Although the market met expectations and rallied to an all-time high closing in March, it may be dogged by some uncertainties and potentially retrace in April.
This, however, has not deterred investors from scouring the market for Election-related BUYs.
For April, OSK Top Buys are stocks with a specific catalyst during the month, namely TNB, which should report improved results this month, MMC with the upcoming listing of subsidiary Gas Malaysia, Kencana with its upcoming merger with SapuraCrest, Dialog which has been a noteworthy laggard and Padini, for which a wider coverage and better liquidity should boost sentiment.
The table below is the target price for OSK’s April 2012 top picks.
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Although 2011 was the best year ever for most plantation companies, their December quarter results were a mixed bag.
OSK continue to maintain Neutral stance on the sector. Although soybean and palm oil prices have strengthened of late, it is due to the threat of lower yields in the upcoming 1 or 2 months. For prices to sustain their run-up, demand has to stabilize and pick up, which have yet to see.
Within the sector, OSK continue to like Sarawak Oil Palms despite their strong stock price performance. These are well run plantations with more organic production growth going forward.
Below are the target prices and ratings for selected plantation stock.
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OSK’s earlier suspicion that bearish view on the market may not survive February turned out correct as the KLCI took the cue from the DJIA to rally past its resistance level at 1565 pts for a 3.2% gain in the month.
Nonetheless, OSK remains unconvinced that this liquidity fueled rally is supported by strong fundamentals and still see a risk of market correction.
However, OSK set year-end KLCI target at 1620 pts and upgrade our market call to NEUTRAL. OSK recommends a more balanced portfolio that includes Defensives in the Consumer and Telco sector as well as Cyclicals in the Construction, Oil & Gas and Banking sectors as Top Buys given the improved news flow going forward.
The table below is the target price for OSK’s March 2012 top picks.
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As jobs visibility improves, 2012 should generally be a better year for the Malaysian O&G industry compared to 2011. This year and next year’s focus should still be on marginal oilfields. OSK expects the overlap of marginal oilfield and deepwater activities to boost O&G services providers’ utilization rates to their peaks.
The development of onshore O&G projects would also continue to hog the headlines moving forward.
OSK Maintains Overweight on the sector, with Kencana Petroleum and Dialog Group being the top picks.
Below are the target prices and ratings for selected Oil & Gas stock.
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As the much anticipated 13th general election draws near, OSK see the Government dishing out more contracts to create a “feel good” climate in the run-up to the polls.
News relating to mega projects such as the KL MRT, WCE, EDT and potentially SCORE, should gain traction and hence present investors – who are increasingly becoming more upbeat – with trading opportunities aplenty.
As such, OSK upgrade our sector call from Neutral to OVERWEIGHT as the rush of positive news in the next few months is likely to fire up the sector to new highs this year.
Below are the target price, market capitalization and rating for selected stocks in construction sector.
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