Stock Picks – 2011 Outlook & Small / Big Cap Top Picks

Continue to see the market rallying on 3 Factors. After rising more than 20% at its highest in 2010, we still see the Malaysian market rallying to new highs in 2011 with our KLCI fair value at 1648 points.

We believe this rally will be driven by 3 key factors:

  1. Still respectable Earnings at 16% growth for 2011 with most sectors expected to record at least 10% growth. Banks and Domestic consumption driven sectors such as Aviation, Healthcare and Property should see decent quality earnings with little downside surprises. We expect earnings surprises and upgrades to support the market in 2011.
  2. A wave of Election related news which will excite the Construction, Property and Oil & Gas sectors. Ahead of General Elections which we expect in 2011, we see a slew of infrastructure related news such as the start of the KL MRT, the extensions for the LRT and the various property development projects around KL.
  3. A flood of liquidity from Quantitative Easing. While the continued printing  of money does justify longer term fears for the global economy, in the medium term, we see a flush of liquidity coming to Asia with its still higher growth rates.

Below are top picks for 2011

Big Caps

Stocks Price (RM) Target (RM) Market Cap (RMm) Rating
Maybank 8.49 10.07 64410.0 Buy
CIMB Group 8.55 9.77 62286.9 Buy
Axiata 4.72 5.80 37580.9 Buy
Genting 10.82 13.81 37277.5 Buy
AirAsia 2.57 3.32 8255.5 Buy

Medium & Small Caps

Stocks Price (RM) Target (RM) Market Cap (RMm) Rating
Kencana 2.34 2.57 3417.2 Buy
SP Setia 5.73 6.38 5277.2 Buy
QL Resources 5.62 6.88 2252.5 Buy
KPJ Healthcare 3.70 4.62 2053.1 Buy
Sunway 2.25 2.72 1215.9 Buy

Source : OSK Research

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