Written by HwangDBS Vickers Research
Wednesday, 03 March 2010 11:05
An excerpt of a March 2 report by HwangDBS Vickers Research
— There were more company-specific positive surprises in 4Q09. We raised our universe earnings by 2.1% for 2010 and 3.3% for 2011.
— We expect further weakness in FBM KLCI in 1H10 before it resumes its upward trend in 2H10. Our end-2010 FBM KLCI target is 1,448.
— Stock-picking remains our preferred strategy. Our picks include potential beneficiaries of government initiatives to improve investability, accelerated mega projects and sale of government land.
Key themes to look out for would include further government initiatives to improve investability, acceleration of mega projects and sale of government land.
Apart from further government linked companies (GLCs) stake sales, initiatives to improve investability could involve privatisation of government entities and M&As. CIMB (Buy; TP: RM15.20) is a potential beneficiary via listings, advisory and fund-raising activities.
For accelerated mega project awards, we like IJM Corp (Buy; TP: RM6.00) and Gamuda (Buy; TP: RM4.20).
Although focus to date has been on the Low Cost Carrier Terminal, we expect more newsflow on the Interstate Water Transfer and LRT extensions in subsequent months.
As part of the government’s measure to unlock land value/raise funds and stimulate growth, we expect more government land sales/privatisation deals.
GLCs such as MRCB (Buy; TP: RM1.80), which is 30%-owned by EPF, and players with strong balance sheets and development track records such as SP Setia (Buy; TP: RM4.80), could be strong contenders for these projects.
We like Genting Malaysia for its attractive valuation. Ex-cash, the stock’s resilient Malaysian gaming business is trading at only nine times 2011 EPS. It remains one of the cheapest gaming stocks in the world.
For yield-seeking investors, our picks are Axis REIT (Buy; TP: RM2.15), YTL Power (Hold; TP: RM2.30), Public Bank (Hold; TP: RM12.20), Telekom (Buy; TP: RM3.95), Digi.Com (Hold; TP: RM21.60) and PLUS Expressway (Buy; TP: RM4.00) — where we expect dividend payouts to remain high.
