Tuesday, May 8, 2012

Bursa Malaysia Defensive Picks by Hong Leong Bank 2012

Market now hit our targets as well as at the tail-end of our earlier envisaged peak in early 2Q. Thus, time to reevaluate the risk-reward profile for the next course of action.

True to our view that the market is expected to peak in early 2Q and our analysis of risks and rewards, we believe that the tide has turned. We believe that there are limited catalysts to propel the FBM KLCI significantly above our revised year-end target of 1,580 and our earlier technical target of 1,600. However, re-emergence of uncertainties in EU coupled with concerns about slowdown in China, our fiscal position and general election as well as negative technical readings suggest that there could be more downside risks vis-a-vis potential returns.

While we believe there are more downside risks vis-a-vis upside potential, we also believe that equity markets as a whole is not likely to revisit the fear level experienced in 2011. This is premised on higher liquidity level (after the massive injections in Dec 11) and the correction in 2011 (though seems large in quantum) was just short of the Fibonacci retracement level of 38.2% given that the market was on a slightly more than two years of rally. Coupled with recent changes to our forecasts (especially on Tenaga) and consensus forecasts, we have raised our year-end target slightly to 1,580 (based on 14x 2013 earnings) from 1,555 (13x).

Stock NameRef DateRef PricePrice DiffLastRangeOpenChangeVolumeNote
BSTEAD02/05/20125.23- - 5.195.20-0.0149,500
BJTOTO02/05/20124.32-0.014.314.30 - 4.344.30+0.01131,500
CBIP02/05/20122.84+ -,500
CMMT02/05/20121.44+0.011.451.44 - 1.451.43+0.02100,000
GENM02/05/20123.84-0.033.813.81 - 3.853.83-0.02151,100
AIRPORT02/05/20125.79-0.085.715.71 - 5.725.79-0.0810,000
MAXIS02/05/20126.12+ - 6.156.14-0.01813,100
MAYBANK02/05/20128.63+0.098.728.71 - 8.768.75-0.031,478,500
TM02/05/20125.39+0.045.435.42 - 5.485.47-0.041,508,100
Updated: 9 May 2012

Source: Hong Leong Investment Bank Research - May 2012 

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