RHBInvest Research

Top Story: Earnings Review –

Strategy Update

• The External headwinds; rising cost and margin pressures on earnings
• Overall, it has resulted in a downgrade of our 2011 EPS projection for the FBM KLCI to 12.6%, vs. +16.3% two months ago. Whilst this suggests a downward revision to our end-2011 FBM KLCI target of 1,700, we are inclined to maintain it at this juncture given that it is still supported by bottom-up valuation methodology.
• We expect the market to go through a bumpy ride in the immediate term .Nevertheless, beyond the short-term volatility, we believe there is still room for the market to move higher in the 2H of the year.
• The current market weakness may persist into the 2Q, we believe market conditions would likely improve from the 2H as investors look forward to a brighter economic prospect in 2012. We reiterate our view that any market pullback would present an opportunity for investors to accumulate fundamentally-robust stocks on weakness as value re-emerges.

Corporate Highlights

MAS: Underperform

• Briefing Note
• Growing yields the priority in FY11
• Fair value is RM1.91. Maintain Underperform.

First Resources: Outperform

• 4QFY10 Results/Briefing Note
• A record year in 2010, with more to come
• Our fair value is reduced slightly to S$1.65 (from S$1.75).

Proton: Underperform

• News Update
• MOU with Nissan
• Maintain Underperform call and RM4.00 fair value for now pending the outcome of the MoU. Costs and expenses from the Lotus Turnaround Plan will continue to cloud Proton’s medium-term earnings prospects.