Daybreak Malaysia May 22, 2012 KLCI 1,538.91 Gainers/Losers… Turnover Regional Indices (+6.45pts /+0.42% ) Gainers 385 814m units / RM1,110 KLCI 1,539 Losers 306 3m avg. - RM1,642m FSSTI 2,790 - May futures 1537.0 (+0.69% ) Unchanged 301 JCI 3,940 - June futures 1535.0 (+0.62% ) SET 1,135 HSI 18,922 Charts & Statistics What’s on the Table… Tan Chong Motor Holdings - In reverse gear Index Chart FBMKLCI Index Though earnings should improve as supply recovers, Tan Chong’s 1Q12 core net 1700 profit was way below expectations, at 13% of our full-year projection and 12% of 1650 consensus numbers. The high effective tax rate and A&P spend were to blame. 1600 1550 We are cutting EPS for a higher tax rate and lower margins, leading to a fall in 1500 our SOP-based target price. We downgrade the stock from Neutral to 1450 Underperform. The share price has done well, rising 10% YTD vs. the KLCI’s 1400 1350 1%. As few meaningful rerating catalysts are in sight, investors should lock in 1300 profits. We like DRB for exposure to the sector. May-11 Aug-11 Nov-11 Feb-12 May-12 Source: Bloomberg Telco - Fixed Line - Maxis’s broadband broadside The recent deep cuts in Maxis's fibre broadband price were a negative surprise Terence Wong CFA T (60) 3 20849689 to us. The telco slashed its price by 46%, undercutting TM’s entry-level plan by E
[email protected] 21% and equivalent plan by 41%.