KUALA LUMPUR: CIMB Equities Research is maintaining its Overweight stance on the markets despite the lower FBM KLCI target of 1,580 for end-2011 and end-2012 target of 1,660.
It said on Monday, Sept 5 that led by Tenaga's shocking losses, earnings upsets were the order of the day during the 2Q11 results season.
'The earnings upgrades/downgrades ratio deteriorated from 0.6 times to 0.3 times, the weakest in six years, and CY11-12 EPS numbers were cut by 5%-6%.
'This, plus a slide in the market's three-year moving average P/E and our target basis from 14.5 times to 14.1 times, reduces our end-2011 KLCI target from 1,700 to 1,580 points. We also introduce our end-2012 target of 1,660, based on 13.4 times P/E, a 5% discount to the three-year moving average P/E,' it said.
CIMB Research said despite the lower index targets, Malaysia remains an Overweight as it believes that the general election is likely to be held later rather than sooner.
'We do not believe that the bull market is over as sharp pullbacks of 15%-20% in an upcycle are par for the course,' it said.
It said on Monday, Sept 5 that led by Tenaga's shocking losses, earnings upsets were the order of the day during the 2Q11 results season.
'The earnings upgrades/downgrades ratio deteriorated from 0.6 times to 0.3 times, the weakest in six years, and CY11-12 EPS numbers were cut by 5%-6%.
'This, plus a slide in the market's three-year moving average P/E and our target basis from 14.5 times to 14.1 times, reduces our end-2011 KLCI target from 1,700 to 1,580 points. We also introduce our end-2012 target of 1,660, based on 13.4 times P/E, a 5% discount to the three-year moving average P/E,' it said.
CIMB Research said despite the lower index targets, Malaysia remains an Overweight as it believes that the general election is likely to be held later rather than sooner.
'We do not believe that the bull market is over as sharp pullbacks of 15%-20% in an upcycle are par for the course,' it said.
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