Weekly Technical Could the index stage a possible re-test of 1,597.08?

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1 PP16832/01/2013 (031128) Malaysia TECHNICALS 8 February 2012 Lee Cheng Hooi chenghooi.lee@maybank-ib.com (603) Weekly Technical Could the index stage a possible re-test of 1,597.08? FBM KLCI Broke above 1, A re-test of 1,597.08? CPO Futures Rebound stalled at MYR3,270. Weaker tone for CPOF. DJIA Low of 10, and broke 12, Moving higher. TDM To surge into uncharted territory. FBM KLCI Weekly Chart Support: 1,509 to 1,538 Resistance: 1,540 to 1,597 Strategy: The FBM KLCI gained points and closed at 1, last Friday. The local market remained firm as a low interest rate policy in the US and strong American markets lifted local sentiment too. High volumes of between 1.78b to 2.84b shares were registered. The obvious support areas for the FBM KLCI are in the 1,509 to 1,538 zone. The next resistance levels of 1,540 and 1,597 may see heavy liquidation activities. The FBM KLCI consolidated in a tight range of 801 to 936 from October 2008 to April 2009, but broke above its resistance level of (Wave a/b) in April 2009 and surged to an all-time high of 1, on 11 July Its intermediate Wave b/b low was We traced out a Wave c/b (of the Flat variety) rebound phase to its all-time high of 1, (c/b). A downward killer large-scale Wave C is now in place and has only just begun, with a temporary low formed at 1, (Wave a/c). A temporary rebound wave (Wave b/c) is underway and may take the shape of yet another Rising Wedge pattern (as shown on the chart above). We see two Rising Wedge patterns on the FBM KLCI chart. There could be some local maintenance of the index but in the medium to longer term, the FBM KLCI could face yet another quiet but very challenging year ahead. For now, the index may try to test higher territory (like 1,540, 1,552 and 1,597) as it broke above its intermediate resistance of 1, Some stocks we like are: BOXPAK, BURSA, COASTAL, GAB, GAMUDA, GUANCHG, JCY, MAYBULK, MUHIBAH, TDM, TIMECOM, TWSCORP, UMLAND, UTDPLT and WCT. SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Page 1 of 9

2 Major Indices Watch DJIA Index Low of 10, Broke 12,876. Moving higher. Support: 12,328 12,878 Resistance: 12,903 13,010 RSI: level. Signal line inched up. Stochastic: level. Overbought Stochastic buy signal. MACD: level. MACD buy signal. MA: Above both the 18 and 40 WMA. Obvious daily, weekly & monthly uptrend. Strategy: The DJIA Index surged points last week on a WoW basis to close at 12, The index gained as better-than-forecast growth in US jobs bolstered optimism in the economy. The DJIA s tone is positive in the daily, weekly and monthly time frames. The DJIA stalled at 12, (swing high) followed by a key swing low of 10, Due to last week s positive close, the DJIA Index may remain firm towards the resistance areas. The DJIA has surpassed 11, and 12, recently. With its positive weekly signals, we have surpassed the key 12, resistance level and the DJIA would move into higher territory. S&P 500 Index Low of 1, To re-test 1, and above. Support: 1,300 1,344 Resistance: 1,349 1,370 RSI: level. Signal line rose slightly. Stochastic: level. Grossly overbought Stochastic buy signal. MACD: level. MACD buy signal. MA: Above both the 18 and 40 WMA. Obvious daily, weekly & monthly uptrend. Strategy: The S&P500 Index gained points WoW to close at 1, The SP500 rose in tandem with the DJIA s gain last week, albeit at a lesser rate. Its tone is positive in the daily, weekly and monthly time frames. The SP500 stalled at its swing high of 1,370.58, followed by its next key swing low of 1, Due to last week s rise, the S&P500 Index could remain firm towards the resistance areas, with further upward momentum. The index surpassed 1, and 1, recently. With last week s minor upward move, the SP500 is expected to test higher levels. The SP500 s eventual test of the key 1, resistance may happen soon. A successful penetration beyond that level would also see higher highs being formed. Page 2 of 9

3 Major Commodities Watch Crude Palm Oil (3-mths delivery) High at MYR3,270. A downward drift. Support: MYR2,850 3,036 Resistance: MYR3,085 3,270 RSI: level. Signal line declined. Stochastic: level. Heed the Stochastic sell signal. MACD: +9.0-level. Ignore the MACD buy signal. MA: Prices are between the 18 WMA and 40 WMA with a Dead Cross. Trend is neutral, but can turn down soon. Strategy: The CPOF fell from the week s high of MYR3,126 to close at MYR3,085 last Friday. It lost MYR50 WoW and this was a second weekly drop on concerns that exports from Malaysia (the second-largest producer) may continue to slide, signaling weaker demand and a build-up in stockpiles. The CPOF peaked at MYR3,967 in February Its next key swings were: MYR3,148 (low), MYR3,465 (high), MYR3,016 (low), MYR3,164 (high), MYR2,754 (low) and MYR3,270 (high). Due to last week s minor decline from the high of MYR3,126, the CPOF may range trade towards the support areas and eventual downside targets of MYR2,164 and MYR2,344. Bean oil rose USD0.08 on a WoW basis to USD52.49 last week. Despite bean oil s minor rise, we advocate a Take Profit on rallies for CPOF. Brent Crude Oil (EUCRBRDT) Brent may rise further Support: USD USD Resistance: USD USD RSI: level. The signal line inched up. Stochastic: level. Stochastic buy signal. MACD: +0.2-level. MACD buy signal. MA: Just above the 18 and the 40 WMA. May range trade with some further upward bias. Strategy: The EUCRBRDT closed firmer for the week at USD114.28bbl on 3 February It rose by USD3.28bbl on a WoW basis. Crude oil was higher as there seems to be a better set of American jobs data. Due to its positive chart signals, the EUCRBRDT remains in a Range Trading mode, with a tendency to trade towards its key resistance areas for this week. We are still trapped in a Wave 4 weekly pattern (between USD98.71bbl and USD126.91bbl) but we favour Buying on Dips for crude oil this week. Page 3 of 9

4 FBM KLCI Futures Low of 1,295. Also drawing another Rising Wedge. Support: 1, ,538.0 Resistance: 1, ,598.0 RSI: level. Signal line inched up. Stochastic: level. Overbought Stochastic buy signal. MACD: level. MACD buy signal. MA: Price bars are above the 18 and 40 WMA. Exercise some caution though. Strategy: The futures market rose last week to settle at 1,538.0 for the February 2012 contract and closed at a minor 0.77 point discount to the FBM KLCI. Market action was active, as investors bought the contract up in firm bargain-hunting activities last week. The February contract gained 15.0 points on a WoW basis. Due to its mixed chart signals, investors may range trade the KLCIF for this week. Due to the DJIA s fine performance last week, there may be further buying on the KLCIF this week. The KLCIF made a key all-time high of 1,598.0 (July 2011). Its next swing low was at 1,295.0 (Sep 2011). As it managed to surpass its previous key swing high of 1,536.5, the KLCIF may be poised to move to higher levels. Malaysian Ringgit MYR looks very firm against the USD. Support: MYR Resistance: MYR RSI: level. The RSI plunged. Stochastic: level. Clear Stochastic sell signal. MACD: level. Firm MACD sell signal issued. MA: Below the 18 and 40 WMA. USD will trade with a weaker bias against MYR. Strategy: The Ringgit traded in a firmer range against the USD and ended stronger at last week. The MYR was much firmer against the USD as the regional risk-on trades emerged after the US Fed signaled a low interest rate policy at their recent FOMC meeting. The recent key swings of the USD/MYR are (high), (low), (high), (low) and (high). The USD/MYR rate will remain softer towards the support levels, with a further weaker bias. The Greenback could be tracing further weakness against the MYR. We believe that the USD/MYR rate will remain softer towards the mark. If the psychological level cannot hold, then we foresee a re-visit of the level next. Page 4 of 9

5 Daily Trading Idea TDM MYR 4.72 (Stock Code: 2054) (Bloomberg Code: TDM MK Equity) ACCUMULATE (TECHNICAL) TDM Berhad (TDM), through its subsidiaries, manages oil palm plantations, trades palm oil and related products. The company also provides consultancy and management services to specialist medical centers. FUNDAMENTALS TECHNICALS Board / Sector : Plantation CCI : Positive Par Value : MYR 1.00 DMI : Positive Market Cap. : MYR 1.13b MACD : 52 Week High : MYR 4.84 Oscillator : Positive Positive 52 Week Low : MYR 2.60 RSI : V Overbought (85) Book Value / Share : MYR 3.42 Stochastic : Positive Beta vs. KLCI : 0.91 Dividend/share : MYR 0.17 Support S1/S2 : MYR 3.95 & 4.72 Historical EPS : 61.2sen Resistance R1 : MYR 4.84 Historical P/E : 7.5x Trend : Up Historical Ind. P/E : 11.4x Upside Target T1/T2 : MYR 5.27 & 5.42 Historical Net Profit : MYR 145.7m Stop-loss : MYR 3.93 Avg. Daily 3mth Vol. : 0.51m shares Period : 2 days to 1 month TDM reached a significant weekly Wave 4 low at MYR2.60 in early October 2011 with grossly oversold and bullish chart signals. Due to all its positive indicators, it is likely to surge to its obvious weekly upside Wave 5 targets (of MYR5.27, MYR5.42 and MYR5.90) and resistance levels above. ACCUMULATE (TECHNICAL) on dips for TDM, with stop-loss at MYR3.93. Page 5 of 9

6 TDM MYR4.72 The weekly indicators (such as the CCI, DMI, MACD, Oscillator and Stochastic) are positive and now depict fine indications of TDM s prolonged price strength. We expect TDM to remain firm on any dips to its support levels of MYR3.95 and RM4.72. It will attract some major buying at those levels. The only resistance level (and all-time high) of MYR4.84 will offer token selling activities. Our technical upside targets for TDM are MYR5.27, MYR5.42 and MYR5.90. Stop-loss is at MYR3.93. Maybank IB has no fundamental coverage on TDM, but has recently issued a Non-Rated report with fair value of MYR5.50. The weekly indicators (such as the CCI, DMI, MACD, Oscillator and Stochastic) are positive and now depict fine indications of TDM s prolonged price strength. We expect TDM to remain firm on any dips to its support levels of MYR3.95 and RM4.72. It will attract some major buying at those levels. The only resistance level (and all-time high) of MYR4.84 will offer token selling activities. Our technical upside targets for TDM are MYR5.27, MYR5.42 and MYR5.90. Stop-loss is at MYR3.93. Our featured stock this week is TDM Berhad (TDM). The company is an upstream oil palm plantation player as well as the operator of three specialist medical centers in Malaysia. Currently, the company owns 25,000 hectares of land in Indonesia and 37,000 hectares of land in Terengganu. This brings the total land bank TDM owns and manages to 62,000 hectares. The company is in the process of acquiring a hospital in the Klang Valley, and plans to build two more new hospitals on the East Coast over the next three years. Maybank IB research recently released a Non-Rated report on TDM where we highlighted the fair value of the stock to be at MYR5.50, significantly higher than the current share price of MYR4.72. We feel that TDM is deeply undervalued due to a lack of analyst coverage, its relatively thin trading volumes and shareholding structure which lacks institutional ownership apart from the Terengganu government s 63% stake. However, over the past five years, TDM has successfully divested all of its non-core businesses, raised FFB yields and turned most of its hospitals profitable. TDM - Summary Quarterly Earnings FYE 31 Dec 3Q10 4Q10 1Q11 2Q11 3Q11 9M10 9M11 YoY (%) (MYR m) Turnover % PBT % Net profit % EPS (sen) PBT margin (%) 35% 38% 36% 35% 47% 31% 41% Sources: Bloomberg, Maybank-IB Page 6 of 9

7 Trading Idea Summary Table Stocks recommended Target (MYR) Date Recom. Company Bloomberg Ticker Stock Code Technical Call T1 T2 Recommended Price (MYR) Last Price (MYR) Comments Stop-Loss (MYR) 03-Feb-12 HARTA HART MK 5168 ST Buy Buy Feb-12 HARVEST HAR MK 9342 Take Profit Sell NA 31-Jan-12 MHB MMHE MK 5186 Take Profit Sell NA 30-Jan-12 GAMUDA GAM MK 5398 Accumulate Buy Jan-12 MPHB MPU MK 3859 ST Buy Buy Jan-12 MKH MKH MK 6114 Accumulate Buy Jan-12 PERWAJA PERH MK 5146 Take Profit Sell NA 17-Jan-12 MHB MMHE MK 5186 Take Profit Sell NA 12-Jan-12 HAPSENG HAP MK 3034 Accumulate Buy Jan-12 IJMPLNT IJMP MK 2216 Accumulate Buy Jan-12 MUDA MUD MK 3883 ST Buy Buy Jan-12 SOP SOP MK 5126 ST Buy Buy Jan-12 UEMLAND ULHB MK 5148 Take Profit Sell NA 04-Jan-12 IGB IGB MK 1597 ST Buy Buy Stocks Hit T1/T2 or Stop-loss Target (MYR) Date Issued Company Bloomberg Ticker Stock Code Technical Call T1 T2 Recommended Price (MYR) Closed out Price (MYR) Comments Stop-Loss (MYR) 16-Jan-12 HARTA HART MK 5138 ST Buy Took T Dec-11 ANNJOO AJR MK 6556 Take Profit EXPIRED NA 19-Dec-11 BOILERM BMHB MK 0168 ST Buy EXPIRED Jan-12 BOXPAK BPAK MK 6297 Accumulate Took T Jan-12 GTRONIC GTB MK 7022 Accumulate Took T Jan-12 UNISEM UNI MK 5005 Accumulate Took T Jan-12 MAYBULK MBC MK 5077 ST Buy Took T Dec-11 MKH MKH MK 6114 Accumulate EXPIRED Dec-11 TWSPLNT TWPB MK 6327 ST Buy EXPIRED Dec-11 BOILERM BMHB MK 0168 Accumulate EXPIRED Dec-11 KFIMA FIMA MK 6491 ST Buy EXPIRED Dec-11 VS VSI MK 6963 ST Buy Took T Dec-11 IGB IGB MK 1597 ST Buy Took T Dec-11 BOXPAK BPAK MK 6297 ST Buy Took T Dec-11 IGB IGB MK 1597 ST Buy Took T Dec-11 BOXPAK BPAK MK 6297 ST Buy Took T Dec-11 TDM TDM MK 2054 Accumulate EXPIRED Dec-11 AEONCR ACSM MK 5139 Accumulate EXPIRED Nov-11 TSH TSH MK 9059 ST Buy EXPIRED Nov-11 TENAGA TNB MK 5347 Take Profit EXPIRED NA Page 7 of 9

8 APPENDIX 1 Definition of Ratings Maybank Investment Bank Research uses the following rating system: FIRM BUY (TECHNICAL) ACCUMULATE (TECHNICAL) STRONG SELL (TECHNICAL) TAKE PROFIT (TECHNICAL) SHORT-TERM BUY (TECHNICAL) Applicability of Total return is expected to exceed 20% in the next 2 months. Total return is expected to be above 10% in the next 1 month. Total return is expected to drop below 20% in the next 2 months. Total return is expected to drop below 10% in the next 1 month. Total return is expected to be between 5-10% in the next 1 month. However, the upside may or may not be sustainable. Technical ratings are purely based on price and volume-related indicators extracted from Bursa Malaysia Securities Berhad, explained in the Glossary below. Featured securities are selected as and when their technical indicators appear convincing for an investment action. Maybank Investment Bank Bhd expressly disclaims any obligation to update or revise its to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events. Glossary of key technical terms COMMODITY CHANNEL An oscillator used in technical analysis to help determine when an investment vehicle has been INDEX (CCI) overbought and oversold. It quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. DIRECTIONAL MOVEMENT INDEX (DMI) MOVING AVERAGE CONVERGENCE DIVERGENCE (MACD) OSCILLATOR RELATIVE STRENGTH INDEX (RSI) STOCHASTIC Source: Investopedia.com An indicator for identifying when a definable trend is present in an instrument, i.e. the DMI tells whether an instrument is trending or not. A trend lagging momentum indicator that shows the relationship between two moving averages of prices. A signal line is also plotted on top of the MACD to function as a trigger for buy and sell signals. A technical analysis tool that is banded between two extreme values and built with the results from a trend indicator for discovering short-term overbought or oversold conditions. As the oscillator approaches the upper extreme value the stock is overbought, while in the lower extreme it is oversold. A technical momentum indicator that compares the magnitude of recent losses to determine overbought and oversold conditions of the stock. The stock is overbought (overvalued) once the RSI approaches the 80-level. Meanwhile, the stock is oversold (undervalued) as the RSI approaches the 20-level. A technical momentum indicator that compares a security s closing price to its price range over a given time period. The stock is overbought when the indicator is above 80 and oversold when it is below 20. Disclaimer This report is for information purposes only and under no circumstances is it to be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that income from such securities, if any, may fluctuate and that each security s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. 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9 APPENDIX 1 Additional Disclaimer (for purpose of distribution in Singapore) This report has been produced as of the date hereof and the information herein maybe subject to change. Kim Eng Research Pte Ltd ("KERPL") in Singapore has no obligation to update such information for any recipient. Recipients of this report are to contact KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law. As of 8 February 2012, KERPL does not have an interest in the said company/companies. Additional Disclaimer (for purpose of distribution in the United States) This research report prepared by Maybank Investment Bank Berhad is distributed in the United States ( US ) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Kim Eng Securities USA, a brokerdealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Kim Eng Securities USA in the US shall be borne by Kim Eng. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. This report is not directed at you if Kim Eng Securities is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Kim Eng Securities is permitted to provide research material concerning investments to you under relevant legislation and regulations. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply if the reader is receiving or accessing this report in or from other than Malaysia. As of 8 February 2012, Maybank Investment Bank Berhad and the covering analyst do not have any interest in in any companies recommended in this Market themes report. Analyst Certification: The views expressed in this research report accurately reflect the analyst's personal views about any and all of the subject securities or issuers; and no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the report. Additional Disclaimer (for purpose of distribution in the United Kingdom) This document is being distributed by Kim Eng Securities Limited, which is authorised and regulated by the Financial Services Authority and is for Informational Purposes only.this document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers. Published / Printed by Maybank Investment Bank Berhad (15938-H) (A Participating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, Kuala Lumpur Tel: (603) ; Fax: (603) Stockbroking Business: Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof Kuala Lumpur Tel: (603) ; Fax: (603) Page 9 of 9