Kencana Petroleum Berhad : Two More Wins - 05/10/2010

♦ Taking home two more contracts. Kencana announced two wins
yesterday: 1) a contract from Newfield Peninsula Malaysia Inc. valued at
RM21.6m for procurement and construction of jackets for a wellhead
platform and a central processing platform for PM329 East Piatu
Development; and 2) a contract from Lynas Malaysia S/B valued at
RM9.1m for the design, fabrication, lining, supply, installation, and
commissioning of carbon steel and stainless steel tanks on full turnkey
basis. Both contracts are expected to be delivered within 1QFY11.

Kencana Petroleum Berhad : Two More Wins - 05/10/2010

Kencana Petroleum Berhad : Ending The Year Within Our Expectation - 30/09/2010

♦ Within expectations. 12MFY07/10 core net profit was unsurprisingly in
line with both our full-year expectation (RM131.4m) and consensus
estimate (RM136.6m). Recall, we previously mentioned that management
had guided for a 15% yoy growth in net earnings for FY10. Full-year
earnings came in at RM135.8m for FY10, and 4QFY07/10 results of
RM41.5m.

Kencana Petroleum Berhad : Ending The Year Within Our Expectation - 30/09/2010

Corporate Highlights - 30/09/2010

♦ Plantation
Sector Update : The “Knock-On” Effect

♦ Kencana Petroleum
Results Note : Ending The Year Within Our Expectation

Corporate Highlights - 30/09/2010

Kencana Petroleum Berhad : New Contract Awards - 02/09/2010

♦ Wins one more contract. Kencana announced yesterday that its whollyowned
subsidiary, Kencana HL S/B had won two Hook-up and Commissioning (HUC) jobs amounting to RM32m for fields located offshore Malaysia. This is its eighth contract win since April 2010.

Kencana Petroleum Berhad : New Contract Awards - 02/09/2010

Kencana Petroleum Berhad : A Better Tomorrow - 20/08/2010

♦ 4QFY07/10 results likely good. Management has guided for a 15% yoy growth in net earnings for FY10, leading us to expect full-year earnings of around RM135.7m for FY10. As such, 4QFY06/10 results could be better at c.RM41m. This would be in line with our RM131.4m FY10 forecasts.

Kencana Petroleum Berhad : A Better Tomorrow - 20/08/2010

RHB Equity 360° - 15 July 2010 (Market, PLUS, Tanjong, Gamuda; Technical: Kencana)

Market Update
- The Government announced a fuel price hike involving petrol, diesel, LPG and sugar. The fuel price hikes were on an even more gradual basis than that proposed by Pemandu at the end of May, and the market’s reaction will likely be relatively muted.
- However, the market will now be anticipating future measures, including price hikes for natural gas and electricity. This will be positive for TNB (if the fuel cost pass through mechanism is approved), but negative for energy-intensive industries like building materials and rubber glove manufacturers. We note however,
that rubber glove manufacturers normally are able to pass on the higher costs with a short time lag.
- Overall, we continue to advocate a bottom-up strategy, preferring stocks with strong underlying businesses, good management and robust balance sheet.

RHB Equity 360° - 15 July 2010 (Market, PLUS, Tanjong, Gamuda; Technical: Kencana)

RHB Equity 360° : 8 July 2010 (QL, Banks, Kencana; Technical: Proton) - 08/07/2010

Top Story : QL Resources – Pathway paved for QL’s next growth phase Outperform
Visit Note
- 74.5%-owned plantation in Indonesia is expected to start contributing more meaningfully to the plantation division (>60% of plantation earnings) by FY13 arising from the maturing age profile of its plants and milling profits from CPO mill in Indonesia.
- QL targets to enlarge its eggs product to 4.0m eggs/day (+60%) by FY13. This would come from its expansion plans in Malaysia (+0.5m (+20%) in FY11), Indonesia (+0.5m (+20%) in FY12) and Vietnam (+0.5m (+20%) by end-FY12).
- Started construction of surimi plant in Indonesia which has 2 lines with a total initial capacity of 5,000mt p.a.. Earnings contribution from this new plant is expected to come in by early-FY12.
- Our FY11-13 earnings forecasts have been reduced by 0.1-5.0% p.a. after: 1) tweaking our earnings model; 2) assuming earnings for Indonesia and Vietnam operations only come in by mid- to end-FY12 instead of early-FY12 previously; and 3) increasing our capex assumptions.
- Our fair value has been increased to RM4.90 (from RM4.60) based on higher CY11 PER target of 14.5x (from 13x), to be in line with the consumer sector target PER.

RHB Equity 360° : 8 July 2010 (QL, Banks, Kencana; Technical: Proton) - 08/07/2010

Kencana Petroleum Berhad :Newfield Contract - 08/07/2010

Newfield contract. Kencana announced that it had been awarded a RM201.1m contract from Newfield Peninsula Malaysia Inc. for the procurement and construction of wellhead platform topside, central processing platform topside, living quarters and bridge for the PM329 East Piatu Development Project located offshore Terengganu. The one-off contract is scheduled to be delivered in stages within the 3Q 2011.

Kencana Petroleum Berhad : Newfield Contract - 08/07/2010

Kencana Petroleum Bhd : A Disappointing Quarter - 29/6/2010

Below expectations. 9MFY07/10 core net profit of RM94.3m (+7.2% yoy) was below our expectations, accounting for 55.8% and 67.3% of our and consensus full-year estimates respectively. We note that 3Q revenue was up 12.4% qoq and reflects the strong orders in hand, while gross margins were sustained at 20% vs. 2QFY10 of 22% also reflecting a relatively robust flow of jobs. However, pre-tax profits were dragged down by higher operating expenses. And while we still expect the 4Q to be stronger, we believe our revenue assumptions for FY10-12 are now overly optimistic.

Kencana Petroleum Bhd : A Disappointing Quarter - 29/6/2010

RHB Equity 360° - 29 June 2010 (Banks, B-Toto, Hai-O, AEON, Sunway, Kencana; Technical: Time Eng)

Top Story : Banks – Valuations still decent with potential for earnings to surprise - Overweight
Sector Update
- In our view, the banking sector represents the best proxy to the economic recovery. We believe the sector can help lift the market to higher grounds, underpinned by factors such as: 1) earnings growth gaining momentum; 2) valuations remain decent relative to the market and historical levels; and 3) relatively low
foreign shareholding levels.
- Looking ahead to 2H2010, we expect the sector’s earnings growth momentum to pick up steam. We also do not discount the possibility of earnings surprises ahead and believe the areas that could surprise on the upside include: 1) interest income; 2) non-interest income; and 3) impairment allowances.
- Valuation-wise, we find that the sector is still compelling with the sector weighted average FY11 PER of 12.3x as compared to the FBM KLCI’s 2011 PER of 13.8x. More importantly, the historical trading bands of the banks suggest that there is still room for valuations to expand.
- Finally, although foreign shareholding of most banks are now off their lows, the levels are still well below peaks as well as below levels at the time of the entry of strategic partners.
- Competition, we think, will remain intense. In addition, BNM had also recently announced that five new commercial banking licences will be issued. While we believe that increasing competition would put pressure on margins and overheads (e.g. staff cost), domestic banks would still be able to hold their ground and maintain their market share at around the current level.
- We maintain our Overweight rating on the sector. Maybank remains as our top pick for the sector.

RHB Equity 360° - 29 June 2010 (Banks, B-Toto, Hai-O, AEON, Sunway, Kencana; Technical: Time Eng)

Kencana Petroleum Berhad : Follow Up - 23/6/2010

Follow up. We spoke with Kencana’s management yesterday. The tender-assist drilling rig owned by MKR1 (and currently being built by Kencana) will be delivered to Petronas Carigali by mid-Aug, and should commence operations in mid-Sep. The rig is in fact physically completed and only awaiting final testing. Kencana has already recruited the rig’s onshore manager and will go on to recruit the crew. Manpower and other operating costs are already covered under the 5-year US$235m service contract awarded by Petronas Carigali. The charter will still earn a pre-tax profit margin of 30-35% p.a. which is higher than our estimate yesterday of 20-30% EBIT margin based on SapuraCrest’s drilling division earnings.According to management, Kencana’s profit margin may be higher due to differences in engineering specifications, as well as the financing structure.

Kencana Petroleum Berhad : Follow Up - 23/6/2010

RHB Equity 360° - 23 June 2010 (Sunway Holdings, Motor, O&G, Kencana, KFC, Proton; Technical: My E.G.)

Top Story : Sunway Holdings – Earnings visibility improves further
Visit Note:

The high construction margins recorded in 1QFY12/10 appear sustainable over the next few quarters.Property profits from Malaysia are likely to exceed our forecasts as Sunway rides on its seeminglyworkable "boutique development" strategy. The still relatively poor visibility for new public jobs will not derail Sunway's overall growth prospects as growth in non-construction profits remains robust. FY12/10-12 net profit forecasts are raised by 7-11% largely to reflect higher construction margins and stronger property profits from Malaysia. Fair value is raised by 39% from RM1.69 to RM2.35. Maintain Outperform.

RHB Equity 360° - 23 June 2010 (Sunway Holdings, Motor, O&G, Kencana, KFC, Proton; Technical: My E.G.)

Corporate Highlights - 22/6/2010

♦ Tanjong plc
Results Preview : 1Q Net Profit Likely Down YoY, Mainly Due To NFO

♦ Kencana Petroleum
News Update : Proposes To Take Control Of MKR1

♦ EON Capital
News Update : Primus Serves Petition Against EON Cap And Directors

Corporate Highlights - 22/6/2010

Kencana Petroleum Berhad : Proposes To Take Control Of MKR1 - 22/6/2010

Proposed acquisition. Kencana has proposed to acquire the remaining shares that it does not own in three companies i.e. 25%-owned MKR1, 60%-owned KMD and 25%-owned MKR Labuan. The proposed acquisitions from Singapore-listed Mermaid Maritime will cost US$66.6m (RM211m) cash, comprising US$43.7m for the shares plus US$23.0m to settle intercompany loans and other debts in the three companies.

Kencana Petroleum Berhad : Proposes To Take Control Of MKR1 - 22/6/2010

RHB Equity 360° - 22 June 2010 (Tanjong, EON Cap, Kencana; Technical: CIMB)

Results Preview
- We expect Tanjong’s 1Q net profit could be down yoy (low double-digit) due to weaker contribution from gaming and, possibly, power, while qoq, net profit is expected to be significantly higher thanks to better contribution from NFO as well as seasonally stronger results from Tropical Island.
- For the power division, potential lumpy items that could impact the 1Q results include business development and bidding costs as well as scheduled maintenance expenses (RM50m budgeted for FY11). A weaker US$ vs. RM would also impact the division’s contribution.

RHB Equity 360° - 22 June 2010 (Tanjong, EON Cap, Kencana; Technical: CIMB)

Kencana Petroleum Berhad : Medium-term Outlook Has Turned Bearish… - 31/5/2010

Kencana staged a technical rebound on last Thursday. The share price of Kencana enjoyed a smooth rally since it broke out from the RM0.76 level in Apr 2009. However, after touching a high of RM1.81 in late Jan 2010, the stock turned negative. It succumbed to heavy profit-taking and retreated to a support near RM1.50. Though it managed to sustain at above RM1.50 for months, its technical outlook deteriorated further when it lost RM1.50 in mid May 2010. Nonetheless, it staged a technical rebound on last Thursday, after touching a low of RM1.26.

Kencana Petroleum Berhad : Medium-term Outlook Has Turned Bearish… - 31/5/2010

Kencana Petroleum Berhad : Bags US$15.5m Contract - 26/05/2010

Bags US$15.5m contract. Kencana Petroleum (Kencana) announced yesterday that it had received a letter of award from Larsen & Toubro for the fabrication, load-out and sea-fastening of six-legged jackets and piles of an offshore platform in offshore India. The contract is worth US$15.5m and is expected to be delivered in 2Q11.

Kencana Petroleum Berhad : Bags US$15.5m Contract

RHB Equity 360° (Market, Consumer, Steel, Kencana, Sunway, MPI, HSL, KFC, Kinsteel, Perwaja, KNM; Technical: Genting Malaysia)-26/05/2010

Top Story : Shifting Trends – Seeking shelter in domestic plays
Market Update
♦ The FBM KLCI has erased all its gains and more during the first five months of 2010 since turning downwards on 13 May. We expect the market to remain volatile, with the risk on the downside.
♦ We have used historical valuations and market data in order to find possible fundamental support levels for the FBM KLCI:
1) Average one-year forward PER for FBM KLCI stocks since 2000 is estimated to be around 15x, and one standard deviation (SD) below the mean is estimated to be around 13.3x, which is coincidentally the same valuation at the next technical support of 1,154 for the FBM KLCI; and
2) Annual returns for the FBM KLCI over the last 32 years have averaged around 13% and 1SD below the mean would imply a pullback of around -17.6%. However, we note that a 1SD fall has only occurred seven times over the last 32 years. As it stands, the FBM KLCI has already fallen by 7.2% from the peak this year.
♦ Having painted a near-term bearish picture for the market, we highlight that the correction is driven more by external factors relating to fears over global macroeconomic conditions especially in the EU. We acknowledge that these concerns could result in some of our earnings forecasts coming under pressure.

Therefore, in our view, companies that have little or hedged exposure to overseas markets or imported costs are likely to be more resilient. These domestic plays include Maxis, TNB, PLUS, Allianz, AEON, KFC, KPJ and B-Toto.

RHB Equity 360°(Market, Consumer, Steel, Kencana, Sunway, MPI, HSL, KFC, Kinsteel, Perwaja, KNM;Technical: ...

Corporate Highlights - 20/5/2010

♦ Notion Vtec
Visit Note : Set To Deliver

♦ Kencana Petroleum
News Update : Termination Of Proposed Collaboration With Global Offshore

♦ Media Prima
Results Note : Expecting Stronger Earnings Ahead

♦ Media Prima
Results Note : Expecting Stronger Earnings Ahead

♦ Amway (M) Holdings
Results Note : Attractive Yield

Corporate Highlights - 20/5/2010

Kencana Petroleum Berhad : Termination Of Proposed Collaboration With Global Offshore - 20/5/2010

Termination of proposed collaboration with Global Offshore. Kencana Petroleum (Kencana) announced that both the jv agreement and MOA with Global Offshore have been terminated as both parties could not arrive at mutually agreed terms. While we have not been able to contact the management, we believe the termination is largely due to the higher investment cost required for the 45% equity stake in Global Offshore.

Kencana Petroleum Berhad : Termination Of Proposed Collaboration With Global Offshore - 20/5/2010