In The Edge FD: Harvest Court's Chan emerges in Naim Indah
Groupon loss, weak sales clobber shares
UN's Ban says Arab League to revive Syria mission
Greek party leaders fail to sign off on bailout
In The Edge FD: AirAsia X eyes IPO in 2H
In The Edge FD: MMC-Gamuda JV to earn RM480m, assuming project cost RM8 bn
Categories
| AmResearch raises KLCI target to 1,190 |
| Written by Surin Murugiah | |||
| Wednesday, 24 June 2009 00:01 | |||
|
At a rebound of 17% in 2010, the KLCI's earnings were expected to expand by more than two times its trend-average earnings growth rate of 7% post 1998-Asian crisis, it said. The key risk was renewed concern over inflation with an associated upturn in interest rate cycle, putting an end to net liquidity creation. "This risk, however, is not expected to be material in the next six to nine months," it added. AmResearch noted that the two themes for 2010 would be infrastructure spending and reflation. "Recession should end by 4Q09 but cyclical transition towards recovery may be a fragile progression as exports are still contracting — though at a slower pace. "Faster return to growth must be anchored by domestic demand via a resurgence of public spending. To ensure continuity, we expect the administration under Prime Minister Datuk Seri Najib Razak to accelerate infrastructure spending as cornerstone for growth in 2010," it said. Recent liberalisation of steel manufacturing licences and reduction in import duties hinted of an imminent roll-out of large infrastructure projects, it said. AmResearch said after rebounding 26% off the lows in March 2009, the KLCI was now negotiating a mid-cycle correction. "We continue to like reflation trades — oil and gas (O&G), plantation, property and steel — given demand kicker from improved prospects of an economic recovery, a weak US dollar and ample liquidity," it said. AmResearch said its top 10 buys were IJM Corporation Bhd, Gamuda Bhd, Ann Joo Resources Bhd, IJM Land Bhd, SapuraCrest Petroleum Bhd, Kencana Petroleum Bhd, IOI Corporation Bhd, Bumiputra-Commerce Holdings Bhd and Malaysian Bulk Carriers Bhd. Sectorally, AmResearch said construction would deliver the strongest earnings growth of 75% in 2010, anchored by the earnings growth at Gamuda and WCT. The research house expects earnings turnaround for the automotive sector in 2010. "After a steep contraction of 56% in 2009, we are forecasting earnings for the auto sector to rebound strongly by 62% in 2010. We forecast a 43% earnings growth for UMW Holdings and expect Proton to return to the black at a forecast RM83 million net profit for FY11 (YE March) versus net loss of RM69 million in FY10F," it said. On the banking sector, AmResearch expects earnings to rebound by 15% in 2010 after a 7% fall in 2009. It retained its overweight call on commodities, particularly plantation and O&G, as it was positive on plantations given that demand from China would improve, underpinned by the festive period in 3Q09. It said rising crude oil prices had resulted in biodiesel being attractive again, adding that this, coupled with government mandates for green fuel, would help absorb any rise in soybean or corn inventory in the US. On the property sector, AmResearch said residential demand was returning with buying interest boosted by the low upfront entry costs embedded in the various deferred downpayment and interest-free programmes on offer from developers.
|
|||
|
|