OSK’s earlier suspicion that bearish view on the market may not survive February turned out correct as the KLCI took the cue from the DJIA to rally past its resistance level at 1565 pts for a 3.2% gain in the month.
Nonetheless, OSK remains unconvinced that this liquidity fueled rally is supported by strong fundamentals and still see a risk of market correction.
However, OSK set year-end KLCI target at 1620 pts and upgrade our market call to NEUTRAL. OSK recommends a more balanced portfolio that includes Defensives in the Consumer and Telco sector as well as Cyclicals in the Construction, Oil & Gas and Banking sectors as Top Buys given the improved news flow going forward.
The table below is the target price for OSK’s March 2012 top picks.
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.
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 November, given the previous month’s sharp rally, OSK expects some pullback in global markets, with Malaysia being no exception.
Barring the announcement of a General Election, OSK remains defensive on the Malaysian market and would advocate a BUY only if the KLCI retraces towards 1,300 pts, while we may call a SELL if the market heads towards 1,533 pts. Maintain NEUTRAL for now.
The table below is the target price for OSK’s November 2011 top picks.
While the destruction arising from the floods is undoubtedly major, it may indirectly benefit some Malaysian companies. Companies involved in tourism and healthcare in Malaysia may benefit from traffic diverted from Thailand, a trend that may continue even after the flood waters recede. Consumer companies may get a short term lift from increased exports to Thailand.
On the other hand, automotive and technology companies are the biggest losers.
Below are the target prices/fair value and ratings for stocks to benefit.