The FBM KLCI is a tradable index comprises of the 30 largest companies in the Bursa Malaysia by market capitalization. The index’s component stocks are due for second 2011 revision on 8th December.
Based on the recent data, PLUS and Gamuda are expected to drop from FBM KLCI components. PLUS will be dropped due to privatization.
On the other hand, Gamuda will be dropped because it is now the 37th largest company by market capitalization. This is because as per FTSE regulations, if the counter no longer in the top 35th, it should be dropped from the FBM KLCI.
Based on the table below, to replace PLUS and Gamuda, 3 most likely candidates are Nestle, AirAsia and Bumi Armada.
August MPOB statistics were within expectations with stock levels easing off as production saw a weaker month. Going forward, ECMLibra expects that production and exports are going to pick up concurrently, hence leading us to maintain our Neutral call. ECMLibra do note that the recurrence of a La Nina and also supply concerns in the soybean market could be re-rating catalysts for the sector.
ECMLibra has Trading Buy calls on all stocks under coverage except KLK. These companies currently trade below their historical average P/E multiples while CPO prices are at the RM3,000/mt levels and improved production is giving rise to strong earnings.
Selected Oil & Gas Stocks Fair Value, Target Price & Dividend Yield.