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We continue to maintain our OVERWEIGHT call on the Auto sector, which will continue to remain favorable next year pointing that valuations remain attractive. Our top pick for the sector is now UMW, given the stock’s laggard performance and in view of the turnaround in its oil and gas bolstering FY11 profitability. Nevertheless, we continue to like Tan Chong in view of its earnings trajectory over the next 3 years as it transforms into a regional player from its exposure in the Indochina and BIMP-EAGA market. On the autoparts side, Delloyd Ventures is our favorite pick in favour of its Indonesian exposure from both the autoparts and plantation division, of which, valuation for the latter remains undemanding despite the recent rally in CPO prices.
Below are the target prices for automotive sector.
| Stock | Price (RM) | Target (RM) | Market Cap (RMm) | Rating |
|---|---|---|---|---|
| TCHONG | 5.60 | 7.29 | 3763.2 | Buy |
| EPMB | 0.52 | 0.82 | 86.3 | Buy |
| NHFATT | 2.28 | 2.85 | 171.4 | Buy |
| PROTON | 4.80 | 6.62 | 2636.2 | Buy |
| UMW | 6.80 | 8.38 | 7826.6 | Buy |
| MBM | 3.10 | 5.00 | 752.3 | Buy |
| DELLOYD | 3.18 | 3.90 | 295.8 | Buy |
Source : OSK Research
Related posts:
- OSK Automotive Sector Stock Picks, May 2011
- Stock Picks – Construction Sector – November 2010
- Stock Picks – Property Sector – November 2010
- OSK Automotive Sector Stock Picks, Jul 2011
- Stock Picks – Automotive Sector – January 2011
- Stock Picks – Steel Sector – September 2010
- OSK Plantation Sector Stock Picks, Sep 2011
- Stock Picks – Steel Sector – June 2010
- Stock Picks – Plantation Sector – December 2010
- Stock Picks – Plantation Sector – February 2011
