CIMB Research maintains Overweight on Malaysia, end-2103 KLCI target of 1,850

CIMB Research maintains Overweight on Malaysia, end-2103 KLCI target of 1,850
Business & Markets 2013
Written by theedgemalaysia.com
Tuesday, 04 June 2013 08:36


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KUALA LUMPUR (June 4): CIMB Research has maintained its Overweight position on Malaysia and its end-2013 FBM KLCI target of 1,850 points, and said May’s results season was encouraging in that earnings cuts were the mildest in four quarters.

In a note June 3, CIMB Research said this suggested that it may be closer to the end of three years of earnings disappointments.

The research house said the stock market’s buoyancy after elections could mark the start of a virtuous cycle.

“No changes to our Overweight position on Malaysia and end-2013 KLCI target of 1,850 pointts, set at a 10% premium to the KLCI’s 3-year moving average P/E (or forward P/E target of 15.6x).

“Market catalysts are expected from funds inflows and improved earnings prospects while our preferred sectors remain potential Economic Transformation Programme winners,” it said.

The research house said May’s results season was encouraging.

“Although our earnings revision ratio declined from 0.47x in Feb to 0.42x, a lower 19% of the stocks in our universe missed expectations versus 35% during the Feb season.

“Some 8% came in above compared with 16% in Feb, while a massive 73% met expectations (49% previously). Nine sectors disappointed (14 previously), while four (six previously) beat expectations,” it said.

CIMB Research said many companies that beat expectations were big-cap heavyweights such as PChem, IOI, MISC, Maxis, Telekom and Tenaga.

10 % upside since election time