RHBInvest Research

Top Story: TNB – Badly burned by massive oil and distillate fuel costs Market Perform (down from OP)

3QFY11 Results / Briefing Note

¨ Excluding forex gains of RM102m, TNB’s 9MFY11 results were below expectations with core net profit of RM801m (-62.4% yoy) accounting for 36% and 33% of our and consensus FY11 net profit estimates respectively. TNB recorded a RM460m loss in 3QFY11, due to significantly higher oil and distillate fuel costs arising from gas supply disruption.



Corporate Highlights



CI Holdings: Selling Permanis to Asahi for RM820m Trading Buy

News Update

¨ CIH announced that it has entered into a conditional share sale agreement for the disposal of its entire equity interest in Permanis to Asahi for RM820m in cash

¨ Post-disposal of Permanis, CIH would be left with only its tap-ware and sanitary ware business (under Doe Industries). As management has stated its intention to maintain CIH’s listing status, CIH would need to acquire a new core business and/or distribute some of the cash proceeds to shareholders to avoid becoming a PN16 (cash) company, given Doe’s small asset base and profit contribution



SEGi: INVITE-ing more foreign students Outperform

News Update

¨ SEGi has been appointed by the Government as Project Leader for a new initiative – SkillsMalaysia International Technical Education & Vocational Training Programme, which is expected to begin in 2012.

¨ The objective of SkillsMalaysia INVITE is to create and provide a new dimension of learning skills to non-academically inclined foreign school leavers and adult learners to pursue their training in Malaysia. Upon completion of the programme, the trainees will be awarded an internationally recognised qualification from UK or Australia, as well as certification from the Malaysian Government.



AirAsia: To set up a low-cost carrier in Japan Market Perform

News Update

¨ AirAsia is setting up a low-cost carrier in Japan via a 49:51 JV called AirAsia Japan Co Ltd with All Nippon Airways Co Ltd (ANA).

¨ The new airline is expected to take to the skies in Aug 2012, with a fleet of 3-4 A320 aircraft by the end of its first year of operations.



Hiap Teck: China Shougang roped in as contractor for blast furnace and shareholder Underperform

News Update

¨ Eastern Steel Sdn Bhd, a 55%-owned subsidiary of Hiap Teck, has entered into an EPC contract worth approximately RM650m with China Shougang International Trade and Engineering Corporation.

¨ A supplement agreement was also entered into where Hiap Teck will issue 32.2m new shares (9.8% of current share base) to China Shougang at an agreed price. China Shougang has the right to terminate the EPC contract if the shares are not issued by 30 November 2011.



VS Industry: Fully focus on EMS Overweight

Company Update

¨ VSI had announced on 19 Jul the disposal of its 53%-owned subsidiary, PT. GY Plantation Indonesia (PGP) for US$4.1m to PT Karya Manunggal Sawitindo. In addition, PGP will also sell a 6,450 ha piece of land (undeveloped) to PT Bumitama Gunajaya Agro for US$2.2m, which will flow to PGP’s existing shareholders (VSI’s portion amounts to US$1.2m). In total, VSI will receive US$5.3m (RM16.1m) from the abovementioned transactions, which management has earmarked for working capital.