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PP 7767/09/2010(025354)

Malaysia

MARKET DATELINE

PP 7767/09/2010(025354) Mala y sia MARKET DATELINE Corporate Highlights Visit Note Fitters Diversified “Foetus” Of A

Corporate Highlights

Visit Note

Fitters Diversified

“Foetus” Of A Green Revolution

30 July 2010
30 July 2010

RHB Research Institute Sdn Bhd A member of the RHB Banking Group

Company No: 233327 -M

30 July 2010

Share Price

:

RM0.86

Fair Value

:

RM1.20

Recom

:

Not Rated

Table 1 : Investment Statistics (FITTERS; Code: 9318)

Bloomberg: FIT MK

 

Net

Net

FYE

Turnover

Profit#

EPS#

Growth

PER

C.EPS*

P/NTA

Gearing

ROE

GDY

Dec

(RMm)

(RMm)

(sen)

(%)

(x)

(sen)

(x)

(x)

(%)

(%)

2009

126.2

8.0

5.6

-62.9

11.7

-

0.9

0.0

7.0

-

2010f

184.9

16.2

11.2

101.8

5.8

-

0.8

0.3

12.7

3.1

2011f

308.5

30.6

21.2

89.0

3.1

-

0.6

0.3

19.7

3.1

2012f

285.1

43.2

30.0

41.4

2.2

-

0.5

0.2

22.1

3.1

Main Market Listing /Non-Trustee Stock /Syariah-Approved Stock By The SC

#Excluding EI

* Consensus Based On IBES

From fire prevention to green energy. Fitters Diversified (Fitters) is predominantly engaged in fire prevention & protection business. While profitable and cash-generative, this bread-and-butter business is unable to take Fitters to a higher level due to its muted growth prospects. Realising the need to explore new growth areas to create new shareholder value, Fitters about 2-3 years ago already identified green energy as the way forward for the company. Since then, via 83%-owned unit Future NRG, it has identified and secured rights to the biomass/plasma gasification technology.

Gasification technology. Gasification is a process that converts carbonaceous materials, such as coal, petroleum, biofuel, or biomass, into carbon monoxide and hydrogen by reacting (but not combusting) the raw material at very high temperatures with a controlled amount of oxygen and/or steam. The resulting gas mixture is called synthesis gas or syngas and is itself a fuel, which can be used to produce heat and electricity.

Investment case. The bases of our investment case for Fitters are:

1. The gasification technology it possesses that has many advantages over the conventional combustion and incineration;

2. The strong prospects of the renewable energy sector in Malaysia and globally, underpinned by the aggressive renewable energy targets set and favourable policies; and

3. The strong prospects of the waste-to-energy sector in Malaysia and globally, driven by a combination of pull and push factors - pull being the energy generated and push being the urgent need to deal with the ever rising volumes of waste produced.

Risks to our view. The risks include: (1) Fitters is to lose the rights to the biomass/plasma gasification technology; (2) Certain countries in the world are to drag their feet on their renewable energy targets; and (3) General risks associated with investing in overseas markets, particularly, developing countries.

Fair value of RM1.20. We arrive at an indicative fair value of RM1.20 for Fitters, having valued its fire prevention & protection business at 10x 1-year forward PER, its smallish property development business by discounting back the expected net profit from RM315m GDV to NPV at 10% and its green energy business via the DCF model.

Please read important disclosures at the end of this report.

Issued Capital (m shares) Market Cap (RMm)

144.3

124.1

Daily Trading Vol (m shs)

0.5

52wk Price Range (RM)

0.47-0.915

Major Shareholders:

(%)

Datuk Richard Wong

32.9

FYE Dec EPS Revision (%)

FY10

FY11

FY12

-

-

-

Var to Cons (%)

-

-

-

PE Band Chart

PER = 10x PER = 8x PER = 6x
PER = 10x
PER = 8x
PER = 6x

Relative Performance To FBM KLCI

Fitters Diversified FBM KLCI
Fitters Diversified
FBM KLCI

Joshua CY Ng (603) 92802151 joshuang@rhb.com.my

Chye Wen Fei (603) 92802172 chye.wen.fei@rhb.com.my

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Prologue 30 July 2010 ♦ Future is now. In the opening scene of Back To

Prologue

30 July 2010

Future is now. In the opening scene of Back To The Future II, the 1989 sequel to the 1985 science fiction adventure comedy blockbuster Back To The Future, the time machine, a modified DeLorean DMC-12 sports car, screeches into the driveway, Doc Brown (Christopher Lloyd) jumps out and shouts to Marty (Michael J. Fox), “Marty! You’ve got to come back with me.”

Marty replies, “Where?”

Doc says, “Back to the future!”

Doc pulls a beer can and banana peels out of the garbage and dumps them into a small “Mr Fusion” energy reactor mounted on the back of the DeLorean DMC-12 (see Image 1).

Marty is confused, “Wait a minute, what are you doing, Doc?”

Doc turns impatient, “I need fuel! Go ahead, quick, get in the car!”

Fitters Diversified (Fitters) is transforming this scene from a science fiction movie into something fairly similar in reality with its biomass/plasma gasification technology.

Image 1 : Doc Brown Refuels His Time Machine

technology. Image 1 : Doc Brown Refuels His Time Machine Source: Universal Studios Background ♦ From

Source: Universal Studios

Background

From fire prevention to green energy. In FY12/09, Fitters recorded RM8m net profit on RM126.2m turnover, with profits coming almost entirely from its bread-and-butter fire prevention & protection business that comprises: (1) Manufacturing and trading of fire resistant door sets, fire extinguishers, fire safety apparels, foam systems, sprinkler systems, smoke/heat detectors and fire alarm & monitoring systems; (2) Fire prevention engineering, maintenance and upgrading services; and (3) Operation of a privatised computerised fire alarm monitoring system linked up with fire stations under a government concession.

This bread-and-butter business, while profitable and cash-generative, is unable to take Fitters to a higher level due to its muted growth prospects. Realising the need to explore new growth areas to create new shareholder value, Fitters about 2-3 years ago already identified green energy as the way forward for the company. Since then, via 83%-owned unit Future NRG, it has identified and secured rights to the biomass/plasma gasification technology from reputable names in the industry comprising ENPRO Envirotech & Engineers Pvt Ltd, S.M.S. Infrastructure Ltd and Ankur Scientific Energy Technologies Pvt Ltd, all based in India (see Table 2).

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30 July 2010 Table 2 : Fitters’ Technology Partners

30 July 2010

Table 2 : Fitters’ Technology Partners

Technology Partner

Background

ENPRO Envirotech & Engineers Pvt

ENPRO Enviro Tech & Engineers Pvt Ltd is design, engineering, project management and turnkey

Ltd

solution provider in the fields of plasma waste-to-energy (gasification and Pyrolysis), water

(www.enpro.co.in)

treatment, waste water treatment and recycling, common effluent treatment, air pollution control,

hazardous waste thermal treatment, etc. ENPRO provides concept to commissioning and operation

and maintenance solution for single and cluster of industries in the field of environmental projects.

S.M.S. Infrastructure

S.M.S. Infrastructure is the largest infrastructure company in Central India with presence across

(www.smsl.co.in)

more than ten cities in India and abroad with an employee base of over 1,300. It ranked the first

among the top 500 unlisted companies in India in terms of turnover. It has constructed 70 tonne-

per-day plasma hazardous waste-to-energy plants in Pune and Nagpur, India, in association with

ENPRO, who functioned as site engineering and commissioning contractor. The facilities are

currently the largest plasma gasification waste-to-energy plants in the world.

Ankur Scientific Energy

Technologies Pvt Ltd

(www.ankurscientific.com)

The company, led by technological entrepreneur Dr .B.C. Jain, specialises in technologies to exploit

non-conventional energy sources. It has successfully developed and commercialised a wide range of

biomass gasifiers ranging in size from as small as 5 kWe output to 500 kWe output, and solar water

heating systems.

Source: Company

Fitters has transformed itself into an “integrator” of the technology who basically drives the engineering, procurement, construction and commissioning (EPCC) of the actual biomass/plasma gasification power plants in South East Asia and China, where it has the exclusive rights to the technology, and in India and Sri Lanka, where it has the rights to the technology on a project-specific basis. At present, it is already working on at least five green energy projects in Malaysia and overseas (see Table 3). Based on our forecasts, the green energy segment will contribute 11% and 15% of Fitters’ total EBIT in FY12/11 and FY12/12.

Table 3: Renewable Energy Targets

Location

Technology

Type

Capacity

Status

China

Biomass gasification

Green field

4 MW

Under construction

Sri Lanka

Biomass gasification

Green field

4 MW

Due diligence

Gujerat, India

Plasma gasification

Green field

10 tonnes/day

Finalising agreement

Malaysia

Plasma gasification

Green field

10 tonnes/day

Exploring

China

Mini-hydro

Brown field

5.1 MW

Due diligence

Source: Company

Gasification technology. Gasification is a process that converts carbonaceous materials, such as coal, petroleum, biofuel, or biomass, into carbon monoxide and hydrogen by reacting (but not combusting) the raw material at very high temperatures with a controlled amount of oxygen and/or steam. The resulting gas mixture is called synthesis gas or syngas and is itself a fuel, which can be used to produce heat and electricity. Syngas may be burned directly in internal combustion engines or turbines, used to produce methanol and hydrogen, or converted into synthetic fuel. Gasification can also begin with materials that are not otherwise useful fuels in their original state, such as biomass or organic waste. In addition, the process refines out corrosive elements such as chloride, sulfur, potassium etc, allowing clean gas production from fuels that might otherwise be contaminated. Fitters possesses the gasification technology for different types of waste or feedstock materials:

1. Plasma gasification (see Diagram 1) for: (1) Non-homogeneuos waste such as municipal solid waste and industrial waste; and (2) Toxic and hazardous waste including medical and clinical waste; and

2. Biomass gasification (see Diagrams 2 & 3) for agricultural waste or biomass such as rice husk, bagasse, empty fruit bunches (e.g. from oil palm), coconut shell, wood chips, corn cobs etc (source:

www.futureNrg.net).

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30 July 2010 Diagram 1 : Plasma Gasification Source: www.futurenrg.net Diagram 2 : Biomass Gasifier

30 July 2010

Diagram 1 : Plasma Gasification

30 July 2010 Diagram 1 : Plasma Gasification Source: www.futurenrg.net Diagram 2 : Biomass Gasifier Diagram

Source: www.futurenrg.net

Diagram 2 : Biomass Gasifier

Diagram 3: Biomass Gasifier Connected To Generator

Diagram 3: Biomass Gasifier Connected To Generator Source: www.futurenrg.net Investment Case ♦ The
Diagram 3: Biomass Gasifier Connected To Generator Source: www.futurenrg.net Investment Case ♦ The

Source: www.futurenrg.net

Investment Case

The investment case. The bases of our investment case for Fitters are:

1. The gasification technology it possesses that has many advantages over the conventional combustion and incineration;

2. The strong prospects of the renewable energy sector in Malaysia and globally, underpinned by the aggressive renewable energy targets set and favourable policies; and

3. The strong prospects of the waste-to-energy sector in Malaysia and globally, driven by a combination of pull and push factors - pull being the energy generated and push being the urgent need to deal with the ever rising volumes of waste produced.

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30 July 2010 ♦ Many advantages of gasification technology. Gasification has many advantages over the

30 July 2010

Many advantages of gasification technology. Gasification has many advantages over the more conventional combustion and incineration, among others:

1. The efficiency (i.e. useable energy recoverable as a percentage of total energy content of the input) of gasification is three times higher than combustion (the efficiency of incineration is practically 0%);

2. Gasification is a greener and cleaner technology as it disintegrates all inorganic materials into harmless slag (that can be processed further into building materials and aggregates) and does not leave behind hazardous residues and emissions. This compares with combustion and incineration that leave behind hazardous emissions, i.e. such as bottom ash, fly ash, Dioxins and Furans that need to be treated, and residues that need to be landfilled. Landfilling creates another set of problems as: (1) It puts a strain on valuable land resources; (2) It emits landfill gases, primarily methane that is believed to be 21x more damaging than CO 2 in terms of global warming potential; and (3) It poses long-term secondary pollution and future liability issues; and

3. Its entry-capacity is low, as low as 50-100kW, as compared with a few MW for a combustion biomass power plant. This makes it an ideal choice of system for electrification projects in low-density remote areas.

The strong prospects of the renewable energy sector in Malaysia and globally. Fitters is well positioned to benefit from the aggressive renewable energy targets announced as well as favourable policies to the renewable energy sector put in place in Malaysia and globally.

Locally, the Government has set a target of 4,000MW of generating capacity, translating to 11% of peak demand, to be fueled by renewable sources by 2030, compared with 219MW and 1.5% projected by 2011 (see Chart 1). By 2030, the five key renewable sources, i.e. solar, biomass, mini-hydro, biogas and solid waste will fuel generating capacity of 1,370MW, 1,340MW, 490MW, 410MW and 390MW respectively, sharply higher vis-à-vis 9MW, 110MW, 60MW, 20MW and 20MW projected by 2011. Fitters’ biomass gasification technology will enable it to garner a slice of action of the 1,230MW new biomass-fueled generating capacity between 2011 and 2030, while its plasma gasification technology a share of the 370MW new solid waste-fueled generating capacity over the same period.

Also, under the recently announced 10 th Malaysia Plan (10MP), the Government has committed to increasing the rural electricity coverage in Peninsular Malaysia, Sabah and Sarawak from 99.5%, 77% and 67% in 2009 to almost 100% in Peninsular Malaysia and 99% in the two East Malaysian states during 2011-2014. This will be achieved by supplying electricity to about 6,000 additional houses in Peninsular Malaysia, 59,000 in Sabah and 76,000 in Sarawak. Given that most of these houses are located in remote areas far away from the national grid (or else they would have been latched onto it long before) and probably without proper access roads, independent systems that are handy and fueled by inputs that can be easily sourced locally are logically the best solution. Again, Fitters’ biomass gasification technology appears to be a good fit here.

Chart 1 : Malaysia’s Renewable Energy Targets

4,500 4,000 3,500 Solid Waste (LHS) Solar (LHS) M ini-Hydro (LHS) Biogas (LHS) Biomass (LHS)
4,500
4,000
3,500
Solid Waste (LHS)
Solar (LHS)
M ini-Hydro (LHS)
Biogas (LHS)
Biomass (LHS)
% of Peak Demand (RHS)
18%
16%
14%
3,000
12%
2,500
10%
2,000
8%
1,500
6%
1,000
4%
500
2%
0
0%
2011
2015
2020
2030

Source: Ministry of Energy, Green Technology and Water, Malaysia

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30 July 2010 ♦ On the back of the aggressive renewable energy targets se t

30 July 2010

On the back of the aggressive renewable energy targets set by most nations in the world (see Table 4), Fitters is also well positioned to tap into the world market for gasification power plants. As mentioned, already, Fitters is building a 4MW biomass gasification power plant in China and undertaking due diligence on a 4MW greenfield biomass gasification power plant in Sri Lanka.

Table 4: Renewable Energy Targets

 

Country

Current

Target

By

Country

Current

Target

By

Share

Share

(%)

(%)

(Year)

(%)

(%)

(Year)

Austria

62.0

78.0

2010

Canada

59

90 (non-emitting

na

   

sources)

Belgium

2.8

6.0

2010

Chile

<1

10

2024

Czech Republic

4.2

8.0

2010

China

8

15

2020

Denmark

26.0

29.0

2010

Egypt

15

20

2020

Finland

29.0

31.5

2010

India

4

na 15 (inc. nuclear)

na

France

10.9

21.0

2010

Indonesia

4

2025

Germany

11.5

12.5

2010

Israel

0

5

2016

Greece

13.0

20.1

2010

Japan

0.4

1.63

2014

Hungary

4.4

3.6

2010

Korea

na

6.08

2020

Ireland

10.0

13.2

2010

Malaysia

0.5

11

2030

Italy

16.0

25.0

2010

Mexico

16

40

2014

Luxembourg

6.9

5.7

2010

Morocco

10

20

2012

Netherlands

8.2

9.0

2010

New Zealand

66

90

2025

Poland

2.6

7.5

2010

Nigeria

na

7

2025

Portugal

32.0

45.0

2010

Pakistan

na

10

2015

Slovak Republic

14.0

31.0

2010

The Philippines

na

100% increase from

2015

   

2005

Spain

19.0

29.4

2010

Russia

na

4.5

2020

Sweden

49.0

60.0

2010

Switzerland

52

na

na

United Kingdom

4.1

10.0

2010

Taiwan

6

12

2020

Argentina

1.3

8

2016

Thailand

7

20

2022

Australia

7.9

20

2020

United States

9.2

na

na

Brazil

5

na

na

Vietnam

na

5

2020

Source: Wikipedia, RHBRI

The strong prospects of the waste-to-energy sector in Malaysia and globally. The prospects of the waste-to-energy sector in Malaysia and globally are strong, driven by a combination of pull and push factors. The pull factor is the energy content of the municipal solid waste, medical/clinical waste as well as industrial waste that can be recovered and put into good use. The push factor is the urgent need to deal with the ever rising volumes of municipal solid waste, medical/clinical waste as well as industrial waste produced in Malaysia and globally (see Table 5 for volumes of waste generated by selected countries annually). As mentioned, gasification is a better solution as, unlike incineration, it does not leave behind hazardous emissions that need to be treated and residues that need to be landfilled. As mentioned again, already, Fitters is capitalising on the opportunities in the waste-to-energy sector by finalising an agreement to build a 10-tonnes-per-day waste-to-energy plant in Gujerat, india, and exploring the possibility of building a 10-tonnes-per-day waste-to-energy plant in Malaysia.

Table 5: Renewable Energy Targets

Country

Waste Produced Annually (tones)

China (including Hong Kong)

Malaysia

Republic of Korea

Singapore

India

Thailand

9,520,000

378,420

2,820,000 (hazardous waste);

17,702,000 (other waste)

203,872 (hazardous waste);

2,802,000 (other waste)

7,245,000

1,680,000 (total hazardous and industrial waste)

Source: www.futurenrg.net

Gearing. As at 31 Mar 2010, Fitters was in a net cash of RM2.4m. A projected operating cashflow of RM0.9- 14.4m per annum in FY12/10-12 will help to part finance Fitters’ capital expenditure in the green energy segment.

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Risks 30 July 2010 ♦ Risks to our view. The risks include: (1) Fitters is

Risks

30 July 2010

Risks to our view. The risks include: (1) Fitters is to lose the rights to the biomass/plasma gasification technology; (2) Certain countries in the world are to drag their feet on their renewable energy targets; and (3) General risks associated with investing in overseas markets, particularly, developing countries.

Valuations

Fair value of RM1.20. We arrive at an indicative fair value of RM1.20 for Fitters, having valued its fire prevention & protection business at 10x 1-year forward PER (consistent with our benchmark for the manufacturing sector), its smallish property development business by discounting back the expected net profit from RM315m GDV to NPV at 10% (consistent with the property sector’s benchmark discount rate) and its green energy business via the DCF model (see Table 6).

Table 6: “Sum-of-Parts” Valuation

 

RMm

Methodology

 

Manufacturing & trading

90.0

PER

10x FY12/11 net profit, in line with our 1-year target forward PER for the manufacturing sector 10x FY12/11 net profit, at lower-end of out benchmark 1-year target forward PER of 10-14x for the construction sector to reflect Fitters’ relatively smaller market capitalisation Discount rate of 10%

Construction & engineering

36.0

PER

Property division

33.9

DCF

Renewable energy

4MW biomass to electricity plant in Liangshan, China

-

 

11.7

DCF

WACC of 7.7%, tariff of RMB0.80/kwh, and base tariff growth of 4% p.a. WACC of 7.7%, tariff of RMB0.32/kwh, and average tariff growth of 4% p.a. WACC of 7.7%, tariff of RMB0.32/kwh, and average tariff growth of 4% p.a. WACC of 7.7 and equity IRR of 12.5%

- 3.2MW hydropower plant in China

8.5

DCF

- 1.89MW hydropower plant in China

5.3

DCF

- Other potential projects

11.8

DCF

197.2

 

Net cash/(debt) as at 31 Mar 10 Additional cash from full conversion of warrants

 

2.4

52.5

 

252.1

Issued shares - assuming full conversion of warrants (m) Sum-of-parts value/share (RM)

209.9

 

1.20

Source: RHBRI

Table 7: Earnings Forecasts

 

FYE Dec

2009A

2010F

2011F

2012F

Revenue

126.2

184.9

308.5

285.1

- Manufacturing & trading

57.6

70.0

75.0

80.0

- Construction & engineering

68.7

100.0

60.0

60.0

- Property development

0.0

14.9

160.3

130.9

- Renewable energy

0.0

0.0

13.2

14.2

- Elimination

-0.1

0.0

0.0

0.0

EBITDA Depreciation & amortisation Operating profit Finance costs Profit before tax Income tax expense Minority interests Net profit

11.9

22.7

47.8

67.0

-1.5

-1.3

-5.1

-4.7

10.4

21.4

42.7

62.3

-0.4

0.0

-0.9

-3.5

10.0

21.4

41.8

58.8

-1.7

-5.4

-10.4

-14.7

-0.3

0.1

-0.8

-0.9

8.0

16.2

30.6

43.2

Source: Company data, RHBRI estimates

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Image 2 : Fitters’ “Show Unit” Of Biomass Gasification Power Plant In Templer Park Source
Image 2 : Fitters’ “Show Unit” Of Biomass Gasification Power Plant In Templer Park
Source : RHBRI

IMPORTANT DISCLOSURES

30 July 2010

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as providing investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of the RHB Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors, officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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30 July 2010 Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by

30 July 2010

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the actions of third parties in this respect.

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