Faber Group Berhad : Concession Agreement – Likely To Be Renewed - 21/09/2010

♦ We met with management recently. Key highlights included:
o Concession agreement – likely to be renewed. Recall Faber submitted its application for a renewal of its government hospitals nonmedical support services concession to the Ministry of Health (“MOH”) in Oct 2009. The outcome is expected to be known by Oct 2010.

Faber Group Berhad : Concession Agreement – Likely To Be Renewed - 21/09/2010

Faber Group Berhad : Non-concession IFM Boosted 2QFY10 Earnings - 06/08/2010

♦ 2Q10 net profit grew 134.5% yoy. 2QFY12/10 net profit of RM32.5m (+134.5% yoy) came in within our and consensus expectations with 1HFY10 net profit of RM46.7m (+121.9% yoy) accounting for 48% of our and consensus full-year estimates respectively. As expected, no dividend was declared during the quarter.

Faber Group Berhad : Non-concession IFM Boosted 2QFY10 Earnings - 06/08/2010

Corporate Highlights...-30/07/2010

Faber Group Berhad
Results Preview : IFM Business Likely Boost 2QFY10 Earnings

Fitters Diversified
Visit Note : “Foetus” Of A Green Revolution

Quill Capita Trust
Results Note : 1HFY12/10 Gross Revenue Grows 3% YoY

Market Technical Reading
Daily Trading Strategy : The Bulls Are Ready To Take The Market Higher…

Corporate Highlights...-30/07/2010

Faber Group Berhad : IFM Business Likely Boost 2QFY10 Earnings - 30/07/2010

2QFY10 net profit expected to be higher yoy and qoq. Faber is expected to announce its 2QFY12/10 results on 5 Aug. We believe 2Q net profit could be higher yoy due to stronger contribution from both concession and non-concession IFM businesses, while qoq, net profit is expected to be better thanks to higher contribution from its overseas IFM business.

Faber Group Berhad : IFM Business Likely Boost 2QFY10 Earnings - 30/07/2010

RHB Equity 360° (Faber, Fitters, Quill Capita; Technical: Landmarks) - 30/07/2010

Top Story : Faber – IFM business likely boost 2QFY10 earnings Outperform
Results Preview
- Faber is expected to announce its 2QFY10 results on 5 Aug. We believe 2Q net profit could be higher yoy due to stronger contribution from both concession and non-concession businesses, while qoq, net profit is expected to be better thanks to higher contribution from its overseas IFM business.
- Faber recently secured a new contract with Abu Dhabi Health Services Company and the project is worth approximately RM20.4m for a three-year period starting from 16 Aug. We also note that an IFM contract in Madinat Zayed, Abu Dhabi was renewed in May for another year with an annual value of RM57.8m, while a second contract (likely to be >RM100m) also in Madinat Zayed is expected to be renewed by year-end.
- We expect stronger property earnings to come on stream in 2HFY10 following the recognition of earnings from the launch of Taman Desa Phase 1A DBKL in May.
- Maintain forecasts and fair value of RM3.54, which is based SOP valuation. Reiterate Outperform.

RHB Equity 360° (Faber, Fitters, Quill Capita; Technical: Landmarks) - 30/07/2010

RHB Equity 360° - (Steel, BAT; Technical: Faber)

Sector Update

Ann Joo Resources : Target PER raised from 7x to 9x Market - Perform (up from UP)
CSC Steel : Target PER raised from 7x to 9x - Outperform (up from MP)
Hiap Teck Venture : Target PER raised from 7x to 9x - Market Perform
Kinsteel : Target PER raised from 7x to 9x - Underperform
Perwaja : Target PER raised from 7x to 9x - Outperform
Sino Hua-An : Target PER raised from 7x to 9x - Underperform

- We believe prices of steel products will likely stage a rebound in 4Q, as: 1) steel consumption is seasonally stronger in 4Q; 2) concerns on overcapacity in the steel sector are likely to ease in the near term; and 3) spot price of iron ore fines (key steelmaking input for most large steel mills in the world) has bottomed.

RHB Equity 360° - 23 July 2010 (Steel, BAT; Technical: Faber)

Faber Group Berhad : Award Of Contract By Abu Dhabi Health Services - 6/7/2010

Award of contract by Abu Dhabi Health Services. Faber announced yesterday that its 49%-subsidiary Faber Limited Liability Company (“Faber LLC”) has met the conditions stipulated in the Award of Contract by Abu Dhabi Health Services Company, Emirate of Abu Dhabi on 5 May. The contract relates to the initial repair, maintenance and operation works for all mechanical systems and equipment, and various electrical installations and fittings at Sheikh Khalifa Medical City (Main Campus) and affiliated buildings in the region of Abu Dhabi. The project is worth approximately RM20.4m for a three-year completion period.

Faber Group Berhad : Award Of Contract By Abu Dhabi Health Services - 6/7/2010

RHB Equity 360° - 6 July 2010 (Kossan, IOIC, Faber, Mah Sing; Technical: Supermax)

- Management is still positive on the demand for gloves and expects it to remain firm moving forward. Currently, Kossan’s average utilisation rate stands at approximately 90% and this has been rather consistent over the past few years despite the increase in production capacity.
- The capacity expansion at its new factory in Jalan Meru is ongoing, and upon completion, this new factory will house a total of 32 double-former lines. This factory currently houses 8 double-former lines, which will start commercial production in Sep’10. All-in, Kossan’s annual production capacity would increase by 20.8% from 12bn pieces currently to 14.5bn pieces by end-2010 and further by 3.5% in 2011 to 15bn pieces.

RHB Equity 360° - 6 July 2010 (Kossan, IOIC, Faber, Mah Sing; Technical: Supermax)

RHB Equity 360° - 8 June 2010 (Gamuda, Banks; Technical: Faber)

Visit Note
- We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. This dense population base translates to ready buyers for the Tan Thang project.
- Previously farm land, the land is flat and just a little lower than the road level that means it does not need extensive ground treatment other than some filling to raise the elevation. Most importantly, the land is 100% cleared of squatters.

RHB Equity 360° - 8 June 2010 (Gamuda, Banks; Technical: Faber)

RHB Equity 360° - 7 May 2010 (Timber, Unisem, Sime Darby, Muda, MISC; Technical: Faber)

Top Story : Timber – Highlights from timber conference

Sector Update
♦ We recently hosted a Timber and Furniture Day with management from Samling Global/Lingui and WTK.
♦ Low inventory in Japan is shoring up selling prices in near term. There is a risk that the Japan market could remain weak in the near term, unless construction activities start picking up more aggressively.
♦ In the medium to longer term, given that Japan’s housing starts are at such a low level, downside risk in sales volumes would be relatively limited.
♦ Cost of production is on a rising trend, mainly due to higher logging costs, caused by higher fuel, labour and machinery costs but would be offset by rising economies of scale, given the high fixed costs involved.
♦ We reiterate our Outperform call on WTK based on unchanged fair value of RM1.55 (14x CY10 EPS).
♦ We also derive Lingui’s fair value of RM0.80 based on 14x CY10 consensus EPS. However, we note that consensus numbers may not have factored in the potential upside from the rising plywood prices. There is also a possibility of privatisation by Samling Global which could generate further interest in the stock.
♦ Maintain Neutral call on timber sector.

RHB Equity 360° - 7 May 2010 (Timber, Unisem, Sime Darby, Muda, MISC; Technical: Faber)

Faber Group Berhad : Expect More Property Earnings In 2HFY10 - 6/5/2010

1Q10 net profit grew 98.1% yoy.

1QFY12/10 net profit of RM14.4m (+98.1% yoy) accounted for 15.0% and 14.6% of our and consensus fullyear estimates respectively. We consider this to be in line with expectations as we expect higher property revenue in the 2HFY10. We also expect the IFM overseas contribution, especially from India, to be higher in subsequent quarters, which would boost margins moving forward. As expected, no dividend was declared during the quarter.

Faber Group Berhad : Expect More Property Earnings In 2HFY10 - 6/5/2010

RHB Equity 360° - 6 May 2010 (Hiap Teck, Construction, Unisem, Faber; Technical: Evergreen)

Top Story : Hiap Teck – Focus remains on domestic demand

Visit Note
♦ Despite demand and margins for pipes in the domestic market have improved significantly, Hiap Teck’s capacity utilisation is currently constrained by inconsistent HRC supply domestically. To ensure consistent HRC supply, Hiap Teck is now planning to secure local HRC by giving advance payment to the Megasteel.
♦ Management indicates that export demand is likely to remain weak in the near term, as:
1) Demand in the US market has yet to gain traction; and
2) The ongoing investigation by the Australian government into the imports of steel pipes from Malaysia will result in Australian stockists staying away.
♦ Management believes that there will be a few more months (likely to involve a few more rounds of technical audits) before Hiap Teck can become the approved vendor to MITCO for high-grade ERW pipes, given the stringent quality control required as well as the company’s lack of experience for these pipes.
♦ Management indicated construction of the blast furnace would start by end-2010 and complete by 2013.
♦ We are lowering our FY07/10-12 net profit forecasts by 5.5-6.7% p.a., to reflect higher interest expense arising from its RM110m investment into a 55% stake in Eastern Steel.
♦ Fair value is lowered by 6.7% from RM1.80 to RM1.68 based on 9x revised CY10 EPS of 18.7 sen.

RHB Equity 360° - 6 May 2010 (Hiap Teck, Construction, Unisem, Faber; Technical: Evergreen)

RHB Equity 360° (TM, Infra, TNB, Axis REIT, Quill Capita, MAS, Gamuda, Formis; Technical: Faber) - 21/04/2010

Top Story : TM – Higher dividend, possibly Market Perform
Visit Note
♦ TM’s UniFi packages has registered a take-up of 600 households as of 5 Apr 10. Although most of these subscribers were previously Streamyx users, nevertheless, UniFi would generally help TM both in terms of customer retention and acquisition in the rollout areas over the long run.
♦ Net adds for broadband has improved yoy since Dec 09, thanks to lower churn rate and the introduction of the “super upgrade deal” since Nov 09. While the “super upgrade deal” would result in higher ARPU, the accretive effect would only be felt from May onwards.
♦ Management did not rule out the possibility of paying shareholders in excess of the minimum of RM700m dividend, but neither did management provide a firm commitment to do so. Between special dividends and a higher minimum dividend policy, we sensed management’s preference would be for special dividends.
♦ Indicative fair value remains unchanged at RM3.55, which is based on a required net yield return assumption of 5.5% on the minimum RM700m dividends.

RHB Equity 360°(TM, Infra, TNB, Axis REIT, Quill Capita, MAS, Gamuda, Formis; Technical: Faber) - 21/04/2010

Corporate Highlights...-01/04/2010

♦ Market Outlook & Strategy 2Q2010 : Volatile Market Uptrend Amid Policy Normalisation

♦ Benchmarking
Market Update : First Quarter Review

♦ Plantation
Sector Update : USDA Planting Intentions – Concentrating On Corn, Not Soybean

♦ Plantation
Sector Update : Smooth Or Bumpy Ride Ahead?

♦ Telecommunicatons
Sector Update : Digi Unveils iPhone Plans

♦ Building Materials
Sector Update : Japanese and Chinese Steelmakers Conclude 2Q Iron Ore Benchmark Price

Corporate Highlights...-01/04/2010

Faber Group Berhad : Still A Good Buy - 01/04/2010

Changes made to our FY10-12 earnings forecast. We have relooked at our FY10-12 earnings forecast for Faber and have made the following adjustments:
o Effective tax rate assumption. As guided by the management, our previous FY10-12 effective tax rate assumption of 29% p.a. was too high. Consequently, we have revised our FY10 effective tax rate to statutory tax rate of 25%. We have, however, reduced our FY11 and FY12 effective tax rate to 21% p.a., to reflect the higher contribution from UAE which is tax-free.

Faber Group Berhad : Still A Good Buy-01/04/2010

RHB Equity 360° (Strategy, Market, Plantation, Telecom, Steel, Faber, KPJ, PetGas; Technical: DRB-Hicom) - 01/04/2010

Top Story : Market Outlook & Strategy 2Q2010 – Volatile market uptrend amid policy normalisation
Strategy Update
♦ Good prospects of a sustainable global economic recovery despite a number of global issues and concerns.
♦ Whilst both the Malaysian economic and corporate earnings recoveries are gaining pace, valuations are also back to normal levels.
♦ The market is however still very under-owned by foreign investors and potentially could be re-rate if these investors turn positive on the country’s economic reforms to bring about a more competitive economy.
♦ Meanwhile, we expect external events to dominate market movements and any global policy changes will likely cause the market to be volatile. Our year-end FBM KLCI target, however, remains unchanged at 1,400 or 15x 2011 earnings.
♦ In our view, any significant weakness in the market is an opportunity to accumulate quality stocks for longer-term performance as we believe that a global sovereign credit problem will unlikely unfold and the global economic recovery is more sustainable than feared.
♦ Stock picking is key. The challenge is to look for Alpha+ stocks, including recovery leaders and quality cyclicals that have a strong leverage to the economic recovery.
♦ In our view, the banking sector would continue to benefit from the economic recovery, while pent-up demand and new applications will likely attract new focus into the semiconductor industry. In addition, a base tariff review, which coupled with fundamental recovery in electricity demand, should augur well for TNB in the power sector, while strong data traffic and attractive dividend yields would present good investment themes for the telco sector.

RHB Equity 360°( Strategy, Market, Plantation, Telecom, Steel, Faber, KPJ, PetGas; Technical: DRB-Hicom) - ...

RHB Equity 360° (Plantation, Perwaja, Kinsteel, KPJ, Gamuda, WCT; Technical: Faber) - 10/03/2010

Top Story : Plantation – All for CPO prices crossing RM3,000/tonne mark Overweight
Sector Update

• We came away from the first day of the 2010 POC (Palm and Lauric Oils Conference) with a “bullish vibe”,as three of the speakers who made price forecasts had relatively bullish expectations, projecting CPO prices to cross the RM3,000/tonne mark this year.
• We admit most of the price forecasts given today were slightly more bullish than our expectations. While we believe it is possible for CPO prices to touch or cross the RM3,000/tonne mark, based on the current bullish momentum, we do not discount the potential for prices to fall back down in the normal seasonal peak period in 2H2010, assuming normal weather conditions. We believe Dorab Mistry’s projection for stronger CPO prices in 2H2010 would only come through if the impact of El Nino on production is relatively severe. As such, we maintain our average CPO price assumptions of RM2,500/tonne for 2010 and RM2,700/tonne for 2011. YTD average spot prices of CPO of approximately RM2,550/tonne is in line with our projection, which assumes stronger CPO prices in the first half of the year versus the second half, following the CPO production cycle.
• No change to our earnings forecasts. We maintain our Overweight stance on the sector as a whole and reiterate our recommendation for investors to stick with the more liquid stocks given the anticipated volatile market conditions in 2010. We maintain our Outperform recommendations on IOIC, KLK, Sime Darby and CBIP, and Underperform recommendation on Genting Plantations and IJMP.

RHB Equity 360° (Plantation, Perwaja, Kinsteel, KPJ, Gamuda, WCT; Technical: Faber) - 10/03/2010

Corporate Highlights - 04/03/2010

♦ Faber
Briefing Note : More Growth From IFM Business

Corporate Highlights - 04/03/2010

Faber Group Berhad : More Growth From IFM Business-04/03/2010

More growth for IFM business in UAE. FY09 earnings were significantly boosted by the Integrated Facilities Management (IFM) business in UAE, especially from the “low-cost housing” and infrastructure facilities contracts which started contributing in Nov-09. With around RM110m out of the RM220m indicative annual contract value billed and recognised in FY09 accounts, work on the balance contracts should be completed in FY10. As it stands, a further RM30m has already been billed in Jan this year. We understand the “low-cost housing” contract has been extended for another year, and we expect the infrastructure facilities contract to be extended in due course.

Faber Group Berhad : More Growth From IFM Business

Faber Group Berhad : Full-Year Core Earnings Boosted By UAE Contract - 01/03/2010

Full-year FY09 core net profit grew 32.8%. 4QFY12/09 net profit of RM42.6m (+138.3% yoy) beat our and consensus expectations with full year net profit of RM82.7 (+32.8% yoy) accounting for 134.9% and 135.6% of our and consensus full-year estimates respectively. We believe the key variance was higher-than-expected revenue from the UAE contract arising from new variation orders. This boosted FY09 earnings despite the drop in property earnings (full-year property’s segment EBIT drop 34.3% yoy) that was affected by the global recession last year.

Faber Group Berhad : Full-Year Core Earnings Boosted By UAE Contract- 01/03/2010