Friday, June 4, 2010

Maybank IB cuts FBM KLCI year-end target to 1,375

KUALA LUMPUR: Maybank Investment Bank Bhd on Wednesday, June 2 trimmed its 2010 year-end target for FBM KLCI from 1,410 to 2.5% to 1,375 or 2.5% lower, representing 16 times 2010 earnings.

In a note Wednesday, Maybank IB said the 1Q 2010 earnings season revealed a deceleration in earnings growth and fewer earnings surprises.

Consumer and auto earnings were unusually strong, it said.

"We have revised index earnings growth up 1.9 percentage points, up to 18.2% in 2010, and 11.8% in 2011.

"FRS 139 has had little impact on earnings or valuation. We are trimming our 2010 year-end target to 1,375 (-2.5%), representing 16 times 2010 earnings," it said.

Maybank IB said selected sectors and stocks remain excellent value, and that one of the themes that had yet to be priced in is one of growth in consumer spending.

"We are more positive on consumer names such as F&N, Carlsberg, KFC Holdings, Genting, Media Prima, Proton and QL Resources. Other top picks are in CONSTRUCTION [] (WCT, Hock Seng Lee), oil & gas (SapuraCrest, MISC), RHB Capital and Hartalega.

"We believe many recovery themes have run their course and in a non-conducive global environment, the market will attempt but fail to regain its upward trend. Equity returns would then be more a function of stock-picking than sector preference/allocation," it said.

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