30 July 2010

PP 7767/09/2010(025354)
Malaysia Corporate Highlights
RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su l ts Pr e v i e w
30 July 2010
MARKET DATELINE

Faber Group Berhad Share Price

Fair Value
:
:
RM2.82
RM3.54
IFM Business Likely Boost 2QFY10 Earnings Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (FAB; Code: 9008) Bloomberg: FAB MK

Pre-tax Net EPS Net
FYE Turnover Profit Profit EPS Growth PER C.EPS P/NTA Gearing ROE GDY
Dec (RMm) (RMm) (RMm) (sen) (%) (x) (sen) (x) (%) (%) (%)
2009 805.3 82.7 22.8 22.8 35.3 12.4 - 2.9 net cash 23.4 2.1
2010f 923.1 96.3 26.5 26.5 16.5 10.6 27.0 2.4 net cash 22.5 2.5
2011f 839.2 87.8 24.2 24.2 -8.8 11.7 24.0 2.1 net cash 17.6 2.8
2012f 1,343.0 157.5 43.4 43.4 79.3 6.5 43.0 1.6 net cash 26.3 3.0
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC #Excluding EI * Consensus Based On IBES Estimates

♦ 2QFY10 net profit expected to be higher yoy and qoq. Faber is

Issued Capital (m shares) 363.0
expected to announce its 2QFY12/10 results on 5 Aug. We believe 2Q net
Market Cap(RMm) 1,023.7
profit could be higher yoy due to stronger contribution from both concession Daily Trading Vol (m shs) 1.5
and non-concession IFM businesses, while qoq, net profit is expected to be 52wk Price Range (RM) 1.522-3.00
better thanks to higher contribution from its overseas IFM business. Major Shareholders: (%)
♦ New IFM contracts. Faber recently secured a contract with Abu Dhabi UEM Group 34.0
Universal Trustee 23.4
Health Services Company to maintain all mechanical systems and
equipment and various electrical installations and fittings at Sheikh Khalifa
Medical City (Main Campus) and affiliated buildings in the region of Abu FYE Dec FY10F FY11F FY12F
Dhabi. The project is worth approximately RM20.4m for a three-year period EPS chg (%) - - -
starting from 16 Aug 2010. We also note that an IFM contract in Madinat Var to Cons (%) (1.7) 0.8 0.9
Zayed, Abu Dhabi was renewed in May for another year with an annual
PE Band Chart
value of RM57.8m, while a second contract (likely be>RM100m) also in
Madinat Zayed is expected to be renewed by year-end. Faber’s local non-
PER = 12x
concession IFM business is also expanding - the company recently secured PER = 7x
contracts worth approximately RM7m p.a. from various vendors that include PER = 2x

Tesco, Rapid KL and other private healthcare companies.

♦ Property segment. As for the property segment, we expect stronger
property earnings to come on stream in 2HFY10 following the recognition of
earnings from the launch of Taman Desa Phase 1A DBKL in May ’10. The
company received good response from the public, and over 60% of the Relative Performance To FBM KLCI
development has been sold. The company plans to launch Phase 1A (Fleet)
at Taman Desa as well as Phase 4 for the Laman Rimbunan development in
Cheras by 3Q2010. Faber Berhad
♦ Risks to our view. 1) Failure to secure an extension to the concession
agreement with the Government; and 2) Further delays in property
launches and approvals, which could affect revenues from the property FBM KLCI
segment.
♦ Forecasts. We have kept our FY10-12 earnings forecasts for now.
♦ Investment case. We continue to like Faber for its resilient earnings
derived from the concession business, together with its ongoing expansion
plans for its non-concession business both locally and overseas. Indicative Yap Huey Chiang
fair value of RM3.54, which is based on SOP valuation (see Table 2), is (603) 92802179
maintained. We reiterate our Outperform call on the stock. yap.huey.chiang@rhb.com.my

Please read important disclosures at the end of this report.

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Table 2. Sum Of Parts Calculation

Valuation basis FV (RMm) Per share (RM)
Concession IFM DCF 658.9 1.82
Non-Concession IFM 14x FY11 earnings 378.0 1.04
Property DCF 85.9 0.24

Add : Net cash (End-1QFY10) 162.4 0.44

SOP 1,285.2 3.54
Shares (m) 363.0

Source: Company data, RHBRI estimates

Table 3. Earnings Forecasts Table 4. Forecasts Assumptions

FYE Dec (RMm) FY09 FY10f FY11f FY12f FYE Dec (RMm) FY10f FY11f FY12f
Turnover 805.3 923.1 839.2 1,343.0 Revenue:
Turnover growth (%) 20.2 14.6 (9.1) 60.0 Concession 544.1 562.2 543.5
EBITDA 169.0 195.4 175.8 295.4 Non-concession 241.2 276.9 304.5
EBITDA margin (%) 21.0 21.2 20.9 22.0 Property 137.8 0.0 495.0
Dep & Amort (21.0) (23.0) (24.7) (26.4)
EBIT 148.0 172.4 151.1 269.0
EBIT margin (%) 18.4 18.7 18.0 20.0 EBIT:
Net interest expense (6.7) (6.7) (6.7) (6.7) Concession 97.9 101.2 97.8
Associates (0.3) 0.0 0.0 0.0 Non-concession 43.4 49.8 54.8
Pretax Profit 140.9 165.7 144.4 262.3 Property 31.0 0.0 116.3
Tax (34.8) (41.4) (30.3) (55.1)
Minorities (23.4) (28.0) (26.2) (49.7)
Net Profit 82.7 96.3 87.8 157.5
Growth (%) 82.7 96.3 87.8 157.5
Source: Company Data, RHBRI estimates Source: Company data, RHBRI estimates

Chart 1: Faber Technical View Point

♦ The share price of Faber hit a more than a decade
high of RM3.04 in Jun 2010, but gave in for a
profit-taking dip to a low of RM2.50 by end of Jun.

♦ As it bounced up from the 40-day SMA near

RM2.50, it was followed with a technical rebound.

♦ The recovery pushed the stock to above the

RM2.80 level, and since then, it has sustained at
above RM2.80.

♦ Failing to cross over the RM3.00 level, the stock

was slapped with a stream of selling pressure of
late, and lost the 10-day SMA before touching a low
of RM2.80 yesterday.

♦ It closed the day at RM2.82, and finished the chart

with a “doji” candle. It indicates indecisiveness
after the recent retreat.

♦ Given the immediate support level at RM2.80, the

40-day SMA at RM2.81, and a mild rebound on the
stochastic oscillators, the stock could launch a
technical rebound soon, if it holds steady at above
RM2.80.

♦ If it retakes the 10-day SMA of RM2.88, it will

confirm a technical reversal and head towards the
RM3.04 significant resistance level on follow-
through buying momentum.

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IMPORTANT DISCLOSURES

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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
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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.

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

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