OSK, maintains their UNDERWEIGHT call on the Technology sector as we expect sub par growth in the seasonally sturdy 3Q of the year. Although valuations have retraced to as low as below net book value for some, we believe it is still premature to attempt bottom-fishing with firm recovery unlikely until 2012 given the current global macro outlook.
Despite the recent sharp spike in USD against RM which could help to lift earnings given the export nature of local technology manufacturers, OSK upholds their negative view on the sector due to the weakness in end-consumer demand for HDDs amidst rising demand for solid-state drives and the impact from floods in Thailand where these companies presences.
Below are the target prices/fair value and ratings for selected technology stocks.
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Fraser Institute which is based in Canada recently releases “2011 Economic Freedom of the World Annual Report “. The ranking is based on 5 areas to measure the economic freedom for each country.
The areas are Size of Government (Expenditures, Taxes, and Enterprises), Legal Structure and Security of Property Rights, Access to Sound Money, Freedom to Trade Internationally and Regulation of Credit, Labor, and Business.
In 2011, Malaysia drop to 78th from 77th in 2010. The drop mainly contributed by big government’s involvement in the economy (GLCs). The ideal is more involvement from private sector. On the other hand, Malaysia score very well in Regulation of Credit, Labor, and Business. The 2011 reports are based on data compiled in 2009.
The table below is the 2011 Economic Freedom ranking.
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2012 budget is focussing more on the ‘Rakyat’ rather than infrastructure development. OSK see this as being unexciting for the Malaysian equity market. Measures to assist the lower income group include one-off cash payments, the abolishment of school fees and a hike in civil servant wages. Elsewhere, the re-imposition of income tax on shipping companies and the hike in RPGT should hit the shipping and property sectors mildly.
Potential beneficiaries mainly in education, finance and Sin stocks. In terms of beneficiaries, given Budget 2012’s somewhat subdued impact on the broader market, OSK see winners in Brewery & Tobacco companies, which did not get slapped with a tax hike, and education companies given the incentives offered for more schools and vocational training.
Below are the target prices and ratings for top 5 stocks to benefits from 2012 budget..
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Prime Minister Datuk Seri Najib Razak, who is also Finance Minister, unveiled 2012 budgets at the Dewan Rakyat on Friday 7th October 2011.
The RM232.8 Billion budgets are allocated to implement all government development plans, focusing on the well-being of the rakyat. RM181.6 Billion is for operating expenditure and the remaining RM51.2 Billion is for development expenditure.
The Government’s budget deficit estimated to improve to 4.7% next year compared with the current 5.4%. On top of that, the economic growth was projected to be between 5% and 6% for 2012, with this year’s growth expected at 5% to 5.5%.
The following are Budget 2011 highlights for Personal Finance and Investment.
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Pelaburan Hartanah Bhd (PHB), has announced a final interim dividend of 3.25 sen per unit for Amanah Hartanah Bumiputera Unit Trust Fund (AHB) for the period of six months ended 30th September 2011 which also its financial year end.
The total dividend for year 2011 is 5.42 sen for 10-month periods. It would translate to 6.5 percent annual return and comparable with the funds managed by Amanah Saham Nasional Berhad.
The income distribution is tax-exempted and will be directly credited into the unit holders associated bank accounts on 19th October 2011.
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