Left Brain Right B - the DBS Vickers Securities Equities Research

Regional Equity Strategy 4Q 2009
Country Assessment
Stronger quarterly net profit growth
(RMm)
12,000
10,000
8,000
6,000
4,000
2,000
-
Source: DBS Vickers
4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09
5.0% upgrade in 2009 universe earnings. Following the 2Q09
results season, we lift 2009 and 2010 universe earnings by 5.0%
and 7.5% respectively. This was much stronger than upgrades in
1Q09 (+0.1% for 2009 and 3.4% for 2010). The big lift came
from the banks - BCHB, Hong Leong Bank, AMMB and EON
Capital – and Sime Darby and PPB Group for reasons mentioned
earlier.
2Q09 Net Profit Growth
(RMm) 2Q08 1Q09 2Q09 % chg
y-o-y
%
chg
q-o-q
Banking 2,345.1 2,400.9 2,660.2 13 11
Non-bank financial 28.6 15.5 35.0 22 126
Consumer 300.0 475.7 501.6 67 5
Manufacturing/Industrial 415.9 (62.2) 36.3 -91 -158
Media (2.6) (28.9) 34.5 nm -219
Motor 244.3 127.6 162.0 -34 27
Oil & Gas 166.8 202.3 144.8 -13 -28
Conglomerate 1,354.4 422.4 1,381.5 2 227
Construction 319.9 258.8 285.3 -11 10
Concessionaires 300.3 298.0 281.3 -6 -6
Gaming 709.6 646.3 605.8 -15 -6
Plantation 1,073.1 223.7 716.6 -33 220
Utility 1,053.5 1,307.1 931.0 -12 -29
Property 188.1 104.4 187.1 -1 79
Telecommunication 774.8 468.1 778.5 0 66
Transportation/Logistic 766.5 (356.4) (380.4) -150 7
Total 10,038.2 6,503.3 8,361.1 -17 29
Source: DBS Vickers
Earnings contraction this year reduced. Following our earnings
upgrade, we expect 8.2% earnings contraction in 2009. The
key drag on earnings will come from Plantation and
Conglomerates (Sime Darby and PPB Group), on lower CPO
price assumptions of RM2,300/t versus RM2,864/mt in 2008,
as well as one-offs (forex losses for IOI). We also expect
weaker earnings for Genting (Spore pre-operating expenses,
lower plantation earnings) and Manufacturing (lower steel
prices).
Rebound next year. In 2010, we expect a 15.4% rebound in
earnings, largely on lower provisions and higher noninterest
income (recovery in capital markets) for banks,
absence of forex losses (for plantation) and a recovery in
power demand for Tenaga.
Page 97