Petronas Chemicals

Bursa

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.

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OSK still foresees potential for further market retracement, although a possible deep recession can probably be averted. However, OSK maintains 2012 KLCI fair value at 1466 pts seeing a slow recovery forward unlike in 2009.

OSK is recommending Telcos, Consumer, Healthcare and Media as defensive sectors. With the market approaching 1350pts non recessionary bottom, OSK believes some Bottom “Nibbling” would be reasonable, although aggressive bottom fishing is not recommended.

The table below is the OSK top 10 stocks for a bottom ‘nibbling’ including fair value, dividend yield & rating.

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O&G

OSK remain OVERWEIGHT on the O&G industry and Buy calls on both Coastal and Dayang.

OSK like Coastal for its mergers and acquisition story. OSK re-iterate their view that it would be a matter of time before Coastal finds itself a suitable partner for M&A purposes.

OSK also like Dayang due to it’s stable, recurring income. This is because oilfield and platform maintenance are all-year-round jobs and having a slice of this business pie is always better than getting one-off jobs as they provide assurance of future earnings sustainability

Below are the target prices and ratings for selected Oil & Gas stock.

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O&G

OSK remain OVERWEIGHT on the O&G sector given the numerous opportunities to be mined by O&G service providers, spurred on by Pengerang’s development.

Two recent developments are;

  • Dialog Group signed a Development Cum Joint Venture Agreement (DJVA) with the Johor State Government granting it the right to start land reclamation works in Pengerang in Malaysia’s Johor state, and use the reclaimed land for the construction of a Deepwater O&G Terminal.
  • Petronas announced that its USD20bn Refinery and Petrochemical Integrated Development (RAPID) project, also to be located in Pengerang, will house an oil refinery, petrochemical plants and possibly, a LNG regas terminal.

Below are the target prices and ratings for selected Oil & Gas stock.

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FTSE Bursa Malaysia KLCI Index (FBMKLCI) component stocks is due for mid-year review. The result will be out soon and it will be effective starting from 17th June 2011.

In this review, MMHE Holdings was replacing Malaysian Airline System (MAS), which has fallen below the Top 40 stocks by market cap in Malaysia.

The table below are the new component stocks for FBMKLCI, its Adjusted Market Capitalization, Weightage and Investiblity Weight.

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