OSK still foresees potential for further market retracement, although a possible deep recession can probably be averted. However, OSK maintains 2012 KLCI fair value at 1466 pts seeing a slow recovery forward unlike in 2009.
OSK is recommending Telcos, Consumer, Healthcare and Media as defensive sectors. With the market approaching 1350pts non recessionary bottom, OSK believes some Bottom “Nibbling” would be reasonable, although aggressive bottom fishing is not recommended.
The table below is the OSK top 10 stocks for a bottom ‘nibbling’ including fair value, dividend yield & rating.
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Malaysia already one of the world’s stronger performers so far in 2011. OSK believe the good run will continue in July and hence advocate the sectors linked to the ETP, namely Banks, Construction, Property and O&G, as investment ideas for the month.
OSK also continue to see the local market climb towards year-end target of 1680 pts, although the 1600-pt psychological resistance might be difficult to break before Budget 2012 which to be unveiled on 7 Oct.
For July, OSK top picks are from Banking, Construction, Property, Oil & Gas and Steel
sector.
The table below are the target price for OSK’s July 2011 top picks.
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OSK believe the biggest gainers from the current upcycle are the mid- to high-end developers, particularly those with focus in developing landed properties and also have significant exposure in high growth areas.
As such, OSK top buys for the sector are UEM Land and SP Setia for mid- to large-cap property companies while Plenitude is top pick for small cap companies.
For the mid- to high-end residential properties, OSK top buys include BRDB and HunzaProp.
Below are the target prices and ratings for selected property stock.
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While markets did not rally as much as expected in 1H2011, OSK are keeping our view of an election-fuelled rally towards year-end, bringing the KLCI to 1680-pt target.
Banks, Oil & Gas, Construction, Property & Healthcare/Media remain OSK Preferred sectors. OSK Top Buys are generally extracted from these sectors.
OSK note that their Top Buys are not cheap but they continue to promote these stocks on account of their lower risk profile and the cautious mood in the market.
Below are OSK Top Buys for 2H2011
Top Buys for Big Caps Stocks
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Given what may still be a lackluster broader market in June, OSK is focusing on a number of situational stocks that should see better newsflow during the month.
First up, UEM Land who will likely join the KLCI before end June. Second, KimLun Corporation which may see a pick up in newsflow on Iskandar Malaysia during the month. Next, Pos Malaysia which could see the sale of Khazanah’s stake completed in the 3rd week of June coupled with details of what DRB-Hicom plans to do with the company. Finally to round it off, 2 smaller banks, namely RHB Cap and Alliance Financial Group that should see sentiment on improved M&A rumours.
The table below are the target price for OSK’s June 2011 top picks.
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