SapuraKencana

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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While markets did not rally as much as expected in 1H2011, OSK are keeping our view of an election-fuelled rally towards year-end, bringing the KLCI to 1680-pt target.

Banks, Oil & Gas, Construction, Property & Healthcare/Media remain OSK Preferred sectors. OSK Top Buys are generally extracted from these sectors.

OSK note that their Top Buys are not cheap but they continue to promote these stocks on account of their lower risk profile and the cautious mood in the market.

Below are OSK Top Buys for 2H2011

Top Buys for Big Caps Stocks

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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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