Small, mid-cap stocks tipped to perform well
The composite index could reach 1,553 points in the first quarter of 2011, says Maybank Investment Bank head of retail research who picks the plantation and oil and gas sectors as his top sectorial choices.
SMALL and medium sized stocks are poised to be active in the first quarter of 2011, analysts say, as they expect the market to trade at levels never seen before in the first three months of the year.
"Fundamentally, the composite index could reach 1,553 points in the first quarter of 2011," said Lee Cheng Hooi, Maybank Investment Bank Bhd head of retail research during an interview with Business Times.
Lee, who is also one the country's prominent technical analysts, said on a technical basis, the charts indicate the index could touch the 1,533-point level in the first three months of this year.
The benchmark FTSE Bursa Malaysia 30 stock composite index closed at its highest level on November 10 last year at 1,528.01 points.
"Medium capitalised stocks will do very well this year," said Lee, picking the plantation and oil and gas sector as his top sectorial picks.
He also expects average trading volume for the first three months of 2011 to be between RM1 billion and RM1.2 billion a day for the overall market. His 12-month target for the market this year is 1660 points.
Lee's target is much lower than CIMB Research, which expects the market to top the 1,700-point mark.
"We rate Malaysia an 'overweight' and raise our end 2011 KLCI target from 1,610 points to 1,700 points," Terence Wong, its head of research, wrote in CIMB's the S.E.A Navigator report.
In the report, Wong also wrote that Eastern & Oriental Bhd could be a potential takeover target as it has a premium brand name and prime landbank in strategic locations.
CIMB's top property stock pick is SP Setia Bhd, which aims to sell RM3 billion worth of properties this year.
SP Setia also plans to launch the RM6 billion KL Ecocity project within the first two months of the year.
"The commercial component of the first phase is worth RM1 billion while the residential portion is worth RM800 million," the CIMB report stated.
Meanwhile, CIMB analyst Kelvin Goh wrote that Telekom Malaysia Bhd is a trading buy as there is a possibility of a special dividend at end-2010 or 2011 given the rising cash reserves of the company.
Mercury Securities Sdn Bhd head of research Edmund Tham expects small capitalised stocks to do very well in the run-up to the traditional Chinese New Year rally.
His top picks among the small-cap stocks are Fitters Diversified Bhd, the country's biggest fire-fighting company by sales and cocoa firm Guan Chong Bhd.
"Fitters is a small capitalised stock and its prospects in the coming year are good," said Tham.
The company has done some internal restructuring, which has resulted in it having three profit centres, namely the fire-fighting, property development and renewable energy units.
"When there is earnings growth from small capitalised companies, the market will react positively," he said.
Tham also expects the banking sector and construction companies to do well in the first three months of this year. Apart from the traditional picks such as MMC Corp Bhd, Gamuda Bhd, he also expects Bina Puri Bhd and WCT Engineering Bhd to do well.
Overall, in the immediate three month lifespan, Tham expects the market to inch up by as much as 5 per cent from the current level.
Alan Voon, chief executive officer of Warrants Capital Sdn Bhd, said in a strong market, often speculative interest will spill over to warrants, especially among retail investors.
"Most of the warrants have already run up, owing to the strong market last year, but there are still some potential hidden gems," said Voon.
His top warrant picks for the first three months of the year are Jotech Holdings Bhd and PJ Development Bhd, which should move after its mother share's five sen a share ex dividend date on December 30 2010.
"The Jotech warrants are almost in the money," said Voon, noting that upon Jotech's planned acquisition of two plantation assets for about RM28 million, it will be the cheapest plantation play in the country.
"The mother share is trading at about 10 sen, while the conversion rate of the warrants to the mother share is only 13 sen," said Voon.
He also noted that Jotech's mining venture in Indonesia, which comes with a not less than US$2 million (RM6.2 million) guarantee, is also something to watch out for.
According to Jotech latest annual report, the mining unit is already in the black and contributed RM75,000 in Jotech's share of associate profit in 2009.
SMALL and medium sized stocks are poised to be active in the first quarter of 2011, analysts say, as they expect the market to trade at levels never seen before in the first three months of the year.Lee, who is also one the country's prominent technical analysts, said on a technical basis, the charts indicate the index could touch the 1,533-point level in the first three months of this year.
The benchmark FTSE Bursa Malaysia 30 stock composite index closed at its highest level on November 10 last year at 1,528.01 points.
He also expects average trading volume for the first three months of 2011 to be between RM1 billion and RM1.2 billion a day for the overall market. His 12-month target for the market this year is 1660 points.
Lee's target is much lower than CIMB Research, which expects the market to top the 1,700-point mark.
"We rate Malaysia an 'overweight' and raise our end 2011 KLCI target from 1,610 points to 1,700 points," Terence Wong, its head of research, wrote in CIMB's the S.E.A Navigator report.
In the report, Wong also wrote that Eastern & Oriental Bhd could be a potential takeover target as it has a premium brand name and prime landbank in strategic locations.
CIMB's top property stock pick is SP Setia Bhd, which aims to sell RM3 billion worth of properties this year.
SP Setia also plans to launch the RM6 billion KL Ecocity project within the first two months of the year.
"The commercial component of the first phase is worth RM1 billion while the residential portion is worth RM800 million," the CIMB report stated.
Meanwhile, CIMB analyst Kelvin Goh wrote that Telekom Malaysia Bhd is a trading buy as there is a possibility of a special dividend at end-2010 or 2011 given the rising cash reserves of the company.
Mercury Securities Sdn Bhd head of research Edmund Tham expects small capitalised stocks to do very well in the run-up to the traditional Chinese New Year rally.
His top picks among the small-cap stocks are Fitters Diversified Bhd, the country's biggest fire-fighting company by sales and cocoa firm Guan Chong Bhd.
"Fitters is a small capitalised stock and its prospects in the coming year are good," said Tham.
The company has done some internal restructuring, which has resulted in it having three profit centres, namely the fire-fighting, property development and renewable energy units.
"When there is earnings growth from small capitalised companies, the market will react positively," he said.
Tham also expects the banking sector and construction companies to do well in the first three months of this year. Apart from the traditional picks such as MMC Corp Bhd, Gamuda Bhd, he also expects Bina Puri Bhd and WCT Engineering Bhd to do well.
Overall, in the immediate three month lifespan, Tham expects the market to inch up by as much as 5 per cent from the current level.
Alan Voon, chief executive officer of Warrants Capital Sdn Bhd, said in a strong market, often speculative interest will spill over to warrants, especially among retail investors.
"Most of the warrants have already run up, owing to the strong market last year, but there are still some potential hidden gems," said Voon.
His top warrant picks for the first three months of the year are Jotech Holdings Bhd and PJ Development Bhd, which should move after its mother share's five sen a share ex dividend date on December 30 2010.
"The Jotech warrants are almost in the money," said Voon, noting that upon Jotech's planned acquisition of two plantation assets for about RM28 million, it will be the cheapest plantation play in the country.
"The mother share is trading at about 10 sen, while the conversion rate of the warrants to the mother share is only 13 sen," said Voon.
He also noted that Jotech's mining venture in Indonesia, which comes with a not less than US$2 million (RM6.2 million) guarantee, is also something to watch out for.
According to Jotech latest annual report, the mining unit is already in the black and contributed RM75,000 in Jotech's share of associate profit in 2009.
Comments
Post a Comment