osk jewels book launch-the spirit of investing 20090403 osk

8/3/2019 OSK Jewels Book Launch-The Spirit of Investing 20090403 OSK

1/13

See important disclosures at the end of this report

PP 10551/10/2009 (022563)April 3, 2009

1OSK Research

MALAYSIA EQUITYInvestment Research

Daily News

STRATEGY Private Circulation Only

Jeffrey Tan+60 (3) 9207 [email protected]

OSK JEWELS - 2009 Edition

Jason Yap+60 (3) 9207 [email protected]

The Spirit of Investing

Mervin Chow+60 (3) 9207 [email protected]

Norfauzi Nasron

+60 (3) 9207 [email protected]

Law Mei Chi+60 (3) 9207 [email protected]

We held an exclusive launch of the Top Malaysian Small Cap Companies Book (2009 Edition) at

the Mandarin Oriental on March 31. As with previous launches, the Top 5 companies were

invited for presentations in the morning followed by break-out sessions in the second half of the

day. The five top companies selected for the latest edition are KPJ Healthcare, Kossan Rubber

Industries, QL Resources, Wah Seong Corporation and Hektar REIT. KPJ was represented by

Alvin Lee, its Chief Financial Officer, Kossan by Edward Yip, its Senior Manager, Corporate

Affairs, Wah Seong by Deputy Managing Director Giancarlo Maccagno, and Hektar by Lim Ye

Jhen, GM Strategy, Hektar Asset Management. The companies form part of the 50 small cap

stocks with market capitalisation of under RM1bn featured in our popular investment

compendium, now in its 5th

year of publication.

Fig. 1: Registration and meet thecorporates session

Fig. 2: Clients listening attentively duringthe corporate presentations

Source : OSK

Capacity crowd. The response for the event was overwhelming as more than 80 participants

comprising portfolio managers and members of the buy-side community turned up. Most of our clients

came by to gather fresh ideas and to learn how the companies are weathering the slowdown in the

context of their respective industries. Most of the clients we acquainted with were very supportive of our

continued commitment in the small cap space and like our Top 5 picks given their safe havencharacteristics, supported by promising dividends and resilient business models. The selection this year

provides exposure to the consumer, oil & gas, rubber gloves and healthcare sectors.


2/13


OSK Research PP 10551/10/2009 (022563)April 3, 2009

See important disclosures at the end of this publication 2

OSK Research

KEY HIGHLIGHTS

Table 1: OSK Top 10 Small Cap Companies 2009 Edition

Companies Sector Target price BUY (RM)Alam Maritim Oil & Gas 1.40Hai-O Enterprise Consumer 4.16Hektar REIT REIT 0.99

Kossan Rubber Rubber Glove 4.48KPJ Healthcare Healthcare 4.00Malaysia Steel Works Steel 1.03Mudajaya Group Construction 1.58New Hoong Fatt Automotive 1.80QL Resources Consumer 3.32Wah Seong Oil & Gas 1.93

Companies in bold denote OSK Top 5 picks for 2009

The 50 jewels. We reduced the number of companies featured in the latest edition to 50, which in our opinion

make up the best-of-breed that are able to endure the economic storm and emerge from a position of

strength. The 50 stocks, ranked according to their market capitalisation, ROE, FY09 PER and FY09 dividend

yields, are depicted in Appendix 1-4 of this report. The majority of companies have market capitalisation

ranging from RM100m-RM500m, which is not surprising considering that their share prices have lost anaverage of 36% over the past 12 months. Based on our earnings universe, their PER valuations are at an

attractive 5-6x FY09/10 EPS. Nine companies belong to the top quadrant, returning in excess of 20% in terms

of ROE while slightly more than half of the 50 stocks command dividend yields of over 5%. The top dividend

yielding stocks (>10%) - Hektar REIT and Hai-O - are in our Top 5 and Top 10 picks respectively, with the

latter providing one of the highest ROE in the consumer sector at 32%. We view the choice of the Top 5

companies as befitting the current uncertain economic environment as their business models are robust

enough to withstand external pressures. All companies have been screened based on quantitative and

qualitative scorecards with due consideration accorded to their financial and execution track records, and with

focus on the quality of earnings. We believe the list of companies would appeal to a broad spectrum of

investors with differing risk appetite and risk-reward profiles.

Fig. 3: Group luncheon Fig. 4: Corporate presentation

Source : OSK

Good mix of consumer, oil & gas and thematic plays. Of the Top 5 companies, QL and Kossan Rubber are

widely followed by the investment community given their recession-proof businesses consisting of mainstream

consumables and essential goods. QL is poised for another year of uninterrupted revenue growth, repeating its

untarnished 20-year track record since listing, buoyed by the extended growth of its marine product

manufacturing (MPM) segment. Our consumer analyst, Law Mei Chi, has a BUY recommendation on the stock

with a target price of RM3.32, valuing QL at 12.5x FY09 EPS. Kossan remains one of the most efficient

manufacturers of nitrile rubber gloves (NRG) for the medical industry and among the biggest in the world. The

focus on higher margin NBR gloves would underpin its growth going forward with margins set to further

expand. Our analyst, Jason Yap, has a BUY recommendation on the stock with a target price of RM4.48. KPJ

is OSKs top exposure to the healthcare sector given its expanding portfolio of hospitals nationwide and

overseas. It currently operates the largest network of hospitals in the country (19 in total) and is looking to


3/13




OSK Research

acquire more to drive longer term growth. We feel that the prospects of the healthcare sector in the country

remains bright due to the scarcity of medical services. Our healthcare analyst, Norfauzi Nasron, is of the view

that KPJ is a good BUY based on its undemanding and attractive prospective PERs of 6-7x with a target price

of RM4.00. KPJ remains a sound and compelling exposure for investors looking for a strategic long-term

investment. Our thematic exposure this year is Hektar REIT, the countrys maiden retail focused real estate

investment trust (REIT). Our analyst, Mervin Chow, feels that Hektars fundamentals are under-appreciated as

its business model is inherently more defensive (focusing on the non-discretionary consumer retail segment).

Hektar is well supported by a generous dividend yield of 12% and trades at a 30% discount to its net assetvalue (NAV). He values the stock at RM0.99. As for Wah Seong, our oil and gas analyst, Jason Yap sees it as

being well poised to capture a bigger slice of the worldwide pipe coating and compressor business, with a

success rate of 30%-50% Its tenderbook currently stands at US$4bn. Jasons target price on the stock is

RM1.93 or 9x FY10 EPS.

Strong interest for KPJ, Wah Seong and QL. KPJ, Wah Seong and QL attracted the best response for their

individual break-out sessions. While the sessions for Kossan and Hektar were more subdued, we gather that

some fund managers had obtained updates from Kossans management through recent visits while clients

were understandably more apprehensive over Hektars outlook given the slowdown in the economy. The

investment community may also be more cautious on the Malaysian REIT setting given the flak received by

some REITs in the region, specifically over re-financing, recapitalisation and revaluation risks. That said, the

clients who booked their slots with the company were generally positive on its generous dividend yield and

relatively more resilient earnings compared with other real estate asset classes.

We append the key highlights and major takeaways on our Top 5 picks in the following section.

KPJ HEALTHCARE (BUY, TP- RM4.00)

Good response. The overall response to KPJ Healthcares breakout sessions had been above our expectation

as the stock has generated great interest among the investment community. Given its strong fundamentals and

relatively defensive business, investors are keen to better understand the companys business model,

especially amid the current economic slowdown. This is in line with our view that KPJ is an excellent choice for

strategic longer term investment and portfolio balancing, especially during the current economic landscape

where investors are looking for more conservative and defensive investments.

Fig. 5: Mr. Alvin Lee of KPJ

addressing the crowd

Source : OSK

Hospitals network expansion on track. Part of KPJs expansion strategy is to add at least one new hospital

every year, either by building new hospitals or via acquisitions of existing hospitals. It has been actively looking

for acquisition targets and has so far identified some potential candidates with focus in Johor and EastMalaysia due to large untapped market potential in those locations. In line with its last two acquisitions, KPJ is

planning to acquire small or medium-sized hospitals with capacity of 30 to 60 beds. Meanwhile, construction on


4/13




OSK Research

Seberang Perai Specialist centre to replace the Bukit Mertajam Specialist centre has been completed. It will

start operation in a few months, while the previous centre would be converted into a nursing college for the

northern region. The construction of the new building for Tawakal Hospital will be completed in September, with

the existing building to be converted into a day-care and outpatient centre. This will increase its operating

capacity and positively impact on its earnings.

Healthy patient growth in 1QFY09. Despite the gloomy economic outlook, KPJ still managed to register

healthy growth in the number of in-patients and out-patients for 1QFY09. According to the management, basedon past experience, the impact of a downturn on the healthcare sector lags by about 6 months and it believes

that the full impact of the slowdown would only be reflected in the 2HFY09. Nevertheless, KPJ believes its

business will be relatively resilient due to factors such as the scarcity of medical services and the long waiting

list in public hospitals. This is backed by its strong brand name and growing medical insurance coverage in

Malaysia. KPJ believes the possible downtrading among consumers from private hospital to public hospitals

would only prolong the waiting list, which in turn puts more pressure on the public hospitals, which are already

feeling the strain. This will result in patients requiring immediate treatment and who can afford treatment in

private hospitals to opt for a private hospital instead.

Headache in Indonesia to go away soon. In our previous October 08 report, we stated that KPJs 75%

owned hospital in Jakarta, RS Bumi Serpong Damai, was facing difficulty in starting up operation due to friction

with the minority interest shareholder and red tape on foreign ownership rules in Indonesia. However, in

updating fund managers, KPJ said it is at the final stage of negotiations to acquire the remaining stake in this

hospital, which will pave the way for the group to either start operating the hospital or to sell it to a third party.

Apart from its Indonesia operation, KPJ is eyeing more management contracts for hospitals in the Middle East

after having secured two contracts in Saudi Arabia in 2007.

Maintain BUY. As we mentioned earlier, despite its low liquidity we believe KPJ is an excellent choice fo r

portfolio re-balancing and a strategic long-term investment given its steady dividend payout and relatively

resilient earnings. We maintain our forecast and BUY recommendation at an unchanged target price of RM4.00

based on 10x PER of FY09 EPS. KPJ is still among the cheapest healthcare stocks in the region, trading at a

single digit PER compared to its peers double-digit PER.

FYE Dec (RMm) FY06 FY07 FY08 FY09f FY10f

Turnover 831.5 1108.0 1270.2 1388.1 1542.9EBITDA 105.6 135.3 153.3 157.3 174.2PBT 60.1 85.2 114.1 122.3 137.2Net Profit 41.3 74.2 78.4 84.4 94.6EPS (sen) 19.9 35.8 37.9 40.3 45.1DPS (sen) 15.0 17.0 28.2 20.1 22.5

MarginEBITDA 13% 12% 12% 11% 11%PBT 7% 8% 9% 9% 9%Net Profit 5% 7% 6% 6% 6%

ROE 12% 20% 18% 18% 18%

ROA 3% 4% 6% 6% 7%

Balance SheetFixed Assets 846.3 771.6 676.2 704.0 711.2Current Assets 255.6 433.1 586.7 572.9 618.7Total Assets 1101.9 1204.7 1262.9 1276.9 1330.0Current Liabilities 250.7 286.3 285.9 250.8 252.8Net Current Assets 4.9 146.8 300.8 322.1 365.9LT Liabilities 363.9 332.2 359.4 366.3 370.1Shareholders Funds 442.6 508.8 569.3 611.5 658.8


5/13




OSK Research

QL RESOURCES (BUY, TP- RM3.32)

Good response to breakout sessions. We received good response to QLs breakout sessions as all three

were fully attended. Clients with different fund sizes posed questions on the impact on QL Resources from the

drastic fall in surimi prices.

Doubts clarified. The management was able to address concerns over recent rumours of a meltdown in surimiprices. The strong demand from Japan had earlier pushed surimi prices to a peak in mid-2008. As there was

overstocking in Japan from April to October 2008, the demand slowdown had precipitated a drastic drop in

surimi prices. However, management assured our clients that surimi prices would not fall further as prices have

now reverted to the normal level of RM8000/tonne. Hence, we do not think the price plunge would have a

significant impact on QLs earnings.

Fig. 6: Mr. Freddie Yap of QL

Source : OSK

Surimi expansion. QL is currently expanding surimi production by installing new lines to produce frozen

surimi-based products at its plant in Hutan Melintang in Perak, which will double the plants current capacity of

an average 10,000 tonnes of surimi per year. The company has also invested in a new cold room in Endau,

Johor, which will be in operation in 2HFY09. Its cold rooms store unprocessed fish for the low season, which

ensures the production of surimi during this period.

Targeting 3m eggs by 2011. QL is also looking to expand its egg business as the group is targeting 3m eggs

per day by 2011. The group is currently undergoing expansion in Kota Kinabalu, Tawau and Kuching. It is also

moving into Vietnam, a step it is targeting to complete later in 2009. Moreover, the group expects a larger flowof palm oil earnings from its Indonesian operation beyond FY2012 as more than 30,000 acres of oil palm trees

will be planted by 2012.

Maintain BUY. We recommend a BUY on this stock as we believe that the business model is fairly resilient

given QLs integrated role and its ability to grow during times of crisis. Hence, our BUY recommendation, with

an unchanged target price of RM3.32 based on the 3-year average of 12.5x PER and 2.4x PBV.


6/13




OSK Research

WAH SEONG (BUY, TP- RM1.93)

Eyeing mergers and acquisitions (M&As). Management said it is open to M&A activities but the prospective

companies should either be in the pipe coating or gas compressor business so that there is group synergy.

Also, there should preferably be strategic benefits in terms of geographical location and new customer base.

Fig. 7: Mr. Giancarlo Maccagno of Wah

Seong

Source : OSK

Orderbook replenishment still good. Currently its orderbook stands at RM1.4bn, which is enough to keep

the company busy over the next 6 months. Going forward, Wah Seong is expected to replenish its orderbook,

whereby the pipe coating and gas compressor business in the global market combined would total some

US$4bn. To date, Wah Seong has only tendered for up to RM4bn worth of jobs, with a success rate of 30%-

50% since there are only 3 major players in the market - Bredero Shaw, Socotherm and Wah Seong.

FYE Mar (RMm) FY06 FY07 FY08 FY09 FY10f

Turnover 1,010.5 1,118.5 1,302.0 1,425.9 1,582.3EBITDA 89.8 113.2 137.7 151.9 169.5PBT 59.1 77.1 95.8 106.2 118.5Net Profit 48.3 63.2 80.8 90.1 101.3EPS (sen) 14.6 19.2 24.5 27.3 30.7DPS (sen) 6.0 6.7 6.7 8.0 10.0

MarginEBITDA 8.9% 10.1% 10.6% 10.7% 10.7%PBT 5.8% 6.9% 7.4% 7.4% 7.5%Net Profit 4.8% 5.7% 6.2% 6.3% 6.4%

ROE 23.6% 23.1% 24.5% 22.7% 21.5%ROA 8.3% 9.4% 9.9% 10.5% 10.9%

Balance SheetFixed Assets 308.9 367.2 446.3 495.5 540.3Current Assets 274.8 304.9 368.0 364.3 391.0Total Assets 583.7 672.1 814.2 859.9 931.3Current Liabilities 222.4 261.9 308.4 283.5 278.0Net Current Assets 52.3 43.0 59.5 80.8 113.0LT Liabilities 90.5 87.8 110.2 110.2 110.2Shareholders' Fund 250.0 296.9 361.1 431.7 508.6Net Gearing (%) -81% -80% -74% -55% -43%


7/13




OSK Research

Table 2: Potential jobs for tender for Wah Seong

Project Value US$mPipe CoatingAbove US$100m 2,650Above US$50m 404

Above US$10m 253

Gas CompressorJobs 700

Total 4,000

Source: Wah Seong

Expanding gas compressor rental business. Currently, the rental and fabrication of gas compressors is in

the ratio 15%:85% and going forward to 2011, management expects the rental portion to increase to 50%.

From a customers perspective, renting is more favourable because: 1) it is getting more difficult to obtain new

financing in the current economic environment, and 2) it is less risky to rent than own the gas compressor.However, from Wah Seongs perspective, rental income yields a higher gross margin of about 40% versus

15%-20% for fabrication; and 2) rentals provide a recurring income since most of the contracts are locked in for

more than 2 years.

Disposing of non-core assets. Although this is not a priority for Wah Seong given that all its business units

are profitable, management would still continue to concentrate on its core businesses and dispose of non-core

ones if the offer price is attractive. Having said that, we understand that management has no intention of

liquidating its industrial services division, which contributed close to 40% of total revenue. Examples of

businesses that Wah Seong may consider liquidating are the drill bits business and a few others.

Maintain BUY. Our target price for Wah Seong is RM1.93 based on PER of 9x FY10 earnings. We like the

company for its market leadership in the pipe coating and corrosion protection: it is No. 1 in Asia and No. 3 in

the world. This increases its tender success rate to 30%-50%.


Turnover 1624.3 1950.1 2343.2 2306.8 2413.6EBITDA 160.3 183.8 224.4 239.3 258.8Depreciation -35.4 -37.4 -46.9 -56.2 -59.7Net Interest Income -10.9 21.3 -6.3 -6.6 -1.3Exceptional Items -29.5 0.0 0.0 0.0 0.0Associates 1.8 -5.7 5.7 7.0 10.0PBT 86.4 162.0 176.9 183.4 207.8Net Profit 37.3 86.0 115.6 122.1 141.0EPS (sen) 5.7 13.1 17.6 18.6 21.5DPS (sen) 5.0 6.0 6.0 7.5 7.5


ROE 10.5% 20.4% 18.3% 14.6% 15.2%ROA 2.7% 5.8% 6.3% 5.8% 6.7%

Balance SheetFixed Assets 571.2 554.1 853.1 729.9 720.2Current Assets 813.3 1006.0 1276.1 1364.9 1407.8Total Assets 1384.4 1560.1 2129.2 2094.9 2128.0Current Liabilities 602.6 724.6 811.5 725.7 646.3Net Current Assets 210.7 281.4 464.6 639.3 761.5LT Liabilities 287.2 234.0 364.3 324.6 332.6Shareholders Funds 372.0 470.0 790.8 876.4 980.9Net Gearing (%) 101.5% 75.2% 62.2% 32.6% 19.2%


8/13




OSK Research

HEKTAR REIT (BUY, TP- RM0.99)

Fair degree of interest. Hektar REIT received a fairly good response from the invited guests, particularly the

insurance funds. As expected, despite its lip-smacking valuation and dividend yield, questions were raised as

to how well the trust would be able to at least maintain most of this dividend payout especially in the face of the

current economic downturn. Those who were more familiar with Subang and Mahkota Parades since many

years ago openly expressed how impressed they were to the improvements done by the management to themalls since they were acquired in recent years.

Fig. 8: Mr. Lim Ye Jhen of Hektar Asset

Management

Source : OSK

Relatively more defensive earnings model. Answering the question on how well the trust will continue to be

able to maintain most of its current attractive dividend payout hinges on its relatively more resilient earnings

model vis--vis those of other non-residential real estate classes during a downturn, as summarised in the

following:

! Shopping malls a safer bet? Unlike other real estate sub-segments, retail tenants usually have

relatively lower bargaining power because their main business, i.e. retailing, and prospects

depend very much on being in a particular shopping mall. Moving premises, or even to another

shopping lot, may significantly disrupt business as customers may not necessarily follow. Plus, a

lower-grade shopping mall may not attract clientele with the same buying power. Hence, the

rental rates of shopping malls, at least those in prime locations, should hold up better relative to

those in other real estate sub-segments.

! Consumer-driven tenants and diversified tenant base. It has a well-diversified tenant base

and a healthy mix of consumer-driven tenants who are more focused on providing daily

necessities to the residents in their vicinity. During a downturn, consumers may cut down on

discretionary items but are unlikely to do the same for essentials and daily consumables. With the

exception of Parkson, no other tenant contributes >3.0% of the REITs total monthly income.

! Well-managed tenancy expiry dates. Hektar REIT has a reasonably well-managed distribution

of tenancy expiry dates. All assets combined its tenancy expiry dates make up no more than 23%

of its monthly rental income for CY09.

Ability to pre-empt most adverse situations. The incorporation of turnover rents (a tenancy model which

entails fixing a certain percentage of a tenants monthly or periodic sales turnover, usually with a specifiedsales threshold), which account for >90% of its tenants in Subang and Mahkota Parades, compels a retailer to

provide management with info on their monthly turnover. This indirectly allows management to analyse the


9/13




OSK Research

occupancy cost (i.e. rental income over tenancy sales) of its tenants. According to the management, once the

occupancy cost hits 20%, there is a likelihood of a retailer becoming unprofitable with further rental increases

and this limits their future participation in the mall as well as constrain managements ability to raise rental

rates. Thus, this enables Hektar to pre-empt any situation that may adversely affect profitability.

Further assets acquisition unlikely in the near-term. Given its current gearing level of 40.8%, Hektar REIT

can only leverage a further RM67.6m before hitting the statutory gearing limit of 50%, which is insufficient to

acquire a decent size neighbourhood shopping mall. The possibility of being able to acquire a yield-accretiveasset by way of raising capital from the equity market could be very slim, given its current depressed share

price and high dividend yield of approximately 12%.

Maintain BUY. Given its relatively more defensive earnings and attractive dividend yield of 11.7%,

representing a 747 basis point spread over the 10-year MGS yield of 4.23%, we continue to advocate a BUY

on Hektar. We are not concerned over any refinancing risks as all its borrowings are for the long-term and will

only mature post 2010.

*13 months results. FY07 and FY08 Net profit include exceptional gains of RM43.8m andRM24.1m respectively from revaluation of investment properties.**Gearing is equivalent to Borrowings over Gross Asset Value

KOSSAN (BUY, TP- RM4.48)

Concentrating on nitrile gloves. We understand that the total nitrile glove production in 2008 came in at

2.7bn pieces, representing only 25% of its product mix. However, with the commissioning of 22 new lines

capable of adding another 2.0bn pieces of nitrile gloves, this effectively increases Kossans product mix of

nitrile glove to 40%. Other than yielding a higher margin of 2%-3%, nitrile gloves are preferred in the medical

industry because they are more chemical and oil resistant, and are also protein-free.

Increasing production of higher value products. Kossan is striving to produce better nitrile gloves thorough

continuous improvements in technology. For example, its new nitrile glove, Chemax, provides better

protection and possesses a feel that is closer to that of natural rubber gloves than entry level nitrile gloves.

Also, it is lighter and uses less raw material (i.e. latex), which brings down the cost of production and in turn

boosts gross margin. As it also fetches a higher price (about US$1 higher to US$27-29), it contributes to

margin improvement.

No major line expansion. Since the 22 new lines will only start to contribute from January 2009, management

does not intend to pursue further expansion this year. As for 2010, new lines would only be set up if there isrecovery in global economy and firmer demand for gloves. However, management prefers to refurbish its

existing lines, especially those with a length of 60m to 130m, which could effectively improve their production

FYE Dec (RMm) *FY07 FY08 FY09f FY10f FY11

Turnover 78.33 84.09 86.19 88.40 90.44EBITDA 44.89 47.45 51.96 53.09 54.36

PBT 80.52 60.34 37.96 39.09 40.36Net Profit 80.52 60.34 37.96 39.09 40.36EPS (sen) 25.16 18.86 11.86 12.21 12.61DPS (sen) 10.71 10.20 10.70 11.00 11.40

MarginEBITDA 57.30 56.43 60.28 60.05 60.11PBT 102.80 71.75 44.04 44.21 44.63Net Profit 102.80 71.75 44.04 44.21 44.63

ROE 43.02 15.54 9.40 9.59 9.81ROA 27.40 9.10 5.14 5.28 5.44

Balance SheetFixed Assets 559.40 713.40 713.40 713.40 713.40Current Assets 28.40 24.71 26.56 27.58 29.27Total Assets 587.80 738.11 739.96 740.98 742.67

Current Liabilities 29.41 34.51 32.75 29.95 27.89LT Liabilities 184.00 301.50 301.50 301.50 301.50Shareholders Funds 374.39 402.10 405.82 409.71 413.59Gearing (%) 31.30 40.85 40.75 40.69 40.60


10/13




OSK Research

by 50%-60%. The advantage of refurbishing is that it requires minimal capex spending of RM3m-RM35m

compared to setting up a new plant, which would require a minimum capex of RM50-RM60m.

Fig. 9: Mr. Edward Yip of Kossan

Source : OSK

Maintain BUY. Our target price for Kossan of RM4.48 is based on PER of 9x FY10 earnings. We like the

company for its manufacturing efficiency, with an average utilisation rate of above 90% over the past 5 years.

Also, the company has the technology and capacity to go up the value chain to produce more nitrile gloves,

which yield margins that are higher than that from conventional natural rubber gloves.


Turnover 573.9 702.6 893.1 977.5 1,061.8EBITDA 74.4 90.3 107.1 122.8 139.6PBT 48.6 58.3 73.1 82.6 97.0Net Profit 39.6 55.1 59.3 67.8 79.6EPS (sen) 24.8 34.5 37.1 42.4 49.8DPS (sen) 6.5 8.0 10.0 12.0 13.0


ROE 22.6% 24.9% 21.5% 20.8% 20.7%ROA 10.5% 11.3% 10.0% 10.2% 11.2%

Balance SheetFixed Assets 232.0 284.9 362.3 321.7 338.2Current Assets 202.7 252.0 291.2 348.1 407.6Total Assets 434.8 536.9 653.5 669.8 745.9

Current Liabilities 185.5 242.8 288.9 300.7 312.6Net Current Assets 17.3 9.2 2.3 47.4 95.1LT Liabilities 57.9 42.3 64.7 37.0 37.0Shareholders' Fund 190.9 251.4 299.5 353.1 417.2Net Gearing (%) 71.8% 57.6% 54.3% 42.3% 31.4%


11/13




OSK Research

APPENDIX 1-4

Market Capitalisation of the Top 50 (RMm) Return on Equity (ROE) of the Top 50 (%)

0 300 600 900

CBS!Technology

LTKM!

TASCO

Century!Logistics!Cheetah

!

Efficient!E"Solutions !Freight!Management

Ajiya!

Yi"Lai !

Help!International !

Kawan!Food!

Favelle!Favco!

MaSteel!

New!Hoong!Fatt!

Adventa !

Can"One!

Frontken!Corp!

Pantech!Eng

!Kah

!

NV!Multi

Leader !Universal!

EPIC

Petra!Energy!

TRC!Synergy!

Sino!Hua"An

Plenitude!

TMC!Life!Sciences!

Tanjung!Offshore!

Pelikan!

Hock!Seng!Lee

Hai "O!

Hektar!REIT

CCM!Duopharma

!

Coastal!Contracts!

Padini !

NTPM!

Progressive!Impact!

Naim!Cendera!

Alam!Maritim!

Lion!Industries !

Mudajaya!

Kossan!

Hartalega!

Kian!Joo

KPJ!Healthcare!

MBM!Resources

Wah!Seong

!

QL!Resources

CCM

Litrak

0 % 5% 10% 15% 20% 25% 30% 35%

Lion!Industries!

Sino!Hua"An

CCM

Yi"Lai !LTKM

!

Leader!Universal!

MaSteel!

TASCO

Tanjung!Offshore!

TMC!Life!Sciences !

EPIC

Favelle!Favco!

Pelikan!

Hektar!REIT

Century!Logistics!

Frontken!Corp!

Plenitude!

Kian!JooNV

!Multi

Can"One!

Naim!Cendera !

New!Hoong!Fatt!

Adventa!

MBM!Resources

Cheetah!

Ajiya!

Eng!Kah !

Wah!Seong!

Kawan!Food!

Petra!Energy!

Litrak

CBS!TechnologyProgressive

!Impact

!

Freight!Management

Alam!Maritim!

Help!International!

Efficient!E"Solutions !

KPJ!Healthcare!

Hock!Seng!Lee

TRC!Synergy!

NTPM!

Kossan!

Mudajaya!

QL!Resources

Coastal !Contracts !

CCM!Duopharma!

Padini!

Pantech!

Hartalega !

Hai "O!


12/13




OSK Research

FY09 PER of the Top 50 (x) FY09 Dividend Yields of the Top 50 (%)

0 10 20 30 40

Lion!Industries!

TMC!Life!Sciences !

Progressive!Impact!

CCM

Eng!Kah

!

Litrak

Kawan!Food!

NTPM!

Tanjung!Offshore!

Sino!Hua"An

QL!Resources

CBS!Technology

CCM!Duopharma !

NV!Multi

Kian!Joo

LTKM!

Hektar!REIT

Favelle!Favco!Help

!International

!

Kossan!

Yi"Lai !

Frontken!Corp!

EPIC

Hartalega!

Mudajaya !

Wah!Seong!

KPJ!Healthcare!

Padini!

Hock!Seng!Lee

Hai "O!

Century!Logistics!

MBM!Resources

Plenitude!

Adventa!

Cheetah!

Alam!Maritim!

Pelikan!

Freight!Management

New!Hoong!Fatt!

Naim!Cendera !

Efficient!E"Solutions!

TRC!Synergy!

Petra!Energy!

Can "One!

TASCO

MaSteel!

Leader!Universal !

Ajiya!

Pantech!


0% 2% 4% 6% 8% 10% 12% 14%

CBS!Technology

Efficient!E"

Frontken!Corp!

Sino!Hua"An

TMC!Life

!Sciences

!

Mudajaya !

Alam!Maritim!

Lion!Industries!

Petra!Energy!


Progressive!Impact!

Help!International!

Tanjung!Offshore!

Kawan!Food!

QL!Resources

Litrak

Pelikan!

Favelle!Favco!TRC

!Synergy

!

Kossan!

MaSteel !

Can "One!

Hartalega!

MBM!Resources

Hock!Seng!Lee

Ajiya!

Naim!Cendera !

NV!Multi

Eng!Kah!

Cheetah!

Plenitude!

Wah!Seong!

Leader!Universal !

Adventa!

Century!Logistics!

New!Hoong!Fatt!

TASCO

KPJ!Healthcare!

Kian!Joo

CCM

EPIC

Freight

Padini!

NTPM!

Pantech!

LTKM!

Yi"Lai !

CCM!Duopharma !

Hai "O!

Hektar!REIT


13/13




OSK Research

OSK Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months

Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain

Neutral: Share price may fall within the range of +/- 10% over the next 12 months

Take Profit: Target price has been attained. Look to accumulate at lower levels

Sell: Share price may fall by more than 10% over the next 12 months

Not Rated: Stock is not within regular research coverage

All research is based on material compiled from data considered to be reliable at the time of writing. However, information and opinions expressedwill be subject to change at short notice, and no part of this report is to be construed as an offer or solicitation of an offer to transact any securities orfinancial instruments whether referred to herein or otherwise. We do not accept any liability directly or indirectly that may arise from investmentdecision-making based on this report. The company, its directors, officers, employees and/or connected persons may periodically hold an interestand/or underwriting commitments in the securities mentioned.

All Rights Reserved. No part of this publication may be used or re-produced without expressed permission from OSK Research.Published and printed by :-

OSK RESEARCH SDN. BHD. (206591-V)(A wholly-owned subsidiary of OSK Investment Bank Berhad)

Chris Eng

Kuala Lumpur Hong Kong Singapore Jakarta Shanghai

Hong Kong OfficeOSK SecuritiesHong Kong Ltd.

1201-1203, 12/F,World-Wide House

19 Des Voeux RoadCentral, Hong Kong

Tel : + (852) 2525 1118Fax : + (852) 2537 1332

Malaysia Research OfficeOSK Research Sdn. Bhd.

6th Floor, Plaza OSKJalan Ampang

50450 Kuala LumpurMalaysia

Tel : +(60) 3 9207 7688Fax : +(60) 3 2175 3202

Singapore OfficeDMG & Partners

Securities Pte. Ltd.#22-01 Ocean Towers

20 Raffles PlaceSingapore 048620

Tel : +(65) 6438 8810Fax : +(65) 6535 4809

Shanghai OfficeOSK (China) Investment

Advisory Co. LtdRoom 6506, Plaza 66

No. 1266 West Nanjing Road200040, Shanghai

ChinaTel : +(8621) 6288 9611

Fax : + (8621) 6288 9633

Jakarta OfficePT OSK NusadanaSecurities Indonesia

Plaza Lippo, 14th Floor,Jl. Jend. Sudirman Kav. 25.

Jakarta 12920Indonesia

Tel : + (6221) 520 4599Fax : + (6221) 520 4505

osk jewels book launch-the spirit of investing 20090403 osk

Documents