3 separate entities for the small and medium industries which are expected to be hard hit and can pose a real threat to the stability of our banking system.

Inflation expected to be moderating around 3% but the unemployment is expected to be creeping up between 4% to 5% due to a prolonged global recession.
2.HOW LONG AND DEEP IS THE GLOBAL RECESSION GOING TO BE?

World Bank had revised down its growth forecast for the world economy in 2009 to – 1.7%, below the IMF’s recent forecast of – 0.5% to - 1% but still well shy of a 4.3% contraction predicted on Tuesday 31.3.2009 by the Organization for Economic Cooperation and Development, OECD, the 30 member nations.


A. WHAT WENT WRONG AND WHAT WERE THE PROBLEMS ?

The world economy is in the midst of its deepest and most synchronized recession in our life time caused by a global financial crisis and deepened by a collapse in world trade resulted in US$50 trillion worth of wealth being destroyed .


B. WHAT EVENT MOST LIKELY TO UNFOLD IN 2009 ?

A possible GLOBAL DEPRESSION where economic condition characterized by falling prices, reduced purchasing power, an excess of supply over demand, rising unemployment, accumulating inventories, deflation, plant contraction, public fear and caution, and a general decrease in business activity, for the world’s most develop economies.

C. HOW TO AVOID THE RECESSION FROM BECOMING A FULL BLOWN DEPRESSION ?

Here how the world can get out of the current crisis and prevent the crises from happening again. The double whammy that has hits the world economy were 1. the breakdown of the financial system because of inadequate equity capital and 2. insufficient demand for the goods produced worldwide causing rapid declined in exports and high unemployment because of lack of spending by consumers.














3. CHECKLISTS ON WHAT HAS BEEN DONE BY THE POLICYMAKERS TO TACKLE THE CRISIS ? IS IT ENOUGH AND IS IT WORKING ?

A . FOR THE WORLD AND MALAYSIAN FINANCIAL SYSTEM.
1. RECAPITALIZATION OF THE BANKS.

The US government and the Federal Reserve have spent, lent or guaranteed US$12.8 trillion, an amount that approaches the value of everything produced in the country (GDP) last year.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. included US$1 trillion for the Public-Private Investment Programs designed to help investors buy distressed loans and other assets from US banks. The money works out to US$42,105 for every US citizen and 14X the US$899.8 billion of currency in circulation. The US GDP was US$14.2 trillion in 2008.

IMF expected deterioration in US originated toxic assets to reach US$3.1 trillion plus US$900 billion originated in Europe and Asia by the end of next year.

Meanwhile, FDIC expected another US$1 trillion write off after the US banks stress test.

2. FINANCIAL REFORM.

During the G20 meeting, all the participating countries agreed on tighter regulation and to regulate non bank financial institutions such as hedge funds, insurance companies and on tax havens.
Malaysian financial regulatory seems to be ahead of the curve in regulating the non bank financial institution such as the insurance companies and investment banking which come under the supervision of Bank Negara Malaysia even though the G20 accused Malaysia’s Labuan tax haven status as non compliance with on tax issue during the summit but now admitted Malaysia is in compliance with the latest international tax standard.
The G20 also called for much tighter governance rules on compensation that would tie pay to long term performance and, especially in banking, take into account the amount of risk that executives are taking.
The revamp of risk management and accounting systems includes the introduction by financial regulators of a “leveraged ratio” that would systematically measure the degree to which financial market players have borrowed beyond their ability to cope. Banks would be required to increase their capital ratios in good times, in order to create a cushion in future downturns. Authorities are also likely to introduce or enforce minimum margin requirements on derivatives and other securities contracts. One key accounting technique that has been blamed for some of the current problems, the so-called “value at risk” method of estimating capital requirements of banks is also likely to be tossed out or revised.
European Union finance ministers on April 4, 2009 called for creating a new authority to monitor financial stability as a first step toward overhauling the region’s regulatory system.
3. WHAT TO DO WITH THE GLOBALIZED FINANCIAL SYSTEM ?

G20 also agreed to contribute US$750 billion to IMF to rescue the developing countries affected by the crises, US$100 billion to World Bank to help poor countries and US$250 for world trade finance.

Personally, I proposed to prevent the current crisis from repeating itself again the world obsolete banking system need to be totally revamped as mentioned on 5 January 2009 research paper on The FYE 2009 Malaysian Stock Market Outlook, as the current banking system business model are highly leverage.

Please see the excerpts on page 7, 8 and 9.

B. HOW TO REVIVE DEMAND FOR THE WORLD PRODUCTS ?

1. FISCAL STIMULUS.

The U.S. announced US$787 billion deficit fiscal stimulus package.

China announced US$587 billion fiscal stimulus.

Malaysia unveiled RM60 billion deficit fiscal stimulus package on top of RM7 billion over 2 years period.

The rest of the world also had announced various amount of fiscal stimulus and other measures to fend off the global recession.

2. TRADE FINANCE OR LETTER OF CREDIT FACILITIES FOR WORLD TRADE.

G20 meeting has proposed US$250 billion for trade finance to revive the global imports and exports.

Personally, we had proposed Malaysian bank to set up branch overseas to provide the Letter of Credit facilities to the importing countries for Malaysian products.

3. CURRENCY AS A TOOL TO REVIVE THE WORLD ECONOMY.

We had also proposed a devaluation of the US dollar against world major currencies including our Ringgit for them to exports their way out of crisis. Weaker dollar will strenghten the price of commodities too and benefit commodities exporting countries.

Currently, with the US printing a large amount of money through issuance of Treasury bonds to bailouts their financial system and economy has in part weakened the US dollar and drive the price of oil and other commodities up and investors are not risk averse anymore.
Moreover, exports driven Asian countries with huge amount of foreign exchange reserves of US$4 trillion are in their best interest to try working together hand in hand and with the U.S. to let their currencies strengthen against the U.S dollar as this move will surely feed on itself and revive the world trade.



APPENDIX 1.

WORLD ECONOMIES GDP FORECAST, MONETARY POLICY - POLICY INTEREST RATE AND FISCAL STIMULUS MEASURES.


EST. 2009 GDP INTEREST RATES FISCAL STIMULUS

WORLD - 4.3%

MALAYSIA - 1% 2% RM67 B

USA - 5.0% 0% TO 0.25% US$787 B

ECB - 3.0% 2.25%

UK - 4.0% 1.0%

JAPAN - 5.0% 0.10% NEW US$100B

AUSTRALIA - 1.0% 3.00%

THAILAND - 1% 1.75%

SINGAPORE - 5.0% 0.70%

INDONESIA 2.00% 8.0%

HONG KONG - 3% 0.50%

CHINA + 5% 5.31% US$587 B

SOUTH KOREA - 2% 2.00%

TAIWAN - 2% 1.25%

INDIA + 5% 5.5%


APPENDIX 2.

FROM THE EXCERPTS PUBLISHED ON JAN 5, 2009 “THE YEAR 2009 MALAYSIAN STOCK MARKET OUTLOOK” ON :-

THE REAL SOLUTIONS TO THE PROBLEMS.

Here are what we thinks are the correct solutions or a new tools or proactive measures to the World and Malaysia financial and economic problems :-

After the expected pouring in of billion dollars stimulus package and the ineffective used of traditional monetary policy and then the unorthodox measures such as the bailouts of financial institutions, companies, individual borrowers, investors, and massive injection of liquidity to banks to ease the credit crunch, and before the next bubble to burst which we anticipate to be the U.S. Treasury bond market, here are the possible solutions :-

The solution is what I called “ the God fearing capitalist system with a discipline.“

1.MONETARY POLICY – Structural changes to The World and Malaysia Financial Architecture.

I proposed a merger of the conventional and Islamic banking and insurance business model with the modification on the capital structure of both system, a new set of rules and laws on lending policy and a new Islamic banking financing terms that aren’t the carbon copy of the conventional system.

The banking system should be overhauled as the current business model is highly leverage. The level of capital and loan should be one to one. For a start, banks should fork out at least 75% of capital for every single dollar or ringgit of the loans. This is to ensure whoever owned a bank do have a necessary capital to run the bank without getting into risky lending practice or reckless lending policy and must be based on a new set of banking rules and laws. By implementing this, financial system meltdown and the subsequent government bailout as a result of highly leverage banking system based on risky credit creation and the abuse of derivatives instrument can be avoided in the future.

Without the highly leverage banking system business model, the customers deposit instead accepted by the bank as part of a wealth or fund management business and the money should be required by law to be invested only in the risk free instrument such as government paper or depending on the depositors risk preference.

The insurance policy should be based on risk sharing between the insurer and the insured instead of the transferring of risk business model. All of the derivatives insurance instruments that has been abused and at the epic centre of the recent financial maelstrom such as CDO’s and CDS’s should be banned for the good of the world economy.

The world and Malaysia monetary policy should be continually manage by the central bankers by using a very low interest or financing rates (based on the profit sharing concept of buy first then sell).
As the main cause of the recent trouble is the non ability of the borrowers to make an interest payment on their mortgages, the new system must ensure that the loophole for future abuses are closed.

Meanwhile, the world and Malaysia government and central bank should manage the economy by controlling the inflation level based on the supply and demand of products and services and not based on interest rates or cost of fund.

As of now, the Bank Negara Malaysia should immediately lower the interest rates aggressively to as low as 1% on the Overnight Policy Rates in a proactive approach to bolster the economy by putting more money into borrowers pocket to ease the pain and to spur spending and lowering financing rates to spur business investment and purchases of big ticket items. I believe , the move won’t hurt the Ringgit as the interest rates differential is still quite large even after the interest rate cut.

Currency Policy.

For the World and Malaysian economy to rebound, the currency exchange rate must be based on the country fundamentals. Having said that, the Fed and the world central bankers should coordinate the devaluation of the U.S. dollars to reflect the true fundamentals of the currency instead of sticking to their current arrangement. By doing this, the cash rich Asian countries will help the U.S in their export led economy recovery and Asian countries economy will benefit from cheaper imports from the U.S. especially on high technology products. The prices of battered down commodities will then recover slightly which in turn will benefit a lot of commodities producing countries in the world. This is a good trade off and a win - win situation for every body with the world economy humming back again but the dreaded inflation will still be in check.

A price of crude oil around US$60 to US$70 will push the palm oil prices to around RM2,000 to RM2,500 and SMR rubber price around RM8 without a production cut, This should still be healthy for the Malaysian and the world economy and a cheaper U.S. dollar will go a long way in achieving this goals.

Moreover, I thinks any hedge funds that involved in excessive leveraging and their bankers should be banned because their activities are disruptive to the well being of world financial system and the world economies due to their casinos like mentality.

2.FISCAL POLICY.

A.World – For any country with a budget surpluses and high foreign exchange reserves, fiscal stimulus can be a very effective way to generate growth. But for a country with a high budget deficit and have to rely on foreign borrowing they should practice a fiscal discipline otherwise this will lead into more problems for them in the future.
B. Malaysia – Please don’t overspend or make any new foreign borrowing that can be detrimental to the Malaysian economic well being and financial health. Please let’s the prices of goods, products and services to come down first before implementing any new fiscal stimulus as the only good about this so called crisis is cheaper prices on everything. Stop the spending wastages and no property overbuilt like in the U.S to avoid the bubble. Government must control the issuance of new building construction permit.

Government Policy On Palm Oil and Rubber Prices.

The recent sharp drop in palm oil prices was exacerbate partly because of the non availability of bank credit financing facility for the import of palm oil in the importing countries due to credit freeze. The problem can be rectified by requiring Malaysian banks to open a branch in the importing countries to offer them the trade financing facilities.

Furthermore, the government should intensify the research and development effort in the rubber and palm oil industry, so Malaysia won’t be forever remain as the exporter of raw material only. New value added products will surely bring in more demand for the commodities and more hard currency into the country.

* Latest Addition.

The Palm Oil and Rubber Industry in Malaysia should embrace technology whole heartedly to eliminate the over reliance on foreign labour and increase in productivity.

Employment.

This is the key to survival during this economic slowdown. The government must ensure that employers do not lay off workers as they please. Moreover, the employees are better off to accept lower wages in return for job security during this deflationary period.
Priority must be given to Malaysian instead of foreigners in hiring and firing.

Taxes.

Avoid raising taxes, only as a last resort, to raise government revenue for the budget deficit financing for the fiscal stimulus package to spur economic growth.

Housing for the poor.

As the sub prime mortgage crisis in America involved the housing need of the needy, any responsible government should provide an affordable housing scheme for the poor citizen of the country instead of leaving it to the private sector. The sub prime loan became a crisis because the poor peoples had to take a housing loan that they eventually cannot afford to pay and end up as a defaulters.

So, this were the possible solutions to the economic problems facing Malaysia and the World at the moment.
4. MALAYSIA KEY ECONOMICS AND FINANCIAL STATISTICS.

(Source - Department of Statistics Malaysia and Bank Negara Malaysia)

Table 1.


4th Quarter 2008 Gross Domestic Product.


RM Million
GDP / GNI
2007p
2008p 4th Qtr
FY 2008p
GDP : Current Prices
641,864
177,342
740,721
Nominal GDP Growth %
11.9%
0.4%
15.4%




GDP: Constant 2000 Prices
505,353
131,261
528,804
GDP Growth Rate Constant 2000 : Prices (%)
6.3%
0.1%
4.6%




Gross National Income (GNI) : Current Prices
628,106
n.a.
715,281
Per Capita GNI : Current Prices (RM)
23,114
n.a.
25,796



p Preliminary.



















4. MALAYSIA KEYS ECONOMICS AND FINANCIAL STATICTICS continued :-

Jan. – Dec. January - February

EXTERNAL TRADE 2008p 2008p 2009
( RM Million )

Total Exports 6663,494 100,115 77,856

Total Imports 521,611 81,289 57,778

Balance of Trade 141,883 18,826 20,078

TRADE PERFORMANCE FOR THE MONTH OF FEBRUARY 2009 AND THE PERIOD OF JANUARY - FEBRUARY 2009.

Exports in Feb 2009 recorded an increase of 3.4% to RM39.59 billion from Jan 2009, mainly attributed to higher exports of electrical & electronic (E&E) products, refined petroleum products, machinery, appliances and part as well as chemicals and chemical products. Imports registered a declined of 8.4% to RM27.62 billion from Jan 2009.

On a year on year basis, exports in Feb 2009 decreased by 15.9% compared with Feb 2008 while imports declined by 27.3%.

Total trade in Feb 2009 was valued at RM67.2 billion, a decrease of 21% from a year ago. Malaysia recorded a trade surplus of RM11.97 billion in Feb 2009 , making it the 136 consecutive month of trade surplus since Nov 1997.

During the period Jan to Feb 2009, total trade amounted to RM135.64 billion, a decrease of 25.2% from the corresponding period of 2008. Exports decrease by 22.2% to RM77.86 billion, while total imports contracted by 28.9% to RM57.58 billion resulting in a trade surplus of RM20.08 billion.


BALANCE OF PAYMENTS 2008p 2008p 2008p 2008

( RM million) 1Q 2Q 3Q 4Q

Balance on Current Account 23,778 37,046 38,714 30,398

Balance on Capital & 26,452 -12,307 - 61,479 75,676 Financial Account

Overall Balance 48,942 26,213 - 31,524 - 61,881

Quarterly Balance of Payments Performance October – December 2008.

CURRENT ACCOUNT BALANCE.

In Q4 2008, the current account recorded a lower surplus of RM30.4 billion , a decrease of RM8.3 billion (-21.5%) , from that of RM38.7 billion a quarter ago. The declie was attributable to lower surplus on goods of RM38.9 billion compared to RM49.2 billionin the earlier quarter (- RM10.3 billion or – 20.9%).

In 2008, the current account recorded a larger surplus by RM29.5 billion(+29.4%) to RM129.9 billion from that of RM100.4 billion posted in the previous year.


CONSUMER PRICE INDEX
Jan - Feb
CPI (2005 = 100) (% change) 2008/2007 2008/2007

Malaysia 5.4 3.8

Peninsular Malaysia 5.4 3.7

Sabah 6.0 5.6

Sarawak 6.0 4.1


January
MONTHLY MANUFACTURING
STATISTICS 2009 2008 % Change

Sales Value (RM 000) 36,740,375 47,545,274 - 22.7

Number of Employees 990,794 1,088,599 - 9.0

Salaries & Wages Paid 1,956,167 2,154,863 - 9.2


INDEX OF INDUSTRIAL PRODUCTION MALAYSIA JANUARY 2009. PERFORMANCE OF INDUSTRIAL PRODUCTION INDEX (IPI).

The IPI in Jan 2009 dropped 20.2% as compared with the same month in 2008., after a decrease of 15.9% (revised) in Dec 2008. The contraction in Jan 2009 was due the decrease in the three indices : Manufacturing (26.7%), Mining (6.1%) and Electricity 12.4%.

Month on month, the IPI was down by 4.5%.
MALAYSIA ECONOMIC INDICATORS

Leading, Coincidence and Lagging Indices January 2009.

Source – Statistics Department of Malaysia.

The Coincidence Index (CI), a measure of current economic activity, decreased by 1.1% in January 2009 registering at 113.7. Negative change was recorded by real gross import (-0.5%), real salaries and wages in manufacturing sector (-0.4%), Index of industrial Production (-0.3%), real contributions in EPF (-0.2%) and total employment in manufacturing sector (-0.1%). The six months smoothed growth rate of CI in the current month slipped to -10.7% from -9.7% in December 2008.

The Leading Index (LI) which monitors the economic performance in advance, dropped by 0.4% in January 2009 and reached 157.3 points from 158.0 recorded in the previous month. The drop in the index were attributed by real total trade of 8 major partners (-0.7%), the ratio of price to unit labour cost (-0.4%), real money supply M1 (-0.3%), and number of new companies registered. The six months growth rate of LI depreciated to – 3.6% in January 2009.

The continuing weakness in the six month smoothed growth rates of the Leading Index (LI) and Coincident Index (CI) indicate that the country’s economic will continue to slowdown in the coming months.


DOMESTIC DEMAND.

Malaysia domestic demand will be further enhanced in the of 2009 with the RM60 billion fiscal stimulus on top of RM7 billion fiscal stimulus announced late last year and the effect of downward revision of fuel price in 2008 and the recent measures introduced during Budget 2009. The interest rate also can be expected to be reduce further from the OPR current level of 2.00%. The proposed RM207.9 billion budget for 2009 which is 5.1% higher than 2008 budget together with the speedy implementation of fiscal stimulus will be the main catalyst needed to spur the economic growth during turbulence times ahead. At the same time, we believe Malaysia should be spendthrift and should strive for a balance budget in the near future.



EMPLOYMENT

Job security is the key to survival during any economic downturn as more lay off are to be expected in 2009. For the 4th Quarter of 2008, total labour force stood at 11,170,800 people. Total people employed at 10,819,800 and total unemployed people at 351,000,000 Unemployment rate in the 4th Quarter of 2008 as a percentage of a labour force stood at 3.1%.
Meanwhile, the solution for the unemployment is for Malaysia to move away from being overly dependent on foreign labours by paying more to the locals to make them more interested in the jobs being done by the foreigners. After all, this companies are making tons of profit now so they can afford to pay higher salaries to Malaysian.

Furthermore, Malaysia must have the will power to get rid of an oversized pay package for executives and crony capitalism. Hiring and promotion should be based on merit and not on cronyism or nepotism.



INTERNATIONAL INVESTMENT POSITION.

As of 30.12.2007, the net liabilities position of Malaysia’s international investment stood at RM18.2 billion; a marginal improvement of RM4.8 billion, from a position of RM23 billion last year. This was mainly driven by the performance of external assets of RM742.7 billion (2006:555.4 billion) which increased at faster pace than that of external liabilities , RM760.9 billion (2006: RM578.5 billion).



INTERNATIONAL RESERVES OF BNM as at 13 March 2009.
(Source – Bank Negara Malaysia).

The International Reserves of Bank Negara Malaysia amounted to RM314 billion ( equivalent to US$90.6 billion) as at 13 March 2009.

The reserves position is sufficient to finance 7.7 months of retained imports and is 3.9 times the short term external debt.

The international reserves held by Bank Negara Malaysia decreased from US$91.11 billion as at end February 2009.

Malaysia forex reserves downed by just US$900 million between end 2008 (US$91.536b) and mid March 2009 (US$90.6b) versus a declined of US$18.2 in the 4th Quarter 2008 and a dropped of US$34.2 billion in the 2nd Half of 2008 from US$125.8 billion as at 30 June 2008.

The latest as at 31.3.2009, BNM forex reserve up to RM320.7 billion.







5. MALAYSIA ECONOMY SECTOR OUTLOOK.
A. Real GDP by Sector (2000=100) – Source : Treasury Dept. of Malaysia.
Annual Change (%)

2009f
2008 Actual
Agriculture
Mining and Quarrying
Manufacturing
Construction
Services

3.7
3.4
4.3
3.1
6.9

3.9
- 0.9
1.3
2.1
7.3
Real GDP
5.4
4.6
p Preliminary
f Forecast
- The Malaysian Government since then had revised the forecast GDP growth figures for FYE 2009 from 5.4% to 3.5% and the latest one to between 1% to -1%.

a. SERVICES SECTOR need to sustain its growth momentum as the main contributor to the overall GDP growth. The share of the services sector to GDP is expected to be maintained around 50% . The growth in the sector as in 2008 will be supported by private consumption and tourism activity during the year, as well as new impetus from new growth areas. Activities in new growth areas, such as Islamic Finance, telecommunications, IT services, shared services and outsourcing (SSO) and professional services, are expected to contribute significantly too.

b. MANUFACTURING SECTOR is expected to be weak and possibly record a contraction in growth due to the expected weak performance of the export-oriented industries in an environment of global recession. In particular, the E&E industry is expected to weaken further in view of the deepening recession in the US.

c. AGRICULTURE SECTOR growth is expected to play a key role in any economy recovery. Price recovery rather than cut in production level of our major industrial crops, namely palm oil and rubber is the best policy option. Malaysia should maintain the palm oil its output at 16.25 million tons in 2009 and also rubber output supported by better yield. In term of export numbers, the commodities price recovery is the key for the Malaysian economy to be in the positive territory in term of GDP growth in 2009.

d. MINING SECTOR would continue to lend further support to economic growth, expanding at a moderate rate. Production of crude oil (including condensates) is expected to be maintained at an average of 743,000 barrel per day, supported by the acceleration in output from the Kikeh deepwater oil field in Sabah. Output of natural gas is also expected to rise to fulfill demand from Korea and Japan, Malaysia’s major LNG importers.

e. CONSTRUCTION SECTOR is the main beneficiary of the government stimulus package. The key here is speedy implementation of the infrastructure projects otherwise the growth prospect will be affected. Lower construction costs and better profit margin are expected due to the lower price of building material such as cement and steel prices.
6. BURSA MALAYSIA AND THE WORLD STOCK MARKETS OUTLOOK.

The US and worlds stock market has some what stabilized after the U.S pledges US$1 trillion for the Public-Private Investment program designed to buy up toxic mortgage-related investments and other distressed assets from shaky financial institutions in an effort to clean up banks balance sheet and recapitalized the banks. This measure has restore confidence in the stock markets.

For the 2nd Quarter of 2009, the external environment is expected to deteriorate further unless all the measures and rescue package being passed to tackle a large scale liquidity strains and the consequent constraints on credit conditions and at the same time to recapitalized the banking industry and to prevent the collapsed of the U.S. and the world financial system starting to show the desired results and working. Next on card is a federal budget around US$3.2 trillion for next year from the new President.

The significant volatility in the financial markets experienced in the year 2008 are expected to continue into 2009 because of deleveraging. The stock markets will most likely to perform according to the economy outlook and economic numbers will be monitored more closely. The recent better than expected economic number in the US and the orderly succession in Malaysia has provide a catalysts for the stock markets to rally.

Political differences aside, Malaysia enters this period of heightened global uncertainty from a strengthened position. The economy has been on a steady growth path averaging close to 6% in the past three years. The quality of the growth has also improved – becoming more balanced between domestic and external sources of growth, between private and public sector activity, and between the different economic sectors. Against the background of deteriorating external environment, Bank Negara Malaysia and the Malaysian Government had revised the Malaysian economy to between a growth of 1% and a contraction of 1% in 2009.

Keys in achieving this growth are lower interest rate policy and an employment level that can sustained domestic demand. Rising incomes, strong labour market conditions and increased access to financing are expected to support continued consumption spending. Based on recent economic and financial indicators, strong domestic investment activity and foreign direct investment are expected to continue in 2009 albiet at a slower pace (Government projection at RM25 billion – down 50% from 2008). Public spending on new RM60 billion fiscal stimulus plan on top of the previous RM7 billion stimulus package, including on projects under the Ninth Malaysia Plan and for the new economic corridors will reinforce the growth.

Moreover, as a resource based economy, the Malaysian economy can only fully recover from the slowdown if and when the commodities price recover. The increase in commodity prices can and will generated high multiplier effects on the domestic economy. Strong employment and external balances, low indebtedness and a high rate of savings are the additional macroeconomic fundamentals that will raised the level of resilience of the economy.
Achieving a political stability with a new leadership together with a strong recovery in the economic growth through speedy and transparent manner in the implementation of stimulus package , a lower inflation level, a lower interest rate environment, a strong currency and the recovery of oil and commodities prices will be the main catalysts for a sustainable rally in our stock market for rest of the Year 2009.

The down side risk to the Malaysian economy is the external factors such a prolonged full blown recession or even a depression in the US, one of our key export market with an almost 20% in total export value, and then the rest of the world too.

At the moment, this are the most likely scenario as all the data coming out from the US, the latest being the unemployment numbers, are suggesting a deepening recession with the property, financial and autos sectors were badly affected and a possibility of more write down of the banking assets worldwide from US$1.2 trillion write down so far year to date. Recent study by FDIC suggested a further US$1 trillion write down for the banks are possible after the stress test.


A. FUNDAMENTAL AND TECHNICAL OUTLOOK.

DJIA – DJIA closed at 8,017 up 39.51 or 0.50% on Friday April 3, 2009. DJIA has rebounded 21% from their low around 6,547 level in March 2009.

During of the Great Depression, the market bottomed out after dropped more than 85% from the all time high. Based on that experience, downside risk for DJIA is between 4000 to 5000 level from 14,000 level. That type of valuation is certainly justified by the forecast earnings on the DJIA. Based on future earnings for S&P 500, the index fair value is around 500 level on Price Earnings Ratio of below 10X.

KLCI - KLCI closed at 907.01 on Friday up 1.94. KLCI has rebounded from their lowest level for the year at 836 level in March 2009.

Based on the above outlook, the recent 4th Quarter 2008 corporate results, the CI closing level as of March 31, 2009 at 872.55 and our FYE 2009 forecast average PER for Bursa Malaysia 100 Composite Index Stocks at 14.8X and a dividend yield of 3.67%, we are forecasting a KLCI of between 860 to 880 level for the Year End of 2009.










B. SECTORAL RECOMMENDATION – Stock Prices as at April 3, 2009.

PLANTATION SECTOR to perform in line with the market due to ample supply and soft demand for CPO. We forecast a bottoming out of CPO and rubber prices going forward, currently as of April 3, 2009 the June FCPO was last traded at RM2,165. Meanwhile, rubber production were lower year on year that will cause an upward pressure on the prices due to unsuitable substitute product the synthetic rubber in the production of tyre etc. Malaysia should be more competent in maintaining the price stability of this commodities as together with Thailand and Indonesia we produced almost all of the world production of palm oil and rubber. The key determining factors for the prices here are demand and supply, crude oil prices and the US dollar.


OIL AND GAS SECTOR to perform in line with the market due to the depressed crude oil prices and the trend is still down side bias and probably stabilize around US$50 to US$60 level in 2009. The crude oil is currently at USD53.47 as at April 3, 2009 that will still spur capital expenditure by oil and gas majors and now most of the listed companies valuations are fairly valued. .The downside risk is if the oil majors held back on the capital expenditure. SELL and TAKE PROFIT and BUY BACK at the lower end of the trading range on Wah Seong Corp bhd at RM1.40, Kencana Petroleum Bhd at RM1.42 and Petra Perdana Bhd at RM1.54.


CONSTRUCTION SECTOR to perform in line with market due to fiscal stimulus and high probability of lower cost of building materials such as steel and cement that will improve the industry profit margin with softening demand. BUY recommendation for Zelan Bhd RM0.66 and Muhibbah Engineering Bhd RM0.89 based on their sizeable book order and leverage free balance sheet and healthy cash level and HOLD on Gamuda Bhd at RM2.34 and UEM Land at RM0.77.


BANKING SECTOR to under perform the market due to pricey acquisitions prices and expensive valuations NTA wise and based on expectation of higher non performing loans due to the economic slow down. The worldwide economic recession after the current financial crisis will add more pressure to the industry as a whole.


PROPERTY AND AUTO SECTOR to under perform the market due to consumers holding back their purchases in anticipation of lower prices and lower interest rates.







C. COMPOSITE INDEX TECHNICAL INDICATORS.

1.Composite Index Target Level for the Year End 2009 – 860 to 880.

2.Resistance Level – 900, 926, 980, 1000 ,1024, 1524 (all time high).

3. Support Level – 850, 830, 800, 750, 700, 600, 570, 500, 262 (all time low).






D. STOCK MARKET STRATEGY FOR THE 2nd QUARTER OF 2009.

We expect the Composite index to trade between 800 to 920 level in the 2nd Qtr of 2009.

Continue to BUY or Ringgit Cost Averaging on good quality stocks with good dividend yield especially on extreme market weakness or sharp fall for the 2nd Quarters of the Year 2009. We expect the stock market to bottom out in the month of October 2009 and we’re positioning for the anticipated traditional year end 2009 window dressing activities and the world economy recovery in the second half of Year 2010 ( 6 months to 9 months ahead of the anticipated economic recovery). By that time we should have a better clue on world economy recovery, as the tail end of the fiscal stimulus, easier monetary policy and government bailouts take into effect.

The highly anticipated BN victory in the 3 by-election, speedy implementation of the stimulus package after a new Prime Minister taking office, credible new cabinet lineup and improving economic number domestically and externally especially from the US will keep the stock market buoyant with an upside bias in the second Quarter of 2009. The downside risk is the anticipated bad 1st Quarter 2009 earnings and further deterioration in the world economy.














8. TOP 25 STOCKS RECOMMENDATION.

Based on the closing prices as of Friday, 13 March 2009.

1. BURSA MALAYSIA BHD RM4.44.

Year End Dec. 31 FY2009(F) FY2008(F) 4QFY2008 FY2008(A)
000 000 000 000

Revenue 294,532 334,194 71,114 331,675
Net Profit 80,740 111,080 13,525 104,420
EPS (sen) 15.20 21.1 2.60 24.30
Forecast PER 29.2X
Dividend (sen) 15.00 20.0 7.80 24.30
Net dividend yield 3.4% 4.5% 5.5%
Cash 1,144,305
Debt 220
Net Assets RM1.39
Number of shares 525,917,000
Market Capitalization RM2.335 billion.
Major Shareholders Capital Market Development Fund 19.52%.
Minister of Finance Incorporated 19.52%

LATEST CORPORATE DEVELOPMENT.

Proposed share buy back up to 10% of the issued and paid up capital of the Company as quoted on Bursa Malaysia Securities Bhd.

The company plan to cut expenses by 15% and capex by more than 15% from RM80 that had been announced as its expects a prolonged period of weak market condition. Bursa is not planning a special dividend. Bursa dividend policy is 75% of net profit.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALSIS.

STRENGTHS ANALYSIS
BUSINESS MODEL – Revenue and profit depend on the stock market performance.

For FY 2008, cash market represent 76.28% of revenue and 66.96% of pretax profit; derivatives market represent 15.33% of revenue and 18.0% of pretax profit; offshore market represent 0.105% of revenue and – 0.13% of pretax profit and information services represent 7.63% of revenue and 8.27% of pretax profit.

Trading revenue from the equity market came from clearing fees, SCORE fees (equity trade fees), Institutional Settlement Service fees and buying in commissions.
Trading revenue from derivatives market came from clearing fees, trade fees and guarantee/tender fees.
Stable revenue came from listing fees, depository services, information services, broker services and participants services.


MANAGEMENT – Headed by a Chairman and a CEO.

BUSINESS OUTLOOK – Affected by the current global recession.

CORPORATE GOVERNANCE – Need to be more transparent.

FINANCIAL – Strong with RM1.144 billion in cash and almost debt free ( only RM220,000 of debt).

WEAKNESS ANALYSIS – The malfunction of the costly new trading system still have not been rectify.

OPPORTUNITIES ANALYSIS – Tie up with foreign bourses still have not materialize.

WEAKNESSES AND THREATS ANALYSIS - External threats such as a prolonged global recession and continued weaknesses in the world economy and bourses worldwide not seen since the Great Depression.

QUANTITATIVES ANALYSIS - VALUATIONS.

Forecast PER for FYE 2009 – 29.2X
Forecast Dividend Yield – 3.4%.
Net Assets – RM1.37.
Price to Book Value – 3.2X.
Net Tangible Assets – RM1.2799.
Price to Tangible Book Value – 3.5X.
Debt to Equity Ratio – 0.615X.
Net Profit Margin – 19% (4Q08) and 27.4% (Forecast FY09).
Annualized Return on Equity – 15.475 %.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM9.30. Low at RM4.36.

3 Months – High at RM5.80 and Low at RM4.40.


STOCK RECOMMENDATION – DOWNGRADED BURSA FROM HOLD TO SELL.- BUY at a fair value of RM2.62 based on forecast FYE2009 PER of 17.5X, on an EPS of 15 sen, and a dividend of 15 sen, for a yield of 5.7% at RM2.62.
2. BOUSTEAD HOLDINGS BHD RM3.10.

FYE DEC 31 FYE 2009(F) 4Q FY 2008(U) FY2008(AU) FY2008(F)
000 000 000 000

Revenue 4,878,000 1,227,869 7,029,818 6,926,830
Net Profit 400,000 105,501 667,674 568,000
EPS (sen) 61.44 16.99 90.69 87.25
Forecast PER 5.05X 3.7X
Dividend (sen) 25.00 12.50 30.00 25.00
Dividend Yield 8% 9.7% 8%
Net Assets (RM) RM4.47
Cash RM 614,694,000
Debt RM3,503,380,000
Number of Shares 651,032,000
Market Capitalization RM2.018 billion.
Major Shareholder Lembaga Tabung Angkatan Tentera 64.03%.

LATEST CORPORATE DEVELOPMENT.

Boustead to dispose up to RM600 million in assets this year. Among the assets the company is disposing are a 17,000 hectare oil palm plantation in Sumatera, Indonesia and a lanndbank in Malaysia.

The state government of Negri Sembilan via letter dated 24 February 2009 had given its consent for the acquisition by BHB subsidiary Boustead Weld Quay Sdn Bhd of land from Azrahi Hotel Sdn Bhd for a cash consideration of RM90 million via a novation agreement dated 16 May 2008.

QUALITATIVES ANALYSIS.
STRENGTHS , WEAKNESS, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS
BUSINESS MODEL – A well diversified conglomerate.

The Group revenue came from 1.Plantation 2.Heavy Industries – Listed BHIC Bhd 3.Property Development 4.Property Investment 5.Finance&Investment – Listed Affin Hldg Bhd 6.Trading and 7.Manufacturing and Services – Listed UAC Bhd.

For FY2008, plantations represent 12.63% of revenue and 31.46% of Ebitda; heavy industry represent 16.62% of revenue and 33.51% of Ebitda; property development represent 5.225% of revenue and 17.287% of Ebitda; property investment represent 1.615% and 6.98% of Ebitda; finance & investment represent 3.84% of revenue and 6.98% of Ebitda; trading represent 54.68% of revenue and 4.04% of Ebitda; and manufacturing & services represent 5.39% of revenue and 4.55% of Ebitda.

MANAGEMENT - Strong. Headed by Board of Directors and a CEO.

BUSINESS OUTLOOK – Depending on the Malaysia and the world economic performance which currently are in a recession.

CORPORATE GOVERNANCE - Plenty of room for further improvement. Need to be more transparent.

FINANCIAL STRENGTHS – Cash RM614.6million and Debt RM3.5billion.

WEAKNESS ANALYSIS – Highly leverage business model.

OPPORTUNITIES ANALYSIS – Cheaper M&A opportunity during a market downturn.


THREATS ANALYSIS - The prolonged weaknesses in the global economy and financial crisis in the U.S.


QUALITATIVES ANALYSIS.
VALUATIONS.

Forecast FYE 2009 Price Earnings Ratio – 5.05X
Net Assets per Share – RM4.47.
Price to Book Value – 0.7X.
Net Tangible Assets – RM3.54.
Price to NTA – 0.88X.
Return on Equity – 22.53%.
Debt to Equity Ratio – 1.63X.
Net Profit Margin – 8.6% (4Q98), 9.5% (FY08) and 8.2% (Forecast 09).
Dividend Yield – 8 %.


TECHNICAL ANALYSIS.

TRADING RANGE.

52 Weeks - High at RM5.70 and Low at RM2.18.

3 Months – High at RM3.56 and Low at RM3.00.


STOCK RECOMMENDATION – BUY BOUSTEAD HOLDINGS BHD.
Fair value of RM6.15 at FYE 2009 PER of 10X based on an EPS of 61.4 sen, on a net profit of RM400 million excluding extraordinary gains from assets sales.
3.MISC BERHAD RM8.35.

FYE March 31 FY 2009(F) 3Q FY2009(U) 9M FY2009(U)
000 000 000
Revenue. 17,017,093 3,679,236 11,784,465
Net Profit 1,873,449 280,098 1,313,472
Net EPS (sen) 50.36 sen 6.71 32.87
Forecast PER 16.6X
Dividend (sen) 30.00 0.00 15.00
Dividend yield 3.6 %
Net Assets Per Share RM5.42
Cash RM 4,069,156,000
Debt RM11,338,898,000 (RM10.1 in US$).
Number of shares 3,719,827,000
Market Capitalization RM31.060 billion.
Major shareholder Petronas (62.4 %)

LATEST CORPORATE DEVELOPMENT.

MISC and SLS Shipbuilding Co. Ltd. Have mutually agreed to revise the order for new Chemical Tanker from 8 vessels to 4 vessels.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS.

STRENGTHS ANALYSIS.
BUSINESS MODEL

Revenue came from 1.Energy related Shipping 2.Other Energy Businesses 3.Intergrated Liner Logistics and Non Shipping.

Energy related shipping represent 51.85% of revenue and 28.44% of operating profit margin; other energy businesses represent 16.84% of revenue and 28.45% of operating profit margin; integrated liner logistics represent 31.3% of revenue but the loss represent 24.4% of operating profit and non shipping represent 1.47% of operating profit.

MANAGEMENT – Headed by a new CEO.

BUSINESS OUTLOOK – Continue demand for energy.and long term LNG contract with Petronas will mitigate the soft outlook for shipping rates amid a global recession but earnings nevertheless will still be affected.

CORPORATE GOVERNANCE – Need to be more transparent.

FINANCIAL STRENGTH – RM4.07b in cash and RM11.33b in debt.

WEAKNESS ANALYSIS – Too dependent on Petronas LNG contract.

OPPORTUNITIES ANALYSIS – Opportunity to expand the energy shipping business as the world demand grow.

THREATS ANALYSIS.

Pirates in the Straits of Eden remain as a threat for a shipping company worldwide.

High operating costs such as bunkering cost affecting the net profit margin.

New ship coming on stream will reduce demand and lower the shipping rates.


QUANTITATIVES ANALYSIS.
VALUATIONS.

Forecast PER FYE March 2009 – 16.6X.
Net Assets Per Share – RM5.42.
Price to Book Value – 1.54X.
Net Tangible Assets – RM5.2166.
Dividend Yield – 3.6 percent.
Debt to Equity Ratio – 0.71X.
Return on Equity – 12.56%.
Net Profit Margin – 3Q09 7.6%, Forecast FY09 11%.


TECHNICAL ANALYSIS
TRADING RANGE.

52 Weeks - High at RM9.70 and Low at RM7.80.

3 Months – High at RM8.85 and Low at RM8.15.


STOCK RECOMMENDATION – UPGRADED FROM HOLD TO BUY at the lower end of the trading range because of a possible surprise on the upside in MISC earnings due to the increase in the shipment of LNG to RM8.05 billion from RM5.33b for the months of Jan. and Feb.2009 as compared to 2008 as shown in the trade figures.

Based on forecast FY2009 EPS of 50.36 sen and at a PER of 12X, BUY MISC Bhd at the fair value of RM6.05 plus a dividend yield of 4.96 percent.




4. PETRONAS GAS BERHAD. RM9.65.

FYE March 31 FY 2009(F) 3Q FYE 2009 (U) 9M FY2009 (U)
000 000 000

Revenue 3,120,516 832,871 2,479,270
Net Profit 1,304,687 164,056 666,877
Net EPS 65.94 8.29 33.70
Forecast PER 14.6X
Dividend (sen) 45.00 0.0 15.00
Dividend Yield 4.7%
Net Assets RM3.9304.
Cash RM1,686,078
Debt RM 452,273
Number of shares 1,978,732,000
Market Capitalization RM19.09 billion.
Majority Shareholders PETRONAS ( 60.6 % )

LATEST CORPORATE DEVELOPMENT.

No new development.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL – STRONG.

The Company’s principal business segments are services rendered for separating natural gas into its component and the storage, transportation and distribution of such components and sale of industrial utilities and operates only in Malaysia.

For 9 months FYE 31.3.2009, throughput services represent 80.1% of revenue and 33.77% of ebitda margin; and utilities represent 19.9% of revenue and 1.72% of ebitda margin.

MANAGEMENT - Headed by Board of Directors, CEO and the management team.

BUSINESS OUTLOOK – Strong demand for the natural gas.

CORPORATE GOVERNANCE – Must be more transparent.

FINANCIAL STRENGTH – Cash RM1.686b and Debt RM452.2m.



WEAKNESS ANALYSIS – The operation is only in Malaysia, so the growth can only come from higher domestic consumption.


OPPORTUNITIES ANALYSIS – Still an opportunity for the company to make money even with the gas prices for power industry has been reduced from RM14.31 per mtbu to 10.70 per mtbu.


THREATS ANALYSIS - Gas as a depleting resources need to be replaced with a new finding. No domestic competitor.


QUANTITATIVES ANALYSIS.
VALUATIONS.

Forecast Price Earnings Ratio for FYE March 2009 – 14.6X.
Net Assets Per Share – RM3.93.
Price to Book Value – 2.45X.
Net Tangible Assets – RM3.93.
Dividend Yield – 4.7 percent.
Debt to Equity Ratio – 0.2247X.
Return on Equity Ratio – 16.65 percent.
Net Profit Margin – 3Q09 19.7%, FY09 41.8%.


TECHNICAL ANALYSIS.
TRADING RANGE.

52 Weeks - High at RM10.40 and Low – RM9.20.

3 Months – High at RM9.90 and Low at RM9.55.


MAINTAINED HOLD RECOMMENDATION FOR PETRONAS GAS BHD.

The earnings growth will come from new tariff, increase sales, Gas Malaysia Sdn Bhd and the building of 400 km gas pipeline from Sabah to Bintulu Port in Sarawak.

Based on FYE March 2009 forecast EPS of 65.94 sen and a PER of 12.1X, the fair value for Petronas Gas Bhd is RM8.00 plus a dividend yield of 5.2 percent.





5. TM BERHAD. RM3.48.

FYE DEC. 31 FY 2009(F) 4Q FY2008 FY 2008(A) FY 2008(F) 000 000 000 000

Revenue 8,248,088 2,497,771 8,674,917 8,239,168
Net Profit 1,057,166 184,043 901,178 891,350
Net EPS (sen) 29.55 4.80 23.00 24.92
Forecast PE Ratio 11.77X 15.1X 14X
Dividend (sen) 25.00 14.25 26.25 24.00
Dividend yield 7.2% 7.5% 6.9%
Net Assets RM2.97.
Cash RM2.094 billion.
Debt RM7.0 billion (RM3.8b in US$).
Number of shares 3,577,402,000
Market Capitalization RM12.449 billion
Major shareholder Khazanah Nasional (40.9 % )

LATEST CORPORATE DEVELOPMENT.

Proposed capital repayment to shareholders of approximately RM3,505.8 million.

Received early debt repayment of RM2.0 billion from TM Bhd and will get the remaining balance of RM2.0 billion by end of April.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESS, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL – Fixed line telephone and broadband internet.
Revenue came from 1.Retail Business 2.Domestic Wholesale 3.TM Global and 4.Shared / Support Services.

For FY 2008, retail business represent 51.24% of to revenue from continuing operations, wholesale business represent 7.43% of revenue from c.o., global business represent 8.56% of revenue from c.o. and shared services & others represent 32.66% of revenue from the continuing operations.

MANAGEMENT – Headed by the Board of Directors, CEO and the management team.

FINANCIAL POSITION - Cash RM2.094 billion. Debt RM7.0 billion. TMI Bhd still owe TM RM5b and in the middle of fund raising to raise RM5.25b through rights issue to pay for the debt.

CORPORATE GOVERNANCE – Can still improve further.

WEAKNESS ANALYSIS – High capital expenditures for the high speed broadband business.


OPPORTUNITIES ANALYSIS – Recently signed RM11 billion agreement with the government to provide high speed broadband services to the whole country.

THREATS ANALYSIS -The threat will come from the other broad band service provider.


QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

FYE 2008 PER Ratio – 11.77X.

Net Assets Value – RM2.97.

Price to Book Value – 1.17X.

Dividend Yield – 7.2%

Net Profit Margin – 4Q08 7.3%, FY08 10.4% and Forecast 2009 12.8%.


TECHNICAL ANALYSIS.

52 Weeks - High at RM3.76 and Low at RM2.54.

3 Months – High at RM3.56 and Low at RM3.00.


STOCK RECOMMENDATION – FROM BUY TO HOLD TM BHD.
Fair value of RM3.56 at FYE 2008 PER of 12X based on an EPS of 29.55 sen and dividend of 25 sen for 7% yield.











6. TM INTERNATIONAL BHD RM2.44.

FYE Dec 2008 FY 2009(F) 4Q 2008(U) FY 2008(A) FY2008(F)
000 000 000 000

Revenue 13,112,096 2,418,148 11,347,711 12,207,587
Net Profit 975,584 (613,496) 471,092 1,257,129
Net EPS 24.00 (14.00) 13.00 34.00
Forecast P.E. Ratio 10.2X 18.8X 7.2X
Dividend (sen) 10.00 0.00 0.00 10.0
Dividend Yield 4.1% 0.0% 4.1%
Net Assets RM2.99.
Cash RM 3,236,757,000
Debt RM19,984,351,000
Number of Shares 3,753,402,000
Market Capitalization RM9.158 billion
Major Shareholders. Khazanah Nasional

LATEST CORPORATE DEVELOPMENT.

TMI repaid RM2.0 billion of RM4.0 billion ahead of schedule to TM Bhd and will repay the remaining balance by end of April 2009.

RM700m capex Celcom to upgrade infrastructure of which RM300 million will be for upgrading its wireless broadband infrastructure.

Proposed renounceable rights issue of new ordinary shares of RM1.00 each to raise gross proceeds of RM5,250 million of 5 for 4 at RM1.12 and waiver for Khazanah Nasional from making a mandatory takeover offer on the remaining TMI shares not owned by Khazanah. Ex date for the rights issue is on the 8.4.2009.

Proposed change of name to Axiata Group Bhd from TMI bhd.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

BUSINESS MODEL – International and domestic cellular phone company.
Operating revenue came from operations in 1. Malaysia 2.Indonesia 3.Bangladesh 4. Sri Lanka and 5.Others such as Singapore,Thailand and India.

Malaysian operation represent 48.54% of operating revenue, Indonesia operation represent 32.58% of revenue, Bangladesh represent 6.68% of revenue, Sri Lanka represent 10.26% of revenue and others countries represent 1.93% of revenue.

CELCOM subscribers base – 8 million.
CELCOM average revenue per users – RM57.00.
MANAGEMENT – Headed by Board of Directors, Chairman and CEO.

BUSINESS OUTLOOK – Strong profit contribution locally from CELCOM and high growth prospect internationally.

Celcom had 228,000 wireless broadband subscribers as at end 2008 from a mere 66,000 at end 2007. For March 2009 Celcom had 30,000 new wireless subscribers.

CORPORATE GOVERNANCE - Still plenty of room for improvement.

FINANCIAL – RM3.23b cash an RM19.98b debt. Due to TM Bhd RM5b in March 2009.
WEAKNESS ANALYSIS – Highly leverage balance sheet.

OPPORTUNITIES ANALYSIS – Further overseas expansion.

THREATS ANALYSIS - No more steady profit contribution from the fixed line business after demerger and exposed to foreign currency fluctuation.


QUANTITATIVES ANALYSIS
STOCK VALUATIONS.

Forecast Price Earnings Ratio for FYE 2009 – 10.2X.
Net Assets Per Share – RM2,99.
Price to Book Value – 0.82X.
Net Tangible Assets – RM1.09.
Dividend Yield – 4.1%.
Debt to Equity Ratio – 2.01967X.
Return on Equity Ratio – 9.9878%.
Net Profit Margin – FY08 at 4% and Forecast 2009 at 7.44%.


TECHNICAL ANALYSIS – 52 WEEKS TRADING RANGE.

52 Weeks - High at RM8.20 and Low atf RM2.13.

3 Months –High at RM3.74 and Low at RM2.16.


STOCK RECOMMENDATION - UPGRADED FROM HOLD TO BUY FOR TMI BHD based on closing price as of 30.3.2009 at RM2.21 on growth prospect as foreign currencies debt can be service from TMI foreign operations. Fair value for FYE 2009 at RM3.12 based on PER of 13X, on an EPS of 24 sen. Rights issue is necessary to bolster the balance sheet.

7. TENAGA NASIONAL BERHAD. RM6.15.

FYE 31 AUGUST 1Q 2009(U) FY 2009(F)
000 000

Revenue 7,895,000 28,356,000
Net Profit (Loss) ( 944,100) 2,800,000
Net EPS (Loss) sen (21.78) 64.6
Forecast PE Ratio N.A. . 10X
Dividend (sen) 0.00 20.0
Dividend Yield 0.00% 3.25%
Net Assets RM5.6820
Cash RM 5,121,700,000
Debt RM24,022,500,000
Number of shares 4,334,647,000
Market Capitalization RM26.658 billion
Major shareholder Khazanah Nasional ( 39 % )

# Currently coal prices at US$75 per tons.
# Forecast based on flat growth of electricity demand.

LATEST CORPORATE DEVELOPMENT.

TNB has repurchased and intends to cancel US$165 million nominal value of the US$600 million 7.625% Notes due in 2011. Total debt has been reduced by 2.6% to RM23,387.34 million and its US$ currency debt exposure has come down from 27.5% to 25.6% based on total borrowing as at 30 November 2008.

New electricity tariff effective 1 March 2009 after the reduction in gas price from RM14.31 per mmBTU to RM10.70 per mmBTU. Coal (40%) and gas represent major component of TNB fuel costs.

TNB and Sarawak Energy Bhd has been given approval in principle by the government to take over the operation of Bakun Hydroelectric Project from Sarawak Hidro Sdn Bhd through leasing agreement and to develop the transmission system to Peninsular Malaysia. The construction of the 8x300MW generating units at Bakun HEP is nearing completion and expected to export 1,600 MW from Bakun to Peninsular Malaysia via a HVDC transmission system and the remaining power to Sarawak.

OUTLOOK.

Given the declining domestic economic activities, demand growth for the FY2009 is expected to trend lower compared to the previous year. Whilst average coal prices may ease slightly from USD113.9/ mt (currently at US$75) reported for 1Q09, the weakening Ringgit will continue to keep coal price and operating expenditure high.
The Group’s profitability will continue to face downward pressure from higher capacity payments to IPP’s particularly with the commissioning of 700MW of Jimah Power Plant on 1 January 2009 and the remaining 700MW in July 2009. The capacity payment for the Jimah Power Plant will rise to RM1 billion by FY2011.
The Group’s bottom line would also be adversely affected if the Ringgit continues to weaken against the JapaneseYen and US Dollar with higher interest payments for the foreign currency loans.

The Board of Directors is of the view that the Group’s financial performance for FY2009 will likely be worse.


QUALITATIVES ANALYSIS.
STRENGTHS,WEAKNESS, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS
BUSINESS MODEL.

The principal activities of the group are the generation, transmission, distribution and sale of electricity in Malaysia.

No segmental information.

MANAGEMENT – Still young and not quite proven yet. Relied too much on electricity tariff increase.

CORPORATE GOVERNANCE – Not transparent enough.

FINANCIAL –Weak. Cash RM5.1 billion, Debt RM24.0 billion.

BUSINESS OUTLOOK – In line with the economy growth.

The price of gas to the power sector has increased by 123% from RM6.40 per mmBTU to RM14.31 per mmBTU , whilst coal price has risen by more than 170% since 2006. Gas and Coal currently constitute 68% and 26% of the total generation mix in Peninsular Malaysia.
Government stated policy is to allow an increase in electricity tariff to compensate TNB in case of any increase in gas tariff by PETRONAS should augur well for the company and support the share price. TNB electricity demand will grow in tandem with the economy. Earnings growth will also come from overseas projects and expansion.

WEAKNESS ANALYSIS – Highly leverage balance sheet and unfavorable payment terms to independent power producer.


OPPORTUNITY ANALYSIS - An opportunity for TNB to go for a NUCLEAR POWER PLANT as a cheaper, cleaner and safer alternative, with the latest technology available as a new source of power. Fuel and coal are unfriendly to the environment. Meanwhile, for the Bakun hydroelectric power plant, TNB have to deal with the execution risk and an astronomical cost to lay undersea cables to transmit power from Sarawak to Peninsular Malaysia.

THREATS ANALYSIS - High energy costs (coals, oil and gas), high capital expenditure and high debt level too. Urgent need to diversify the source of power into cheaper alternatives such as hydro electric and nuclear power plants.

QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast Price Earnings Ratio for FYE August 2009 – 10X.
Net Assets Per Share – RM5.6820.
Price to Book Value – 1.08X.
Net Tangible Assets – RM5.6820.
Dividend Yield – 3.25%.
Debt to Equity Ratio – 1.84X
Return on Equity Ratio – 10.069 percent for FY09 and 0% for 1Q09..
Net Profit Margin – 10.07% for FY09.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM9.10 and Low at RM5.60.

3 Months – High at RM6.60 and Low at RM6.60.

RECOMMENDATION FOR TNB BHD DOWNGRADED FROM HOLD TO SELL ON STRENGTH AND BUY BACK ON WEAKNESS at RM5.70 (1X NTA) or lower on weak 1Q FY09 results and very high US$ and Yen borrowings.

A fair value of RM5.70 for 2009 plus a dividend of 20 sen for a yield of 3.08 percent at 1X NTA of RM5.6820. Lower cost of coals (a major cost component) currently at US$75 per tons should be the catalyst for upward re rating of the stock but downside risk remain if coals already hedged at higher prices.









8. KUMPULAN SIME DARBY BERHAD. RM5.40.

FYE JUNE 30 2Q 2009(U) 1H 2009(U) FY 2009(F)
000 000 000
Revenue 7,299,899 16,004,939 19,791,666
Pre Tax Profit 395,502 1,648,372 2,734,567
Net Profit 278,501 1,145,483 1,900,000
Net EPS 4.63 19.06 31.61
Forecast PE Ratio 17.1X
Dividend 5.00 25.00 sen
Dividend Yield 0.0% 4.6%
Net Assets (RM) 3.33.
Cash (RM) 2,622,700,000.
Debt (RM) 5,867,400,000.
Number of shares 6,009,464,000
Market Capitalization RM32.451 billion
Major shareholders ASB (50.01%)

* Management Assumption.
- Average Crude Palm Oil price of RM1,700 for FYE June 30, 2009.

LATEST CORPORATE DEVELOPMENT.

Disposal of Sime Darby Travel Sdn Bhd to Super Deal Travel & Tours Sdn Bhd for RM12,792,000.
Disposal of Harvik Rubber Industries Sdn Bhd to MIK Industries Ltd for RM12 million.

Headline Key Performance Indicator’s.
Net Profit After Tax and Minority Interests RM1,900 million.
Return On Average Shareholders Funds 8.8%.

QUALITATIVES ANALYSIS.
STRENGTHS,WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL - The largest integrated plantation company in the world with 600,000 hectares of plantation land (oil palm and rubber) and 2.5 million annual CPO productions.

Revenues came from 1.Plantation 2.Property 3.Industrial 4.Motors 5.Energy and Utilities and 6.General Trading, Services and Others.

For 6 months FYE June 30, 2009, revenues from plantation represent 37.9%, property represent 3.54%, industrial represent 25.38%, motors represent 21.44%, energy and utilities represent 9.54%; and general trading, services & others represent 2.2%. meanwhile plantation represent almost 62% of segmental results.
MANAGEMENT - Headed by Tun Musa Hitam as the Chairman and Dato Zubir Murshid as the CEO and an experienced management team in their respective fields.

CORPORATE GOVERNANCE – Should strive to be a corporate leader in transparency.

FINANCIAL STRENGTH – Cash RM2.6b and Debt RM5.8b.

BUSINESS OUTLOOK – Depend on Malaysia and world economic conditions.

WEAKNESS ANALYSIS – Still low yielding plantation assets.

OPPORTUNITIES ANALYSIS - To capitalize on lower assets prices for acquisitions or expansions plan.

THREATS ANALYSIS - Production costs still high after the merger at RM1,100. Should be able to bring the production costs down to around RM800 with lower fertilizer costs to improve net profit margin. Prolonged world recession, over supply of palm oil,weak demand and lower crude oil prices will add pressure to CPO prices.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.

Forecast PER for FYE June 2009 at 17.1X.
Dividend Yield FYE June 2009 at 4.6%.
Net Assets Per Share – RM3.33.
Price to Book Value – 1.6X.
Net Tangible Assets – RM.
Debt To Equity Ratio – 0.6X.
Return On Equity – 8.24%.
Net Profit Margin – 2Q 09 at 3.8% and Forecast FY 09 at 9.6%.

TECHNICAL ANALYSIS – Trading Range.

52 Weeks - High at RM10.20 and Low at RM4.94.

3 Months – High at RM5.90 and Low at RM5.30.

MAINTAINED HOLD RECOMMENDATION FOR SIME DARBY BHD despite weak CPO prices outlook as demand softening on oversupply and OPEC decided no cut oil production anymore as the price seem to have stabilize around RM1,700 to RM2000 level. Based on management forecast average selling price for the CPO of RM1,700 for FYE June 2009 and an EPS of 31.61 sen on a net profit of RM1.9 billion, the fair value for Sime Darby Bhd is RM4.12 plus a dividend yield of 6.1 percent at a PER of 13X.



9. SHELL REFINING COMPANY (FOM) BERHAD. RM9.15.

FYE 31 Dec. FY 2009(F) 4QFY2008(U) FY 2008(U) FY 2008(F)
000 000 000 000

Revenue 8,856,000 2,493,558 13,086,128 12,806,570
Net Profit 177,120 (523,112) (330,017) 237,375
Net EPS 0.5904 (174.37) (110.01) 79.12
Forecast PE Ratio 15.5X n.a. n.a. 11..6X
Dividend (sen) 30.00 30.00 50.00 30.00
Dividend Yield 3.3% 5.5% 3.3%
Net Assets RM6.4019.
Cash RM274,988,000
Debt RM484,890,000
Number of shares 300,000,000
Market capitalization RM2.745 billion.
Major shareholder Shell Overseas Holdings Limited ( 70 % ).

KEYS ASSUMPTION.

Sales of petroleum products at 41 million barrels.
Average selling price of USD60.00.
Average crude oil price of USD55.00
Average refining margin of USD5.00 or R18.00.
Exchange rate at RM3.60 to 1 USD.
Net profit margin of 2%.

LATEST CORPORATE DEVELOPMENT.

No corporate proposal to report.

QUALITATIVES ANALYSIS.
STRENGTHS,WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL.

The principal activities of the Company consist of refining and manufacturing of petroleum products. The Company operates with state-of-the-art technology and is the key petroleum products supplier to Shell’s downstream businesses in Malaysia.

The oil refinery at Port Dickson has a licensed production capacity of 156,000 barrels per day and produces a comprehensive range of petroleum products, over 90% of which are consumed within Malaysia.

No segmental information.
MANAGEMENT - Headed by the Shell Overseas Holdings Limited representative.

BUSINESS OUTLOOK - Continue to be good although at a lower price, as the demand for refining and manufacturing of petroleum products continue to be strong in Malaysia and worldwide as the world thirst for oil continue even though the world economy is in a recession.

CORPORATE GOVERNANCE – Not transparent enough.

FINANCIAL STRENGTHS – Cash RM274.988m and debt RM484.890m.


WEAKNESS ANALYSIS – Refining margin subject to fluctuation of oil price.


OPPORTUNITIES ANALYSIS – Plenty of opportunity for the expansion of their refinery business at a lower costs to cater for future demand when the world economy recover from the recession.


THREATS ANALYSIS – Prolonged weakness in oil prices as a result of weak demand cause by the global recession.

QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast PER for 2009 – 15.5X.
Net Assets Per Share – RM6.40.
Price to Book Value – 1.43X.
Net Tangible Assets – RM
Dividend Yield – 3.3 percent.
Debt to Equity Ratio – 0.78X.
Return on Equity Ratio – 7.25%.
Net Profit Margin – 2.0 percent.

TECHNICAL ANALYSIS – TRADING RANGE.

52 Weeks - High at RM11.80 and Low at RM7.95.
3 Months – High at RM9.75 and Low at RM8.15.

RECOMMENDATION FOR SHELL (FOM) BHD DOWNGRADED FROM HOLD TO SELL AND TAKE PROFIT - Shell is a company that thrive on an excellent refining margin that translate into high level of profitability and in turn a cheap valuation. FIFO accounting method benefit them in high crude oil prices environment. Based on FYE 2009 forecast EPS of RM0.59 and at PER of 12X, the fair value is RM7.10 plus a dividend yield of 4.2%.
10. PPB GROUP BERHAD. RM9.50.

FYE 31 DEC. FY 2009(F) 4Q FY2008(U) FY 2008(U) FY2008(F) 000 000 000 000

Revenue 2,127,659 832,338 3,462,024 3,105,876
Net Profit 500,000 363,281 1,286,509 974,048
Net EPS (sen) 42.18 30.64 108.52 82.16
Forecast PE Ratio 22.5X 8.8X 11.6X
Dividend (sen) 35.0 18.00 85.00 70.0
Dividend Yield 3.7% 8.9% 7.4%
Net Assets RM10.32
Cash RM489,022,000.
Debt RM381,285,000
Number of shares 1,185,500,000
Market capitalization RM11.262 billion.
Major shareholder Kuok ( B ) Sdn Bhd ( 42.38 % )

Assumption.

Based on average selling price for CPO of between RM1,600 to RM1,700 level.

LATEST CORPORATE DEVELOPMENT.

First single tier dividend of 18 sen, ex date on 19 May 2009.

QUALITATIVES ANALYSIS.
STRENGTHS,WEAKNESSES, OPPORTUNITIES AND THREATS.

STRENGTHS ANALYSIS.
BUSINESS MODEL.

PPB Group the listed flagship of Kuok Group is a major conglomerate engaged in a wide spectrum of business. Owned 18.2% stake in an integrated oil palm producer Wilmar International listed in Singapore.

PPB’s core businesses are 1.Sugar refining and cane plantation; 2.Grains trading, flour and feed milling; edible oils refining and trading; oil palm plantations; and 3. Environmental engineering, utilities and waste management services, 4.Livestock farming; bulk and consumer packaging; 5.Film exhibition and distribution; 6.Pproperty ownership and development; consumer product distribution; 7.Chemicals manufacturing and commodity trading and other operations.



For FY 2008, revenues from sugar refining and cane plantation represent 28.12%; grains trading, flour & feed milling represent 41.22%; livestock farming represent 2.53%; environmental engineering, waste management & utilities represent 5.31%; film exhibition and distribution represent 5.13%; property investment 7 development represent 1.88%; chemicals trading & manufacturing represent 4.21% and other operations represent 15.57%. Contribution from Singapore listed associate company Wilmar International Ltd represent 67% of pre tax profit.

MANAGEMENT – Headed by a Board of Directors and Executive Chairman.

BUSINESS OUTLOOK – Will be affected by the lower palm oil and commodities prices.

CORPORATE GOVERNANCE – Not transparent enough.

FINANCIAL STRENGTH – Cash RM489m and debt RM381.2m.

OPPORTUNITIES ANALYSIS – Through organic growth or through M&A.

WEAKNESSES ANALYSIS. - Weak CPO prices on ample of supply currently. Profit mainly came from 18.2% stake in Singapore listed Wilmar International.

THREATS ANALYSIS – Prolonged weakness in CPO prices and deepening global recession.

QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast PER for 2008 – 22,5X.
Net Assets Per Share – RM10.32.
Price to Book Value – 0.857X.
Net Tangible Assets – RM10.02.
Dividend Yield – 3.7%.
Debt to Equity Ratio – 0.06X.
Return on Equity Ratio – 3.76 % for FY2009.
Net Profit Margin – 23.5 percent.

TECHNICAL ANALYSIS – TRADING RANGE.

52 Weeks - High at RM11.60 and Low and RM6.85.
3 Months – High at RM10.00 and Low at RM9.35.

MAINTAINED HOLD RECOMMENDATION FOR PPB GROUP BHD based on better than expected 4Q08 and FY08 results but CPO outlook remain weak.and maintained FY09 forecast earnings. - Based on the PER for 2009 of 13X on forecast EPS of 42.18 sen, the fair value for PPB Group Bhd is RM5.50 plus a dividend yield of 5.5%.
11. PLUS EXPRESSWAYS BERHAD. RM2.89.

FYE 31 DEC. FY 2009(F) 4QFY08(A) FY 2008(A) FY 2008(F)
000 000 000 000
Revenue 2,868,612 793,177 2,967,958 2,891,934
Net Profit 967,024 295,984 1,079,333 1,025,105
Net EPS (sen) 19.36 5.92 21.59 20.5
Forecast PER 14.9X 13.4X 14.1X
Net Assets RM1.14.
Dividend (sen) 10.0 9.50 16.00 10.0
Dividend Yield 3.46% 5.5% 3.46%
Cash RM 2,234,430,000
Debt RM10,473,231,000
Number of shares 5,000,000,000
Market capitalization RM14.45 billion.
Major shareholder UEM Group Bhd.


LATEST CORPORATE DEVELOPMENT.

PLUS SPV Bhd has issued an additional RM745 million nominal value Sukuk under the Sukuk Programme based on Islamic Principle of Musyarakah.

Traffic Volume Update.

PLUS (NSE, NKVE, FHR2, SPDH) passenger car unit per kilometer for YTD Feb. 2009 up by 1.4 to 2,269.9m.

ELITE ( North South Expressway Central Link) PCU-KM for YTD Feb. 2009 up 1.6% to 212.9m.

LINKEDUA PCU-KM for YTD Feb. 2009 up 11.9% to 2.63m.

Butterworth – Kulim Expressway PCU-KM for YTD Feb 2009 down 3.1% to 3.13m.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL.

Plus Expressways Berhad wholly owns Project Lebuhraya Utara-Selatan Berhad (“PLUS”), a toll concessionaire in Malaysia.
PLUS’s core business consists of the operation and maintenance of the following expressways and certain ancillary facilities along the expressways :
1.the North-South Expressway, a 772-km expressway from the border of Thailand in the north to the border of Singapore in the south.
2 .the New Klang Vally Expressway, a 35-km expressway running between Kuala Lumpur and the North Klang industrial and urban area.
3. the 16-km section of Federal Highway Route 2 connecting the industrial and urbanareas of Subang and Klang, and
4. the Seremban-Port Dickson Highway, an expressway of approximately 23-km connecting Seremban and Port Dickson.

PLUS Expressways also provides expressway operation services to the following three expressways :

1.North-South Expressway Central Link (ELITE), a 63-km expressway linking South and North of Kuala Lumpur to the KL International Airport.
2. LINKEDUA, the second bridge crossing between Tuas in Singapore and Tanjung Kupang in Johor, Malaysia and the toll road linking the second crossing to the North-South Expressway with total length of 44 km, and
3. Penang Bridge, linking Penang Island to Peninsular Malaysia with total length of 13.5 km (including an 8.5 km bridge).


MANAGEMENT – Headed by the Board of Directors and the CEO.
.
BUSINESS OUTLOOK – Very good with the drop in fuel pump prices will encourage people to travel and use the highways more.

CORPORATE GOVERNANCE – Not transparent enough.

FINANCIAL STRENGTH – Cash RM2.2b and debt RM10.4b


WEAKNESS ANALYSIS – Highly leverage balance sheet.


OPPORTUNITIES ANALYSIS – Overseas expansion .


THREATS ANALYSIS -A toll concessionaire company with a concession period that will expire according to the respective agreement with the Government.







QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast FYE 2009 PER – 14.9X.
Net Assets Per Share – RM1.14.
Price to Book Value – 2.535X.
Net Tangible Assets – RM1.069.
Dividend Yield – 3.46%.
Debt to Equity Ratio – 1.97X.
Annualized Return on Equity Ratio – 19.6%
Net Profit Margin – 4Q09 at 37.3% and FY08 at 36.3%.


TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM3.26 and Low at RM2.49.

3 Months – High at RM3.04 and Low at RM2.75.


RECOMMENDATION FOR THE PLUS EXPRESSWAYS BHD DOWNGRADED FROM HOLD TO SELL ON STRENGTHS and buy back on weakness at RM2.49 or lower – Based on FYE 2009 forecast EPS of 19.36 sen, the fair value for PLUS is RM2.52 at PER of 13X plus a dividend yield of 4 percent.






















12. MAYBANK BERHAD. RM3.66 Ex Price R.I. (Non Shariah Compliance).

FYE 30 JUNE 2Q 2009(U) 1H 2009(U) FY2009(F)
000 000 000

Revenue 4,709,514 8,462,348 15,011,336
Net Profit 734,560 1,306,733 842,692
Net EPS (sen) 10.38 18.46 11.91
Forecast PE Ratio 30.7X
Dividend (sen) 10.00
Dividend Yield 2.73%
Net Assets RM3.826.
Net Tangible Assets RM2.95.
Cash RM 22,734,638,000
Customer deposit RM206,592,878,000
Net Loans RM182,575,367,000
Net NPL RM3,352,622,000 or 1.80%.
Core Capital Ratio 8.13%.
Risk Weighted Capital 13.54%.
Total Assets RM301,706,268,000
Shareholders fund RM 20,229,152,000
Number of shares 7,077,663,000.
Market capitalization RM25.9 billion
Major shareholder PNB, ASB

LATEST CORPORATE DEVELOPMENT.

Rights issue of up to 2,212 million new RM1.00 shares on the basis of 9 for 20 at RM2.74 to raise RM6.0 billion. Ex date on the 31.3.2009. Ex price at RM3.66 based on cum price of RM4.08.
To increase stake in Vietnam’s bank for another 5% to the ceiling rate of 20%.

QUALITATIVES ANALYSIS.
STRENGTHS,WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL

The Bank is principally engaged in the business of banking and finance in all its aspects which also include Islamic Banking Scheme operations with overseas operations in Singapore, Indonesia, Pakistan, Vietnam.

The subsidiaries are principally engaged in the business of investment banking, general and life insurance, general and family takaful, stock broking, discount house, leasing and factoring, trustee and nominees services, unit trust management, asset management and venture capital.
MANAGEMENT – New CEO and not proven yet.

BUSINESS OUTLOOK - Aggressive expansion plan overseas for growth even at a very high acquisition cost that will strain the balance sheet. In a RM7.5 billion capital raising exercise to strengthened back the capital ratios.

CORPORATE GOVERNANCE – Still not transparent enough just like the rest of corporate’s Malaysia.

FINANCIAL STRENGTH – Cash RM22.7 billion. CCR 8.13% and RWCR 13.54%. NPL RM3.35b or 1.8%.

WEAKNESS ANALYSIS – The bank highly leverage business model make them vulnerable during an economic downturn.

OPPORTUNITIES ANALYSIS – Need to be more patient in their overseas acquisitions foray so not to overpay especially now during the world financial market meltdown. There will be plenty of opportunity to acquire banks at a cheap price especially distress banks around the world in the very near future.

THREATS ANALYSIS - Still weak in the investment banking area. Recently very aggressive in pursuing overseas or regional expansion or acquisition but at a very high price and through heavy borrowing which eventually will affect their bottom line.

QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast FYE June 2009 PER – 23.2X.
Net Assets Per Share – RM4.14.
Price to Book Value – 0.97X.
Net Tangible Assets – RM2.95.
Price to NTA – 1.1X.
Dividend Yield – 3.75%.
Debt to Equity Ratio – 11.67X.
Return on Equity Ratio – 14.6%
Net Profit Margin – 2Q09 at 15.6% and 1H09 at 15.4%.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM6.75 and Low at RM3.54.
3 Months – High at RM5.60 and Low at RM3.86.

MAINTAINED HOLD RECOMMENDATION FOR MAYBANK BHD – Take profit on strength as the fair value for Maybank is RM2.95 adjusted from RM3.68 before ex-rights issue based on 1X Price to Tangible Book Value (NTA) and a PER of 21.3X FYE June 2009 forecast earnings per share of 17.26 sen plus a dividend yield of 4.4%.
13. BUMIPUTRA COMMERCE HOLDINGS BERHAD. RM6.20 (Non Shariah).

FYE 31 DEC. FY 2009(F) 4Q FY08(U) FY 2008(U) FY2008(F) 000 000 000 000
Revenue 6,732,868 1,882,411 7,740,512 7,543,518
Net Profit 1,791,844 296,929 2,012,546 2,081,401
Net EPS (sen) 50.07 9.19 57.82 63.64
Forecast PE Ratio 12.4X 10.7X 9.7X
Dividend 20.0 25.0 25.0 10.0
Dividend Yield 3.2% 4.0% 1.61%
NTA RM3.13.
Net Assets RM4.84
Cash RM24.2 billion
Customers Deposits RM141,953,822,000
Debt RM9.38 billion.
Net Loans and Advances RM117.3 billion
Net NPL RM2.73 billion or 2.29%.
Core Capital Ratio 10.9% after dividend.
Risk Weighted Capital 13.91% after dividend
Cost to income ratio 53.2%
Total assets RM190,906,548,000
Shareholders fund RM16,692,480,000
Return on equity 12.3%..
Number of shares 3,578,078,000
Market capitalization RM22.18 billion
Major shareholder Khazanah Nasional, EPF

# Forecast based on high level of non performing loans.

LATEST CORPORATE DEVELOPMENT.

Proposed disposal by BCHB of its 49% equity interest in PR Commerce International for US$22.7 million or RM84.1 million.

Proposed issuance by CIMB Bank of RM2 billion equivalent in foreign currencies of non innovative Tier 1 bank capital instrument has lapsed on 3 March 2009 and no further extension was sought from SC.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL - The Group banking business is organized into six major operating divisions. 1.Consumer Banking 2.Corporate and Investment Banking 3.Treasury and Investment 4.Asset Management & Insurance 5.Foreign Banking Operation 6.Support and Others 7.
MANAGEMENT – Government nominees.

BUSINESS OUTLOOK - Excellent outlook as the regional expansion especially in Indonesia, Thailand and China will be the future earnings driver beside the fast growing commercial bank and the leading investment banking group in Malaysia now turn into a very cautious or even quite uncertain outlook amid world wide U.S. led financial turmoil.

CORPORATE GOVERNANCE – Still not transparent enough and not doing enough on CSR.

FINANCIAL STRENGTH – Cash RM24.2b. CCR 10.9%, RWCR 13.91%. NPL RM2.73b or 2.29%.

WEAKNESS ANALYSIS – The banks highly leverage business model and assets quality are making them quite vulnerable in a recessionary environment.

OPPORTUNITIES ANALYSIS – Need to be patient and nimble enough to do M&A deal on a global scale during this financial crisis especially with the government backing.

THREATS ANALYSIS – Need further improvement in the commercial banking area to be the next earnings driver and to be as good as CIMB investment banking side. Assets quality, weak bond market and a slowing economy worldwide will affect the bank profitability.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.
Forecast FYE 2009 PER – 12.4X
Net Assets Per Share – RM4.84.
Price to Book Value – 1.28X.
Net Tangible Assets – RM3.13.
Price to NTA – 1.98X
Dividend Yield – 3.2%.
Debt to Equity Ratio – 9.97X.
Return on Equity Ratio – 12.3%.
Net Profit Margin – 4Q08 at 15.6% and FY08 at 15.4%.

TECHNICAL ANALYSIS – TRADING RANGE.

52 Weeks - High at RM10.50 and Low at RM5.55.

3 Months – High at RM7.05 and Low at RM6.00.

RECOMMENDATION FOR BCHB BHD DOWNGRADED FROM HOLD TO SELL ON STRENGTH and buy back on weakness at the lower end of the trading rage of RM5.55 or lower as the fair value is at 1.0X net tangible book value of RM3.13. FY 2009 forecast EPS of 50.07 sen and at PER of 6.3X plus a gross dividend yield of 6.4% at RM3.13.
14. PUBLIC BANK BERHAD. RM7.15. (Non Shariah Compliance).

FYE 31 DEC. FY 2009(F) 4Q FY2008 FY 2008(A) FY 2008(F) 000 000 000 000

Revenue 11,164,636 2,557,557 10,500,307 10,733,909
Net Profit 1,765,963 653,975 2,581,237 2,543,602
Net EPS 50.0 19.49 76.93 72.01 sen
Forecast PE Ratio 14.3X 9.3X 9.9X
Dividend (sen) 30.0 25.00 55.00 40.00
Dividend yield 4.2 % 7.7% 5.6%
NTA RM2.3094.
Net Assets RM2.8420.
Total assets RM196,163,106,000
Cash RM 36,597,027,000
Customers Deposits RM162,279,564,000
Net Loans RM118,386,295,000
Net NPL RM1,037,297,000 or 0.86%.
Core Capital Ratio 7.7% after dividend.
Risk-Weighted Capital 13.1% after dividend.
Return on Equity 17.26%.
Total shareholders fund RM10,228,732,000
Number of shares 3,531,926,000
Market capitalization RM25.25 billion
Major shareholder Teh Hong Piow

# Forecast based on higher non performing loans, lower interest margin with lower interest rate and the effect of global recession.

LATEST CORPORATE DEVELOPMENT.

Proposed issuance of Non-Cumulative Perpetual Capital Securities of up to RM5 billion in new capital through non innovative Tier 1 Stapled Securities Programme.

PERFORMANCE REVIEW.

The improvement in earnings was primarily due to higher net interest and financing income by RM570.8 million or 15.45 and higher other operating income by 4.6% or RM64.1 million. These were partially offset by higher operating expenses by 5.8% or RM97.4 million and higher loan loss allowances and impairment losses by RM162.1 million.

The increase in other operating income was mainly due to a goodwill payment of RM200 million received from ING in respect of a regional strategic alliance on bancassurance distribution, higher management fee income, partially offset by lower fee income on sale of trust units, lower stock brokerage income and lower gain on sale of securities.
The growth in Group’s net interest and financing income was driven by a strong loans and deposit growth coupled with further improvement in assets quality.

For the 4Q 2008, the Group’s pretax profit decrease by bRM8.3 million or 1.0% compared to previous quarter due to an increase in loan loss allowance made coupled with lower other operating income mainly due to a reduction in unit trusts fund management business and stock broking activities. This was partially offset by an increase of RM124.2 million or 12.5% in net interest and financing income. Net earnings grew by RM74.0 million or 12.8% due to a lower effective tax rate in the current year.


OUTLOOK FOR 2009.

The banking industry’s loan growth is expected to moderate as households and businesses turn more cautious. The banking industry will remain competitive, particularly in the retail sector and the pressure in the net interest margins will remain.


QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL.

Strong in commercial banking in Malaysia. Regional banking expansion in Hong Kong, Cambodia and China contribute quite substantially to PBB botomline. A complete banking group in Malaysia with an operation in investment banking and Islamic Banking too.

Revenues came from 1.Retail operations 2. Corporate lending 3.Treasury and Capital market operations 4.Investment Banking 5.Fund Management 6.Others.

MANAGEMENT – Old hand in the banking industry, Teh Hong Piow..

BUSINESS OUTLOOK – Very challenging times ahead as the world economy entering a recessionary phase or even a possible depression.

CORPORATE GOVERNANCE – Still not transparent enough and not doing enough on the CSR.

FINANCIAL STRENGTH – RM36.6 billion in cash and CCR at 7.7%, RWCR at 13.1%. NPL RM1.037 billion or 0.86%.

WEAKNESS ANALYSIS – The bank highly leverage business model are vulnerable to global recession.
OPPORTUNITIES ANALYSIS – Like the rest of Malaysian’s bank, during current world financial crisis, PBB should remains conservative and patient until the right M&A deal come along.

THREATS ANALYSIS - Still weak in the investment banking area. Slowing world economy will affect the bank loan expansion but good assets quality and a very low NPL will see the bank through the turbulence time ahead.

QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast FYE2009 PER – 14.3X.
Net Assets Per Share – RM2.8420.
Price to Book Value – 2.515X.
Net Tangible Assets – RM2.3094.
Price to NTA – 3.1X
Dividend Yield – 4.2%.
Debt to Equity Ratio – 18.18X.
Return on Equity Ratio FYE2009 – 17.6 percent.
Net Interest Income Margin – 37.2% for 4Q08 and 35.5% for FY08..
Net Profit Margin – 30.88% for Q4, 24.58 for FY08.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM12.00 and Low at RM7.00.

3 Months – High at RM9.15 and Low at RM7.05.


RECOMMENDATION FOR PUBLIC BANK BHD DOWNGRADED FROM HOLD TO SELL based on fair value of 1.0X net tangible book value of RM2.3094. PB Bank is highly undercapitalized even under the current outdated system for bank equity capital.

We forecast a FYE 2009 EPS of 50 sen or a net profit of RM1.766 billion due to a global recession, rising NPL and lower net interest income with lower interest rate (OPR), the fair value for Public Bank Berhad is RM2.30 at 1X Price to Tangible Book Value plus a dividend yield of 7.7 percent and at a prospective 2009 PER of 4.6X at RM2.30.








15. KULIM ( M ) BERHAD. RM4.90.

FYE DEC. 31 FY 2009(F) 4Q FY2008 FY 2008(U) FY 2008(F)
000 000 000 000

Revenue 2,000,000 788,355 3,866,149 3,000,000
Net Profit 200,000 112,258 364,017 300,000
Net EPS (sen) 64.85 37.41 121.30 83.58 sen
Forecast PE Ratio 7.55X 4.04X 5.9X
Dividend (sen) 20.0 7.50 22.50 20.0
Dividend Yield 4.1% 4.6% 4.1%
Net Assets Per Share RM10.58.
Cash RM 384,816,000
Debt RM1,452,221,000
Number of shares 309,000,000
Market capitalization RM1.514 billion
Major shareholder Johor Corp ( 52.18 % ).

KEY ASSUMPTIONS.
Based on CPO price of between RM1,600 to RM1,700.
If based on CPO prices of RM2,367 as per the first 9 months of 2008, the forecast net profit for FY2009 is RM315,382,000.

LATEST CORPORATE DEVELOPMENT.
Statistical Data for Malaysian Operation YTD 2009.

FFB Produced 48,936 MT. FFB Processed 57,116 MT. CPO Produced 11,214 MT.
Palm Kernel Produced 3,427 MT.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESS, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL – The Group’s business segments are managed on a worldwide basis, they operate in four geographical areas:
1.Malaysia – mainly plantation (more than 40,000 hectares and in the middle of taking over Sindora Bhd with 6000 hectares of plantation land)), manufacturing, fast foods, bio diesel and investment activities.
2.Papua New Guinea – mainly plantation activities (more than 70,000 hectares and plan to double the total hectarage in the future is underway).
3.Solomon Island – rehabilitation of palm oil plantation land.
4.United Kingdom – mainly plantation activities.

Revenues came from 1.Plantation operations 2.Manufacturing (Oleochemical and Rubber Products) 3. Foods and Restaurants 4.Management Services and Other Businesses 5.Shipping Services 6.Investment Property and 7. Other Investment income.
Malaysia plantation operation represent 18% of the revenue and 16.68% of ebitda. Papua New Guinea and Solomon plantation operation represent 49.65% of revenue and 74.9% of ebitda. Manufacturing represent 39.2% of revenue and 4.47% of pretax profit. Food and restaurants represent 13.78% of revenue and 15.8% of pretax profit. Management services and other business represent 3.55% of revenue and 3.62 of pre tax profit. Shipping services represent 1.52% of revenue and 1.02% of pretax profit. Other businesses represent 0.29% of revenue and 2.56% of pretax profit.

MANAGEMENT – Manage by the State of Johor investment arm, Johor Corporation.

BUSINESS OUTLOOK – In a recession proof business as the growing world’s population will continue to consume palm oil at a very affordable price and a steadily growing fast food business.

CORPORATE GOVERNANCE – Transparency is still lacking.

FINANCIAL STRENGTH – Cash RM384.8 million and Debt RM1.45 billion.

WEAKNESS ANALYSIS – Leverage balance sheet.

OPPORTUNITIES ANALYSIS – Time to nurture the business for organic growth.

THREATS ANALYSIS – Prolonged global recession will affect the CPO prices and the company bottom line even though costs of doing business expected to be lower.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.
Forecast 2009 PER – 7.551X.
Net Assets Per Share – RM10.44.
Price to Book Value – 0.47X.
Net Tangible Assets – RM9.40.
Price to NTA – 0.52X.
Dividend Yield FYE 2009 – 4.1%.
Debt to Equity Ratio – 0.466X.
Return on Equity Ratio – 4.66%.
Net Profit Margin – 4Q08 at 14.2%, FY08 at 9.4% and forecast FY09 at 10 percent.

TECHNICAL ANALYSIS – TRADING RANGE.

52 Weeks - High at RM10.40 and Low at RM3.44.
3 Months – High at RM5.35 and Low at RM4.78.

BUY RECOMMENDATION FOR KULIM (M) BHD - A fair value of RM7.80 plus a dividend yield of 2.6 percent at PER of 12.0X forecast 2008 EPS of 64.85 sen and 0.8X net tangible book value. We also based our forecast on the bottoming out of CPO prices at current level of RM1600 per tons and higher contribution from the food division, increase plantation hectarages and a steady contribution from all the other divisions.
16. GAMUDA BERHAD RM1.86.

FYE JULY 31 2Q 2009(U) 6M 2009(U) FY 2009(F)
000 000 000

Revenue 591,731 1,205,695 3,404,916
Net Profit 49,056 104,092 280,812
Net EPS 2.45 5.19 14.00
Forecast PE Ratio 13.3X
Cash RM 795,869,000
Debts RM1,735,722,000
Dividend (sen) 4.00 10.0
Dividend Yield 2.15% 5.4%
Net Assets RM1.53
No. of shares 2,006,233,000
Market capitalization RM3.835 billion.
Major shareholder Generasi Setia Sdn Bhd 7.05%.

LATEST CORPORATE DEVELOPMENT.

Commencement of arbitration proceedings by MMCEG-Gamuda joint venture against Wayss & Freytag (M) Sdn Bhd in respect of the various claims arising from the subcontract for the construction of the Stormwater Management and Road Tunnel Project.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS
BUSINESS MODEL – Construction, property development and toll concessionaires in Malaysia and overseas.

Revenues came from 1.Engineering and Construction 2.Property Development 3.Water related and Expressway Concessions.

Engineering and construction revenues represent 80% and pre tax profit represent 11%, property development revenues represent 16.56% and pre tax profit 30% and water related & expressway concessions revenues represent 4.14% and pre tax profit represent 59% because of higher contribution from associated companies.

MANAGEMENT – Headed by the Board of Directors and the Managing Director.

BUSINESS OUTLOOK – Relatively stable due to RM 16 billion order book.

CORPORATE GOVERNANCE – Still not transparent enough.

FINANCIAL STRENGTH – Cash RM795,869,000 and Debt RM1,735,722,000.


WEAKNESS ANALYSIS – No single largest controlling shareholder making it a possible takeover play.
OPPORTUNITIES ANALYSIS – Will capitalize on their strengths when the opportunity arise.


THREAT ANALYSIS – Prolonged world economic slowdown that will reduce infrastructure spending. Currently still high construction and building materials costs despite the slowdown.


QUANTITATIVE ANALYSIS.
STOCK VALUATIONS.

Actual FYE July 2008 PER – 13.95X
Forecast FYE July 2009 PER – 16.2X.
Net Assets Per Share – RM1.52.
Price to Book Value – 1.49X.
Dividend Yield – 11.00%.
Debt to Equity Ratio – 0.577X.
Return on Equity Ratio FYE July 2008 – 11.91%
Net Profit Margin – 14.64% .


TECHNICAL ANLYSIS - TRADING RANGE.

52 Weeks - High at RM3.46 and Low at RM1.25.

3 Months – High at RM2.10 and Low at RM1.85.


HOLD RECOMMENDATION FOR GAMUDA BHD – A revised fair value of RM1.82 at FY 2009 PER of 13.0X, on an EPS of 14.0 sen.










17. MMC CORP BHD. RM1.37.

FYE 31 DEC. FY 2009(F) 4Q 2008(U) FY 2008(UA) FY 2008(F)
000 000 000 000

Revenue 8,245,000 2,438,473 8,545,033 8,384,288
Net Profit 550,000 128,228 527,319 530,000
Net EPS (sen) 18.06 4.20 17.30 17.4
Forecast PE Ratio 7.6X 7.9X 7.9X
Dividend (sen) 5.0 2.50 2.50 5.0
Dividend yield 3.6% 1.8% 3.6%
Net Assets RM2.01.
Cash RM 3,755,023,000
Debt RM20,085,000,000
No. of shares issue 3,045,059,000
Market Capitalization RM4.1717 billion
Major Shareholder Seaport Terminal 51.76%

LATEST CORPORATE DEVELOPMENT.

MMC shareholders has approved the acquisition of 2,000,000 shares of RM1.00 each in Senai Airport Terminal Services Sdn Bhd (100%) for RM1.7 billion cash.

QUALITATIVE ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.
STRENGTH ANALYSIS.
BUSINESS MODEL.
Transport and Logistics – 70% of Pelabuhan Tanjung Pelepas the container port and logistics hub, 100% of Johor Port the multipurpose port and logistics operations and 100% of Konsortium Lebuhraya Butterworth-Kulim the toll road operations.

Energy and Utilities – 51% of Malakoff Bhd, 41.8% of Gas Malaysia the natural gas distribution company and 51% of Recycle Energy the waste management & recycling and renewable energy company.

Oil & Gas – Through 99.9% stake in MMC Oil & Gas the design engineering services company, 69.9% of Tepat Teknik the steel fabrication works company, 51% of MMC-Transfield Services the asset management and maintenance services company and 51% of MMC-VME the natural gas separations works company.

Engineering & Construction – Through 39.2% of Zelan Bhd (RM2.11) the investment holding company which owned 100% of Zelan the power plant construction company and below 20% of IJM Bhd (RM5.15 Buy) the major infrastructure works company, and through 99.9% of MMC Engineering & Construction the engineering services company.
Others businesses – Through 30% stake in Malaysia Smelting Corporation (RM8.20) the tin mining and smelting company, 20.1% Integrated Rubber Corporation ( RM0.43) the manufacturing and trading of rubber gloves, 52.9% of Kramat Tin Dredging (RM5.90) which refocusing their business, 75.6% of Seginiaga Rubber Industries the weather strip manufacturer and MMC Metal Industries the foundry operations and precision engineering company.

Overseas business division – 50% stake in US$ 30 billion Jizan City project in Saudi Arabia.

Transport and logistics represent 14% of revenue and 17.7% of segmental profit. Energy and utilities represent 84.8% of revenue and 84% of segmental profit. Engineering and construction represent 46.8% of revenue and 0.26% of segmental profit. Others operation represent 0.7% of revenue.


MANAGEMENT – Headed by Board of Directors and CEO linked to Syed Mokhtar.

BUSINESS OUTLOOK - Excellent outlook with strong earnings contribution expected from the railway double tracking project for the next 5 years. Beside that the earnings driver will be from the various project announced recently in the Middle East and Iskandar Development Region plus strong recurrence earnings from the Independent Power Producer (now without the windfall tax).

CORPORATE GOVERNANCE - They should be more transparent in the related parties transaction, financial reporting and should be more active in being a good corporate citizen too.

FINANCIAL STRENGTH.

Strong recurrence earnings from the IPP allowed them to take on huge amount of borrowing for project financing. As of 3Q FYE 2008, cash in hand stood at RM3.75 billion and debt level stood at RM20.08 billion.

WEAKNESS ANALYSIS – The market doesn’t view the recent related parties transaction between Syed Mokhtar and MMC Corp Bhd favourably. It is in their favour to terminate the said deal. Highly leverage balance sheet.

OPPORTUNITIES ANALYSIS – Good dealmaker in Syed Mokhtar Albukhary.


THREATS ANALYSIS -Large amount of borrowing is still a big worry even though most of them is project financing or tie up to future cash flow of the project. Still high construction costs such as cement and steel will affect the group profit margin.

Morever, the recent hike in gas prices to IPP from RM6.40 per mmBTU to RM14.31 per mmBTU will also hit the group power division profitability going forward.


QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast FYE 2009 PER - 7.6X.
Net Assets Per Share – RM2.01.
Price to Book Value – 0.68X.
Dividend Yield FYE 2009 – 3.6%.
Debt to Equity Ratio – 0.77X
Return on Equity Ratio FYE 2009 – 6.05%.
Net Profit Margin FYE 2009 – 4Q08 at 5.25%, FY08 at 6.17% and forecast 09 at 6.67%.


TECHNICAL ANALYSIS.
TRADING RANGE.

52 Weeks - High at RM3.78 and Low at RM0.95.

3 Months – High at RM1.52 and Low at RM1.11.


RECOMMENDATION FOR MMC CORP BHD DOWNGRADED FROM BUY TO HOLD after the shareholders approved of the RM1.7 billion cash injection of Senai Airport Terminal Services (SATS) Bhd into MMC. Earnings loss from assets disposal such as 19% of PTP etc to pay for the purchase of loss making SATS won’t be compensate for the next 3 to 5 years. Based on the forecast earnings for FYE Dec 2009 of RM550 million or an EPS of 18.06 sen, the upside potential is RM2.00 at FYE2009 PER of 11X and a dividend of 5 sen for 4.67% yield.

.













18. PETRONAS DAGANGAN BHD. RM7.40.

FYE MARCH 31 FY2009(F) 3Q FY2009(U) 9M FY2009(U)
000 000 000

Revenue 24,200,776 5,561,380 19,992,622
Net Profit 668,936 43,612 410,169
Net EPS 67.20 sen 4.30 40.90
Forecast PE Ratio 11.01X
Net Assets RM4.02.
Dividend (sen) 30.00 0.00 12.00
Dividend Yield 4.05%
Cash RM721,697,000.
Debt (RM) Zero
No. of Shares Outstanding 993,454,000
Market Capitalization RM7.35 billion
Major Shareholder PETRONAS 69.86%

LATEST CORPORATE DEVELOPMENT.

Completed the acquisition of 5,600,000 shares or 80% equity interest in Lub Dagangan Sdn Bhd for RM16.24 million cash on 23 January 2009.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.

BUSINESS MODEL - The Company is the principal domestic marketing arm of petroleum products for Petroliam Nasional Berhad (PETRONAS), the national oil company, which holds 69.86% of its equity and the operation of service stations. The company markets a wide range of high quality petroleum products including motor gasoline, aviation fuel, kerosene, diesel, fuel oil, bunker fuel, lubricants, liquefied petroleum gas (LPG) and asphalt in Malaysia.

The Company markets its product throughout the country, directly to customers as well as through network of service stations, LPG dealers and industrial dealers. Its marketing activities are well supported by a comprehensive logistics and distribution system consisting of bulk depots, bunkering facilities and LPG bottling plants, all strategically located to ensure a reliable supply of products at all time.

The Company is the largest petroleum products marketer in the country with an estimated 41% market share. In the retail business sector, the Company market share is 30%. The total number of stations in operation are around 855.


THE AUTOMATIC PRICING MECHANISM (APM).

COMPUTATION OF TAX EXEMPTION AND SUBSIDY WHEN RETAIL PRICE OF PETROL AND DIESEL IS FIXED.

Component Price as at Dec. 31, 2008
Ron97 (sen / litre) Diesel (sen / litre)

Average cost (MOPS) US$ / barrel. A 45.469 57.762
Exchange rate. B 3.5812 3.5812
Cost of product** (RM) 102.42 130.11
Alpha (RM) 5.00 4.00
Total cost of product (RM) 107.42 134.11
Operational cost (RM) 9.54 9.54
Oil company margin (RM) 5.00 2.25
Dealer margin (RM) 12.19 7.00
Actual price without tax (RM) 134.15 152.90
Sales tax (RM) 58.62 19.64
Actual price at pump with tax (RM). 192.77 172.54
Tax Exemption (RM). C 12.77 2.54
Subsidy (RM) D - -
Final retail price (RM) 180.00 170.00

** Cost of product is converted to RM sen / litre with the formula below.

(Average Cost MOPS X Exchange Rate) X 100 / 158.987.

The two main variable components are the cost of the product (A) which is subject to MOPS and the currency exchange rates (B), which directly impact the final retail price at the pump. To stabilize drastic retail price changes government sales tax exemption (C) and subsidies (D) are used.

This illustration for setting of retail price of petrol is used to explain how adjustments are made. The average cost US$45.469 / barrel for RON97 is converted to RM of 102.42 sen / litre. The Alpha of 5 sen / litre is added on to account for the markets fluctuations of MOPS buying price of petrol and diesel.

After adding operational costs and margins of oil companies and dealers the price without tax is RM134.15. In this case to maintain a pump price of RM1.80 / litre, the government exempts tax of 12.77 sen / litre without any subsidy.


Source :- Domestic Trade and Consumer Affairs Ministry.



MANAGEMENT - The company are manage by an experience team of capable people from PETRONAS.

BUSINESS OUTLOOK - Strong expansion program by adding more petrol service stations will further strengthen its position and sustain growth.

CORPORATE GOVERNANCE - Need to be more transparent and doing more on corporate social responsibility.

FINANCIAL STRENGTH - Strong backing from parent company PETRONAS. Cash in hand stood at RM721.7 million with zero borrowing .

OPPORTUNITIES ANALYSIS – Will capitalize on PETRONAS strengths when the opportunities present itself.

WEAKNESS ANALYSIS -Not aggressive enough in their overseas expansion program.

THREATS ANALYSIS – Prolonged global recession or Malaysian economy are affected by a recession.

QUANTITATIVE ANALYSIS.
STOCK VALUATIONS.

Forecast FYE March 2009 PER – 11.01X.
Net Assets Per Share – RM4.06.
Price to Book Value – 1.82X.
Dividend Yield – 4.05%.
Debt to Equity Ratio – 1.336X.
Return on Equity Ratio – 16.37%.
Net Profit Margin – 3Q 09 at 0.78% and 9M09 at 2.05%.

TECHNICAL ANALYSIS.
TRADING RANGE.

52 Weeks - High at RM8.50 and Low at RM6.30.

3 Months – High at RM7.70 and Low at RM7.30.


MAINTAINED BUY RECOMMENDATION FOR PDB on possible injection of highly profitable parent company wholly owned subsidiary Engen 1,250 petrol stations in South Africa as the catalyst for further upward rerating of the stock. Based on forecast FYE March 2009 EPS of 67.20 sen, the upside potential for Petronas Dagangan Bhd is RM8.10 at PER of 12X plus a dividend yield of 4.4%.


19. UEM LAND HOLDINGS BHD.RM0.685.

FYE DEC. 31 FY2009(F) 4Q 2008(A) FY2008(A) FY2008(F)
000 000 000 000

Revenue 313,460 181,980 511,647 408,032
Net Profit 25,000 8,637 74,189 66,660
Net EPS (sen) 2.00 0.40 3.10 2.75
Forecast PE Ratio 34.25X 22.1X 24.9X
Dividend (sen) 1.00 0.0 0.0 0.0
Dividend yield 1.46 % 0.0% 0.0%
Cash RM 24,819,000
Debt RM599,294,000
Net Assets Per Share RM0.52
No. of shares 2,428,177,000. Par value 50 sen.
Market capitalization RM1.663 billion.
Main shareholder UEM(M) Bhd 51%


LATEST CORPORATE DEVELOPMENT.

Headline KPI’s for FY2009.

Revenue growth of 20%.
Return on Equity (ROE) of 6%.

QUALITATIVE ANALYSIS.
STRENGTHS,WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.

BUSINESS MODEL – UEM Land is a pure property play as the master developer of Bandar Nusajaya in Iskandar Malaysia.

MANAGEMENT - Led by the Board of Directors and the CEO.

BUSINESS OUTLOOK - Excellent outlook for UEM Land as the development of Iskandar Development Region take off with an investor from the Middle East such as from Abu Dhabi already signed an agreement to develop a few signature project in IDR. Recent signing by LEGOLAND to develop a theme park for kids below 12 years old will provide further impetus for Iskandar Malaysia.

CORPORATE GOVERNANCE – UEM Land should be more transparent and be a more responsible corporate citizen.

FINANCIAL STRENGTH – Cash at RM24.8 million and debt at RM599.2 billion.
WEAKNESS ANALYSIS – Potential lack of commitment from the Company and the Federal Government to develop Nusajaya and Iskandar Malaysia.

OPPORTUNITIES ANALYSIS - To capitalized on the development of Iskandar Malaysia.

THREATS ANALYSIS – Prolonged world economic slowdown or recession and a lack of commitment from the Federal Government together with the execution risks.


QUANTITATIVES ANALYSIS.
STOCK VALUATIONS.

Forecast FYE 2009 PER – 34.25X.
Net Assets Per Share – RM0.52.
Price to Book Value – 1.3X.
Dividend Yield – 1.46%
Debt to Equity Ratio – 0.668X.
Return on Equity Ratio FYE 2009 – 0.26 percent.
Net Profit Margin – 4Q09 at 4.75% and 14.5% for FY08.


TECHNICAL ANALYSIS – TRADING RANGE.

52 Weeks - High at RM0.84 and Low at RM0.50.

3 Months – High at RM0.84 and Low at RM0.575.


MAINTAINED HOLD RECOMMENDATION FOR UEM LAND BHD
UEM Land Bhd is a good long term investment prospect as a master developer of Nusajaya in Iskandar Malaysia. Fair value for UEM Land is RM0.80 or 1.5X current book value.












21. TH PLANTATIONS BHD. RM1.42. Ex Bonus Price RM1.14. (Non Composite Index Linked Stock).

FYE DEC. 31 FY 2009(U) 4Q FY2008(U) FY2008(U) FY2008(F)
000 000 000 000

Revenue 160,000 41,975 243,373 195,380
Net Profit 40,000 14,815 84,051 70,244
Net EPS 10.2 3.04 17.24 14.4 sen
Forecast PE Ratio 13.9X 8.1X 9.9X
Cash RM57,160,000
Debt RM18,659,000
Dividend 5 sen 5.625 sen 10.0 10.00 sen
Dividend yield 3.5% 7.0% 7.0%.
Net Assets RM1.15.
No. of shares 487,644,000
Market capitalization RM692.4 million
Major Shareholder LTH 70%

* Forecast based on average CPO price of RM1,700.

LATEST CORPORATE DEVELOPMENT.

Acquisitions of 51% and 100% in Syarikat Sabaco Sdn Bhd and Ladang Bukit Berlian Sdn Bhd for a purchase consideration of RM147,468,000 and RM51,944,000 respectively.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPOPRTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS
BUSINESS MODEL - Principal activities for the Group are palm oil plantations with a total hectarage of 26,136 hectares with 15,746 hectares planted area.

MANAGEMENT - Headed by a Chairman of the Board of Director and CEO with his management team appointed by the Lembaga Tabung Haji.

BUSINESS OUTLOOK.

Bottoming out of CPO prices which is currently at RM1,590 level should augur well for the group bottom line going forward. Net profit margin will increase with the higher CPO prices.

CORPORATE GOVERNANCE – Still not transparent enough.

FINANCIAL STRENGTH - Strong backing from parent company, GLIC Lembaga Tabung Haji. Cash in hand of RM57.16 million and a debt of RM18.6 million.


OPPORTUNITIES ANALYSIS. - Should use the cash in hand to increase total plantation acreage.

WEAKNESS ANALYSIS - Small free float as Lembaga Tabung Haji owned 70 percent of the shares and also small size plantation company with a total hectarage of only 26,136 hectares.

THREATS ANALYSIS - Profitability going forward still dependent on sustainability of the crude palm oil prices even though CPO prices look like bottoming out despite weakness in crude oil prices amid improving demand from importing countries.


QUANTITATIVES ANLYSIS.
STOCK VALUATIONS.

Forecast FYE 2009 PER – 13.9X
Net Assets Per Share – RM1.17.
Price to Book Value – 1.77X.
Dividend Yield FYE 2009 – 3.5%.
Debt to Equity Ratio – 1.326X.
Return on Equity Ratio – 17.2 percent.
Net Profit Margin – 4Q08 at 35.3% and FY08 at 34.5%.


TECHNICAL ANALYSIS.
TRADING RANGE .

52 Weeks - High at RM1.84 and Low at RM0.94.

3 Months – High at RM1.50 and Low at RM1.21.


RECOMMENDATION FOR TH PLANT BHD DOWGRADED FROM BUY TO HOLD – Based on the CPO prices, currently trading around RM1,900 level. Maintained earnings forecast based on CPO price of RM1,700 per tons. A fair value of RM1.50 based on the prospective FYE 2009 price earning ratio of 14.7X on a forecast net profit of RM40m and a net EPS of 10.2 sen and a dividend yield of 3.33%..





22. MALAYSIAN AIRLINES SYSTEM. RM2.39.

FYE DEC. 31 FY 2009(F) 4Q 2008(U) FY 2008(U) FY2008(F)
000 000 000 000

Revenue 16,909,056 3,866,449 15,503,714 15,756,693
Net Profit 50,000 46,160 244,312 236,224
Net EPS 2.99 2.76 14.62 14.14 sen
Forecast PE Ratio 80X 16.3X 16.9X
Dividend (sen) 0.0 0.0 5.0
Dividend Yield 0.0% 0.00 0.0% 2.0%
Net Assets RM2.50.
Cash RM3,571,743,000
Debt RM1,418,988,000
Number of Shares 1,671,062.,000
Market Capitalization RM3.993 billion
Major Shareholder Khazanah Nasional & PMB ( 69.3% )

# MAS miss a chance to enjoy lower fuel costs as they fully hedged FY09 jet fuel price at RM95. RM500m net profit forecast were based on jet fuel price of USD100 per barrel during operating environment in 2008.
* Management forecast profit of between RM500 million loss to RM50 million profit for FY2009 based on tougher operating environment in 2009.

LATEST CORPORATE DEVELOPMENT.
- FIREFLY given cabinet approval to fly the lucrative Singapore route from Kuala Lumpur’s nearby Subang Airport.
- GMR-HIAL and MAS Aerospace Engineering Seal agreement for maintenance, repair and overhaul (MRO) 50:50 joint venture Airframe MRO company in Hyderabad, India.

QUALITATIVES ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.
STRENGTHS ANALYSIS.
BUSINESS MODEL - The Company is principally engaged in the business of air transportation – airlines operations and cargo services and the provision of related services.

Airline operations – operation of aircraft for passenger

Cargo services – operation of aircraft for cargo and mail services.

Other business segments include hotel operations, catering, engineering, computerized reservation services, coach transportation, trucking and warehousing services, retailing of goods, terminal charges and tour and related activities.
The Group has in operation 111 aircraft and 36 engines under operating leases.
Airline operation represent 90% of revenue and 96.77% of operating profit. Cargo services represent 17.23% of revenue and 7.33% of operating profit. Catering services represent 0.07% of revenue and 0.65% of operating profit. Others operation represent 0.63% of revenue and 2.18% of operating profit.

MANAGEMENT - Headed by the Chairman of the Board of Director and Dato Idris Jala as the CEO and his team of turnaround managers.

BUSINESS OUTLOOK – Strong turnaround in place. Profitability will improve with lower jet fuel prices currently around US$70. MAS turnaround plans to check the company slide include cost control, a fuel efficiency programme and a revenue enhancement plan.

CORPORATE GOVERNANCE – Still not transparent enough.

FINANCIAL STRENGTH - Strong backing from the Government to the management to turn around the company. Currently cash in hand at RM3.571 billion and debt level of RM1.418 billion.

WEAKNESS ANALYSIS – Bottomline easily affected by the movement of jet fuel prices.

OPPORTUNITIES ANALYSIS - To capitalized on its strength especially strong backing from the Government especially during this high crude oil prices environment.

THREATS ANALYSIS – Deepening global recession will affect MAS long haul passengers, business travelers and cargoes business.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.

Forecast FYE 2009 PER – 80X
Net Assets Per Share – RM2.50.
Price to Book Value – 0.956X.
Dividend Yield – 0 percent.
Debt to Equity Ratio – 2.5X.
Return on Equity Ratio FYE 2009 – 12.07 percent.
Net Profit Margin – 1.2% for 4Q08 and 1.58% for FY08.

TECHNICAL ANALYSIS - TRADING RANGE.
52 Weeks - High at RM4.20 and Low at RM2.37.
3 Months – High at RM3.30 and Low at RM2.37.

DOWNGRADED FROM BUY TO HOLD RECOMMENDATION FOR MAS BHD based on management guidance of RM50 million profit or EPS of 2.99 sen for FY2009. MAS currently trading at 80X prospective FY09 earnings and no dividend payment expected in FY09.
23. SCOMI GROUP BERHAD. RM0.295.Non Composite Index Linked Stock).

FYE 31 DEC. FY 2009(F) 4Q 2008(U) FY 2008(U) FY2008(F)
000 000 000 000

Revenue 2,017,216 601,070 2,109,293 2,012,527
Net Profit 77,328 40,865 116,553 95,020
Net EPS (sen) (FD) 7.68 4.02 11.47 9.44
Forecast PE Ratio 3.8X 2.57X 3.13X
Dividend 1.00 0.50 0.50 1.25 sen
Dividend Yield 3.4% 1.7% 4.2%
Net Assets Per Share RM0.88.
Cash RM (22,463,000)
Debt RM1,255,017,000
Number of shares 1,022,467,000
Market capitalization RM301.6 million
Major shareholder Kaspadu ( 23.8% ), Onstream M ( 20.9%)

LATEST CORPORATE DEVELOPMENT.
Proposed renounceable rights issue of up to 554,418,350 new shares in RM0.10 each in SCB on the basis of one (1) rights shares for every two (2) shares of RM0.10 each in SCB at an issue price of RM0.30 per rights shares.

Proposed exemption from making mandatory takeover offer for Shah Hakim, Kamaluddin Abdullah and person acting in concert.

QUALITATIVE ANALYSIS.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.
BUSINESS MODEL – Strong in drilling fluid business.

Investment holding company with subsidiaries involved in the wide range of activities in the oil&gas service industry throughout the world in 55 locations and 30 countries :-
Drilling Fluids & drilling waste management solutions – KMC Oiltools.
Marine vessel transportation- Main Board listed Scomi Marine Bhd (RM0.97)
Manufacturing businesses – 2nd Board listed Scomi Engineering Bhd (RM2.38) and currently bidding for RM6 billion worth of contracts.
Oilfield & Production Enhancement Chemicals
Distribution – KMC Oiltools.

Oilfield services represent 72.85% of revenue and 53.2% of segmental profit. Energy and logistic engineering represent 20.3% of revenue and 14.48% of segmental profit. Production enhancement represent 0.04% of revenue and 6.85% of segmental profit. Energy logistics represent 2.42% of revenue and 6.85% of segmental profit. Investment holding represent 1.68% of revenue and 36.2% of segmental profit.
MANAGEMENT – Headed by Shah Hakim as the CEO.

BUSINESS OUTLOOK – Despite the softening demand for oil amid global recession, the outlook for the oil & gas industry is still promising. The US Energy Information Administration anticipates oil will remain world dominant energy fuel and predicts an average growth in total global oil consumption of 1.9% per year until 2025. The key global factor affecting Scomi performance is the level of drilling activities. The company control 90% of the local mud engineering product .

CORPORATE GOVERNANCE – Still not transparent enough.

FINANCIAL STRENGTH – RM1.255 billion in debt with negative cash flow of RM22.4 million.

WEAKNESS ANALYSIS – Highly leverage balance sheet and negative cash flow.

OPPORTUNITIES ANALYSIS - Opportunities in the current environment of high oil and gas prices for the shareholder and management to close a deal and getting a new contract either at the holding company or subsidiary level will bring in the much needed cash flow to mitigate the still high debt level and also as a future earnings driver and catalyst for the share price.

THREATS ANALYSIS – Oil majors cutting back expenditures on oil exploration due to a recession and lower crude oil prices. Strengthening ringgit will hurt the company profit.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.

Prospective FYE 2009 PER – 3.8X.
Net Assets Per Share – RM0.88.
Price to Book Value – 0.335X.
Dividend Yield – 3.4 percent.
Debt to Equity Ratio – 1.73X.
Return on Equity Ratio FYE 2009 – 9.45 percent.
Net Profit Margin – 4Q08 at 6.8% and FY08 at 5.5%.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM1.17 and Low at RM0.255.
3 Months – High at RM0.40 and Low at RM0.285.

MAINTAINED BUY RECOMMENDATION FOR SCOMI GROUP BHD on low valuation even though investors normally dislike rights issue but it is necessary to rectify the problem of weak balance sheet. A fair value for Scomi Group Bhd at RM0.85 on the prospective FYE 2009 PER of 11.1X on an EPS of 7.68 sen plus a dividend yield of 2.8% and at 1X book value. There will be an earnings dilution after the completion of the proposed 1 for 2 rights issue at 30 sen.
24. AFFIN HOLDINGS BERHAD. RM1.25. (Non Shariah Compliance).


FYE 31 DEC. FY 2009(F) 4Q 2008(U) FY 2008(AU) FY 2008(F)
000 000 000 000

Revenue 2,066,520 512,575 2,115,438 2,307,244
Net Profit 215,580 84,107 292,762 261,872
Net EPS 14.44 5.63 19.60 17.61 sen
Forecast PE Ratio 8.7X 6.4X 7.1X
Dividend 7.5 5.00 10.0 10.0 sen
Dividend yield 6.0% 8.0% 8.0%
NTA RM2.2575.
Price / NTA 0.55X
Customers Deposit RM26,934,976,000
Total Net Loans RM19,927,677,000
Net Non Performing Loans RM647,355,000 or 3.20%.
Total Assets RM36,836,431,000
Net Assets Per Share RM2.95.
Cost to Income Ratio 66.88 %.
Shareholders Fund RM4,411,305,000
Cash RM6,812,543,000
Debt RM 700,000,000
Number of Shares 1,494,367,000
Warrants Outstanding 153,776,000
Core Capital Ratio 11.03% after dividend.
Risk Weighted Capital Ratio 13.83% after dividend.
Market capitalization RM1.8679 billion
Major shareholder Lembaga Tabung Angkatan Tentera

LATEST CORPORATE DEVELOPMENT.

The High Court had ruled a full trial of the suit. By BSN Corporation Bhd against Affin Holdings Bhd and Affin Bank Bhd.

QUALITATIVES ANALYSIS
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.

STRENGTHS ANALYSIS.

BUSINESS MODEL - AFFIN Holdings Group is a financial services conglomerates. The Group’s primary activities focus on the provision of commercial and investment banking services, money broking, fund and unit trust management, underwriting of general and life insurance business and stock broking operations.
The Group’s revenue and earnings mainly come from 1.Commercial banking and Hire Purchase 2.Investment Banking 3.Stockbroking 4.Insurance 5.Others.
In the future, a strong earnings driver will come from the Islamic banking, Commercial banking and the Investment banking.

MANAGEMENT – Headed by the Chairman of the Board of Director. Dato Hamidy Hafidz has resigned and Zulkifli Abbas has replaced him as the new CEO.

BUSINESS OUTLOOK – Business will be affected by the current world financial crisis and expected slowdown or recession of the develop world economy.

CORPORATE GOVERNANCE – Still not transparent enough.

FINANCIAL STRENGTH - Strong backing from the ultimate parent company, Lembaga Tabung Angkatan Tentera. Cash in hand at RM6.8 billion and debt of RM700 million. NPL of RM647.445 million or 3.2%. CCR at 11.03%. RWCR at 13.83%.

WEAKNESS ANALYSIS – The bank highly leverage business model and assets quality are a major concern during a global recession now.

OPPORTUNITIES ANALYSIS - To leverage on their tie up with Bank of East Asia, Hong Kong to venture oversea especially in the fast growing economy of China.

THREATS ANALYSIS - Recession or depression in the United States, weak global growth, high inflation and a slowdown in the Malaysia economy will increase the NPL.

QUANTITATIVES ANALYSIS - STOCK VALUATIONS.

Forecast FYE 2009 PER – 8.7 X.
Net Assets Per Share – RM2.95.
Price to Book Value – 0.42X.
Net Tangible Assets – RM2.2575..
Price to NTA –0.55X.
Dividend Yield – 6.0 percent.
Debt to Equity Ratio – 7.44X.
Return on Equity Ratio FYE 2009 – 4.915 percent.
Net Interest Income Margin – 45.2 percent.
Net Profit Margin FYE 2009 – 4Q08 at 16.4% and FY08 at 13.8%.

TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM2.15 and Low at RM1.14.
3 Months – High at RM1.50 and Low at RM1.25.

MAINTAINED BUY RECOMMENDATION on low valuation – The fair value for AFFIN Holdings Bhd is at RM2.26 or 1.0X Tangible Book Value (NTA), on a prospective FYE 2009 PER of 12X on a net profit of RM215,580,000 and an EPS of 14.4 sen plus a dividend yield of 6.0 percent.
2 5. YTL CORPORATION BHD. RM6.90.

FYE 30 JUNE 1H FY2009(U) 2Q FY2009 FY 2009(F)
000 000 000

Revenue (RM) 3,363,829 1,624,617 7,553,524
Net Profit (RM) 302,789 50,422 947,843
Net EPS(sen) 20.12 3.35 58.00
Forecast P.E. Ratio 11.9X
Dividend (sen) 0.0 0.0 25.0
Dvidend Yield 3.6%
Net Assets Per Share RM4.8653.
Cash RM10,293,224,000
Debt RM21,357,645,000
Shares Outstanding 1,661,191,000
Market Capitalization RM11.462 billion.
Major Shareholders. Yeoh Tiong Lay & Son Hldgs 53.29%.

LATEST CORPORATE RESULT.
No latest development.
All the acquisitions in Singapore had been completed.

QUALITATIVES ANALYSIS
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS.


STRENGTHS ANALYSIS
MANAGEMENT – Run by the Yeoh Tiong Lay family.

BUSINESS MODEL – Strong in construction, water, IPP, power generation, cement, property development in Malaysia and overseas.

Revenues came from 1.Construction 2.Information Technology & E-Commerce related business (Listed YTL-E Solution Bhd) 3.Cement Manufacturing & Trading (Listed YTL Cement Bhd) 4.Property Investment & Development (Listed YTL Land Bhd) 5.Management Services & Others 6.Hotels (Star REIT Bhd) and 7.Utilities.(YTL Power Bhd).

Construction represent 5.55% of revenue and 0.21% of operating profit. Information technology and e-commerce represent 0.46% of revenue and 0.4% of operating profit. Cement manufacturing and trading represent 31.4% of revenue and 21.2% of operating profit. Property represent 1.95% of revenue and 3.93% of operating profit. Management services and others represent 5.49% of revenue. Hotels represent 2.34% of revenue and 0.63% of operating profit. Utilities represent 52.8% of revenue and 74.8% of operating profit.

CORPORATE GOVERNANCE - Need to be more transparent.

FINANCIAL STRENGTH - Cash RM10.293 and Debt RM21.357 billion.


WEAKNESS ANALYSIS– Highly leverage business model.


OPPORTUNITIES ANALYSIS – Made a few acquisitions in Singapore recently.

THREATS ANALYSIS - Family run business and RM23.4 billion debt level, rising cost of raw materials and uncertainties in the business outlook for the construction industries in Malaysia with the government emphasis on more people centric projects instead of mega projects after the recent general election.


QUANTITATIVES ANALYSIS - STOCK VALUATIONS.

Forecast FYE 2009 PER – 11.9X
Net Assets Per Share – RM5.1584.
Price to Book Value – 1.33X.
Dividend Yield – 3.6 percent.
Debt to Equity Ratio – 2.33X.
Return on Equity Ratio FYE 2009 – 7.67%
Net Profit Margin – 2Q 08 at 3.1% an 1H08 at 9.0%.


TECHNICAL ANALYSIS - TRADING RANGE.

52 Weeks - High at RM7.60 and Low at RM5.20.

3 Months – High at RM7.15 and Low at RM6.90.


DOWNGRADED FROM HOLD TO TAKE PROFIT (SELL) RECOMMENDATION FOR YTL CORP AND SWITCH TO YTL POWER BHD RM1.93 based on disappointing 2Q09 results. Half year results of RM302.7 million only represent 31.9% of forecast FYE 2009 net profit of RM947.8 million and an EPS of 58 sen. YTL Power Bhd represent 52.8% of YTL Corp Bhd revenue and 74.8% of operating profit in FY 2009.



So that’s our results update on the top stocks pick for the FYE 2009. Remember that a company with a strong fundamental will always win the day. So, stick with the basic principle of investment.
8. BURSA MALAYSIA BERHAD
KUALA LUMPUR COMPOSITE INDEX (100 STOCKS)

As of March 13, 2009 and the Composite Index at 843.45.

Name
PRICE
RM
EPS 09(F)
SEN
PER 09(F)
X
NET ASSETS
RM
DIV YIELD
%
AFFIN
1.25
14.44
8.6
2.95
6.0
AFG
1.71
18.74
9.1
1.81
3.0
AIRASIA
0.94
0.09
104.0
0.69
2.3
AIRPORT
2.58
32.00
8.1
2.89
7.0
AMMB
2.37
26.00
9.1
2.73
2.2
ANNJOO
1.07
30.00
3.6
1.76
4.2
ASTRO
1.85
00.00
0.0
0.41
2.2
BAT (M)
44.00
280.00
15.7
1.42
4.7
BERNAS
1.30
24.00
5.4
2.02
4.3
BJ TOTO
4.60
26.00
17.7
0.35
4.4
BRDB
0.95
10.00
9.5
3.15
4.5
BOUSTEAD
3.10
61.44
5.0
4.47
8.0
BURSA
4.44
15.2
29.2
1.39
3.4
CARLSBERG
3.28
28.00
11.7
1.54
7.1
COMMERZ
6.20
50.07
12.4
4.84
3.2
DIALOG
0.78
5.30
14.7
0.29
2.5
DIGI.COM
21.10
1.10
19.2
2.44
4.8
EONCAP
2.79
15.00
18.6
4.62
2.5
GAMUDA
1.86
14.0
13.3
1.53
4.1
GENTING
3.24
29.7
10.9
3.37
5.3
GUOCOLAND
0.68
1.25
54.4
1.26
1.4
HAP SENG
1.91
50.0
3.82
4.09
3.9
HL BANK
5.20
50.00
10.4
3.73
5.0
IGB CORP
1.25
6.8
18.4
1.80
2.6
IJM CORP
3.58
32.0
11.2
5.18
11.3
IOI CORP
3.58
16.0
11.2
1.31
11.3
KPS
1.29
10.0
12.9
1.92
3.8
KINSTEEL
0.375
10.0
3.8
0.86
6.1
KENCANA
1.00
14.7
6.8
0.38
5.7
KFC (M) BHD
6.95
63.4
11.0
3.49
4.1
KLCC PROP
2.93
17.8
16.5
3.97
3.7
KL KEPONG
10.40
56.2
18.5
5.15
3.6
KNM
0.33
10.9
3.0
0.46
6.0
KULIM
4.90
64.85
7.6
10.58
4.1
KURNIAASIA
0.335
0.0
0.0
0.09
0.0
LANDMARK
0.635
5.0
12.7
3.53
2.4
LINGUI
0.51
3.6
14.2
2.25
1.5
LION DIV
0.23
10.0
2.3
2.73
6.9
LION IND
0.595
30.0
2.0
4.27
3.9
LITRAK
1.87
21.9
8.5
1.00
5.5
LM CEMENT
3.70
20.0
18.5
3.57
3.1
MAH SING
1.55
8.0
19.4
1.10
1.6
MAS
2.39
2.99
80.0
2.50
0.0
MAYBANK
4.00
17.26
23.2
4.14
3.25
MAYBULK
2.94
10.0
2.90
1.88
2.20
MEDIA
0.935
10.0
9.4
0.65
2.1
MEDIAC
0.51
5.0
10.2
0.64
3.80
MISC
8.35
50.36
16.6
5.47
3.5
MK LAND
0.155
1.0
15.5
0.84
0.0
MMC CORP
1.37
18.06
7.6
2.01
3.6
MPI
5.50
44.00
12.5
3.95
2.5
MRCB
0.81
2.0
40.5
0.70
1.33
MULPHA
0.295
2.0
14.8
1.69
2.63
MUHIBAH
0.69
16.1
4.3
1.13
5.55
ORIENTAL
4.42
40.0
11.1
6.95
4.1
OSK
0.845
6.0
14.1
2.13
2.1
PB BANK
7.15
50.00
14.3
2.84
4.2
PELIKAN
0.595
15.00
4.0
1.89
2.56
PET DAG
7.40
67.20
11.2
4.02
4.05
PET GAS
9.65
65.94
14.6
3.93
4.7
PETRAPRDANA
1.30
20.0
6.5
1.82
3.73
PLUS
2.89
19.36
14.9
1.14
3.46
POS M’SIA
2.08
16.00
13.0
1.42
2.55
PPB GROUP
9.50
42.18
22.5
10.32
3.7
PROTON
1.55
25.00
6.2
9.81
3.4
PUNCAKNIAGA
2.81
12.12
23.2
3.30
4.2
RHB CAP
3.60
40.0
9.0
3.63
3.90
SAPCREST
0.64
10.0
6.4
0.79
3.9
SWAK ENERGY
1.75
20.0
8.8
1.88
2.3
SURIA CAP
0.65
12.5
5.2
2.24
2.9
SHELL (FOM)
9.15
59.04
15.5
6.4
3.3
SIME DARBY
5.40
31.61
17.1
3.33
4.6
SPB
2.97
12.00
24.8
5.05
3.0
SP SETIA
3.08
20.0
15.4
1.97
3.3
STAR
3.14
20.0
15.7
1.64
3.2
SUNWAY CITY
1.42
20.0
7.1
3.75
3.1
SUNRISE
0.99
15.0
6.6
1.79
2.0
TAENTERPRISE
0.585
5.0
11.7
1.46
4.0
TA ANN
2.75
20.0
13.8
3.17
1.5
TANJONG PLC
14.40
90.0
16.0
10.26
3.0
TAN CHONG
1.20
15.0
8.0
2.15
4.4
TENAGA
6.15
64.6
9.5
5.68
3.25
TITAN
0.48
2.2
31.8
2.21
0.0
TM
3.48
29.55
11.8
2.97
7.2
TM INT.
2.44
24.00
10.2
2.99
4.1
TOP GLOVE
4.68
34.00
13.8
2.41
2.8
TWS PLANT.
1.38
12.00
11.5
2.54
1.4
UCHI TECH
0.89
10.0
8.9
0.46
4.3
UMW
5.25
40.0
13.1
3.23
4.1
UNISEM
0.47
13.0
3.6
1.77
1.4
WAH SEONG
1.15
10.0
11.5
1.20
2.0
WCT
0.99
12.0
8.3
1.51
2.0
WTK HLDG
0.75
10.0
7.5
2.48
2.5
YNH PROP.
0.895
10.0
9.0
1.67
0.0
YTL CORP
6.90
58.0
11.9
5.16
3.6
ZELAN
0.47
14.0
3.4
0.75
6.3

FORECASTS FOR THE YEAR 2009.

1. FORECAST AVERAGE P.E.RATIO FOR FYE 2009 - 14.8X.

2. FORECAST AVERAGE GROSS DIVIDEND YIELD FOR FYE 2009 – 3.6673%.

3. Forecast an average FYE 2009 earnings growth contraction of between 25% to 60% as compare to FYE 2008 earnings.

4. Maintained forecast a worst case scenario downside risk on the Composite Index of between 500 to 600 level by the end of FYE 2009, due to deteriorating fundamentals.

5. Forecast the CI for the 2Q 2009 to be between a trading range of 770 to 936 level.

6. The CI best case scenario for FYE 2009 is between 860–880 to 980–1000 level if the economic fundamentals improving.

7. The CI most likely scenario by the end of FYE 2009 is between 860 to 880 level, due to better than expected (stable) economic fundamentals.

8. We revised the forecast GDP growth for FYE 2009 from between 1% to 3% to a possible contraction of 1% to 3% due to a deepening recession in the world most develop economy especially in the United States, U.K., European Union and Japan after the recent financial meltdown and a series of government bailouts not seen since the era of the Great Depression. Asian countries such as China, Korea, India are also experiencing a sharp economic slowdown.
A VERY HAPPY AND PROSPEROUS INVESTING IN THE YEAR 200