OSK foresees that the market could be upgraded to NEUTRAL if markets continue to rally in the first half of February. An upgrade would put the spotlight back on Construction and Oil & Gas stocks with some spillover to Financials.
For now, OSK remains upbeat on Consumer stocks with expectations of strong results in an otherwise lacklustre results season. Top Buys for February are KPJ, MBSB, QL, Media Chinese and Padini.
The table below is the target price for OSK’s February 2012 top picks.
2011 advertising expenditure (adex) grew less than expected, largely due to softer growth on the TV segment. However, other media platforms performed well. The newspaper segment enjoyed robust advertising spending by retailers, hypermarkets, telcos and property developers, driven by improving consumer sentiment.
OSK maintains OVERWEIGHT on the sector as they belief that 2012 will be an exciting year for media players in light of the upcoming 2012 Olympics and Euro 2012, as well as the impending General Election. Hence, OSK is keeping their adex growth forecast at 2x of GDP growth forecast of 5.2% with Media Chinese as top pick.
OSK also continues to believe that domestic consumer spending will remain healthy given the Government’s ongoing initiatives to turn the country into a highincome nation by 2020.
Below are target price and rating for selected stocks in Media Sector.
OSK maintained NEUTRAL on the construction sector despite expectations of stronger contracts in 2012. The elevated portion of the MRT SBK line would already make up for all domestic jobs awarded
Given that the construction sector has a relatively high beta, OSK advised to remain cautious for now. In the last three major market down cycles in 1997-98, 2000-01 and 2008-09, the KLCON Index underperformed the KLCI by 11-15%. OSK’s top large cap pick is Gamuda (BUY, FV: RM3.94) while for the small caps is KimLun (BUY, FV: RM2.15).
Below are the target price, market capitalization and rating for selected stocks in construction sector.
OSK has a Neutral outlook on the Malaysian market going into 2012 as the combination of uncertain growth outlook in the US and Asia coupled with a possible recession in Europe cloud the prospects for strong earnings growth locally.
OSK advises investors to stay cautious into mid 2012 and focus on Defensive sectors such as Consumer, Telco, Healthcare and Media with KLCI fair value of 1466 pts.
Investors are advised to Trade on Cyclical sectors such as Banks, Oil & Gas and Construction as the market dips or rallies strongly. The trading strategy to adopt is, buy when the KLCI falls towards the 1300 pts and sells when the KLCI rises towards the 1500 pts.
The tables below are OSK’s top Big/Mid/Small Caps Stocks with the target price & rating for 2012.
For December, with both China and Thailand easing monetary conditions and 6 Central Banks in OECD countries coming together to boost liquidity, it appears that governments worldwide want to tackle global economic woes with a united front.
As such, there could be a modest year-end rally in December, both globally and in Malaysia. OSK advocate a little short-term risk-taking while maintaining their medium-term conservative stance.
The table below is the target price for OSK’s December 2011 top picks.