OSK foresee that market will recover in May as they believe the 1Q2011 will at least meet downbeat expectations after the past 4 quarters of disappointments. With the potential for reasonable results, OSK believe the market will shift back to fundamentals and look back at Big Caps.
Strategy for the month would be to Buy fundamentally strong Big Caps as well as Trade on the Property sector as the newsflow here could resume after a couple of months hiatus.
OSK Top Buys are big caps with Maybank, CIMB, and Axiata are top banking & telcos stocks. AirAsia’s reintroduction of fuel surcharges and upcoming listing of its associates should help its share price while UEM Land is an excellent proxy for newsflow in the property sector
The table below are the target price for OSK’s May 2011 top picks.
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March 16, 2011
Stock Picks
AirAsia,
Automotive Sector,
Aviation Sector,
Oil & Gas Sector,
Petronas,
Petronas Chemicals,
SapuraKencana,
Steel Sector,
Timber Sector,
Utilities Sector
Japan hits by worst earthquake in over 100 years. The cost of reconstruction is estimated at USD161bn. The impact on Malaysia is generally limited given that Japan’s major ports and industrial areas have been spared. However, there would still be winners and losers among some sectors. For now, OSK maintain Buy into Weakness call on the Malaysian market with year-end target for KLCI of 1680 pts remain intact.
The Winners
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We expect the market to rebound in February as fundamentals remain intact and the 4Q2010 results reporting season should see analysts upgrading their earnings again. We like the Banks, Oil & Gas and Consumption related sectors for February. Our Top Buys center on companies anticipated to display strong profitability (CIMB, AirAsia), laggards (KPJ) and rebounding stocks (Kencana, SP Setia).
The table below are the target price for February 2011 top picks.
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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:
- 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.
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Given the success of recent bonus issues in fuelling a rally in share prices and the potential abolishment of ‘par value’ in the Malaysian capital market, we take a look at who else might be declaring bonus issues soon.
Based purely on the share premium to share capital ratio, where the higher the ratio the easier it is to issue bonus shares.
The table below are the list of higher potential bonus issuers among the top 75 companies by market capitalization.
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