leftright-investment

By TA Securities, We believe 1H13 will be a choppy period and election concerns could drag down the FBM KLCI by 8% to 10% in the period before market rebounds in the 2H13. The impetus for revival will mainly hinge on the end of election overhang and strong domestic demand. Sustained monetary easing on the back of low inflationary pressure and attempts to reduce budget deficits by cutting subsidies and channeling the savings to productive ventures are positive despite the short-term impact on earnings. Overall, domestic economy will play an integral role in sustaining confidence in domestic equities next year in the absence of any overwhelming micro drivers. Corporate earnings for 9M12 were less robust and we forecast full year earnings growth for the FBM KLCI to be 9.4% only. Chances of a strong revival in the immediate-term are minimal based on external sentiment and dwindling demand in key export markets. Our earnings growth forecast of 8% and 8.4% for CY13 and CY14 is not compelling...

RHB research institute (RHBRI) is of the view that it could still be a choppy few months for the equity market in the 4Q given weakening economic fundamentals in the major world economies and fears of an imminent general election on the home front. Whilst more rounds of quantitative easing have been unveiled in the developed world, the big question in investors’ minds is how all these quantitative easing measures will translate to better global economic outlook. Having said that, equity still stands up vis-a-vis the unappealing returns of the alternative asset classes, such as cash and bonds and any good news is still likely to prompt a rally in equities. How was Malaysia fared? And, what's the strategy now? Thus far, Malaysia has fared relatively well in the global financial crisis, and this is partly on account of low reliance on foreign funding of its banking system and more importantly, the progress in the implementation of the Econ...

IGB REIT comprises of Mid Valley Megamall (retail; 1.72m sf NLA) and the Gardens Mall (retail; 0.82sf NLA) with a total appraised value of RM4.6b . Currently, Mid Valley Megamall is 99.8% occupied and the Gardens Mall is 99.7% occupied. Based on the IPO  price of RM1.25, IGB REIT’s market capitalization would be RM4.3bn, making  it the largest pure retail M-REIT .  Following closely behind IGB REIT in terms of market capitalization size is Pavilion REIT (RM4.08b), Sunway  REIT (RM4.02b) and CMMT (RM3.02b). What are the key selling points for IGB REIT? Prime asset with strategic location, huge catchment area and well connected  transportation networks. Diverse based of tenants to sustain rental income. Low gearing provides ample room for acquisition growth.   Based on IGB REIT’s Pro Forma Statement of Financial position, IGB REIT’s  gearing ratio upon listing will be approximately 25.8% , which is below the  average o...

Other than competitive brokerage fees, brokerage firms are battle it all out to gain market share by dishing out all kind of freebies. Those who did not make the move would definitely lose their market share to other competitors. Last year, we noticed that many brokerage firms were competing in fees charged. But, RHB investment bank has their own way - RHBInvest HOTTIE Rewards programme . Let your investment take you on Vacation!!! Under the programme, every broking transaction done on RHB's online share trading platform (RHBInvest) will be rewarded with loyalty points. Every RM1 spent on brokerage fees will earn 1 HOTTIE point and every HOTTIE point can be converted to 500 BIG points from AirAsia's BIG Loyalty global reward programme. The accumulated BIG points can be redeemed for AirAsia's seats and for shopping at 1,500 BIG's associated partners and online merchants worldwide. "We expect an improvement in participation. Most brokers are competing with real estat...

More Signs of Recovery The tail risk from the euro-debt crisis has subsided after ECB opens its liquidity floodgates. Elsewhere, more signs of economic stabilization and recovery have emerged, particularly in the US. As the global economic recovery gains momentum, external demand for Malaysia’s exports will likely improve as the year progresses. Domestically, consumer spending remains resilient, which will be reinforced by the progress in the implementation of the Economic Transformation Programme to sustain growth. We envisage the country’s economy to grow at 4.5% in 2012, albeit at a more moderate pace than the +5.1% achieved in 2011. This will underpin corporate earnings growth, projected at +12.2% and +7.9% for 2012 and 2013, respectively (+8.7% and +7.0% ex-Tenaga). But, anticipate a short-term market pullback ? Notwithstanding improvements in the global economy, we continue to expect a market pullback and consolidation in the 2Q. I...

In tandem with the moderating economic growth trend, corporate earnings remained weak in 4Q 2011 .  Of the 113 reported earnings that we cover, 55 of the results (48.7% of the total) were within our  expectations, 33 below projections (29.2% of the total) and 25 above forecasts (22.1%) (see Table 1). Against  the consensus numbers, 44.2% of the reported earnings were within expectations, 38.1% below and 17.7%  above projections (see Table 2). Sequentially, net EPS for the FBM KLCI stocks under our coverage  weakened back to +1.7% qoq and +2.8% yoy in the 4Q, from +8.9% qoq and +12.4% yoy in the  previous quarter (see Chart 1). However, the downgrade to upgrade ratio has improved significantly to 1.07 times, from 1.65 times in  the previous quarter. Overall, 2011 has been a year where Corporate Malaysia suffered from slowing sales and  falling utilisation rates. This, coupled with the trend of higher costs, resulted in falling margins for many...

While Malaysia remained a laggard compared to the rally in developed markets, the global rally that had started in January finally dragged the local bourse kicking and screaming up during February with a rally of more than 3%. Globally, markets continued to rise despite the patchy fundamental landscape. Thus, while we had anticipated a potential rally in the 1st half of February, our expected market retraction in the 2nd half failed to materialize. Top Gainers for February were dividend plays such as Carlsberg or companies with corporate activities such as Hartalega with its bonus issue or potential targets such as RHB Cap and MBSB. Smaller plantation companies such as TH Plantations and RImbunan Sawit also had a good run. On the flip side, companies with poor results such as Maybulk, MAS and KNM got sold down. On a broader sectoral basis, telcos were the dominant play. It was the return of the Big Caps in February as the catc...

2011 had triggered a wave of unwanted chain effects, which would not languish but resonate further into 1H12. While Japan is recovering from the worst ever tsunami and nuclear disaster, and oil prices stabilized after the unrest in the Middle East, conditions in Europe are expected to worsen before stabilizing. Global Economy – Risk Factors Extending into 2012 Positive news flows on drastic measures to restore confidence in Europe and maintain the credit ratings of core economies could boost market sentiment in early 1Q12 and push the index to test the all‐time high of 1,597. However, the reality check on the implication of European austerity measures and rising market risk premium due to the 13th General Election (GE) could push the index around 1,200 levels in 1H12 based on a minus two standard deviation from its last decade’s historical mean of 16.6x. A revival should ensue in the following months due to oversold conditions and anticipation of a subseque...

Essentially, with the uncertainties in Europe continuing amid a potential global slowdown in the economy, we will continue to see market volatility in the next few months. As such, we continue to advise investors to be patient and focus on Defensive counters , while looking out for opportunities to Trade. We continue to advocate Buying into Weakness when the KLCI falls towards the 1,300-pt level, focusing on Banks, O&G and Construction stocks while we advocate Selling into Strength on the same three sectors when the market rallies towards 1,500 pts. Festive Cheer in December? While we remain fairly defensive over the mid term, December may still be a bright spot amid the gloom. There is still a possibility of the traditional year-end rally and the just announced joint effort by various central banks, including the US Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada to provide liquidity may just convin...

In contrast, the better-than-expected results of Maybank came mainly from lower-than-expected credit cost and minority interest charged, partly offset by weaker-than-expected non-interest income. In addition, the change in accounting treatment for the recognition of profit equalisation reserve also helped lift earnings. The stronger-than-expected revenue growth of DiGi, on the other hand, came from stronger data and prepaid voice, aided by festivities, as well as improvement in consensus, were above our forecast on account of better-than-expected EBITDA margins on the back of lower other operating costs and supplies & materials expenses, as well as lower effective tax rate. During the quarter, BAT experienced stronger-than-expected industry volume growth, while earnings of Genting Plantations were boosted by stronger-than-expected increase in FFB production. The Under-performers... Sector-wise, earnings of the semiconductor, building materials, construction, motor, transportation, ...

Are you bored of the current small market capitalization of REITs in Malaysia? I think Sunway REIT (the largest REIT right now) is by far sitting there very lonely without anyone closer to it. Come 7th December 2011 , we will witnessed a new contender - Pavilion REIT , to challenge the title. Although it may started-off in 2nd place, the new REIT may grows to clinch the first place from SunREIT. Below is some info taken from RHB Research report on the IPO; Pavilion REIT (PavREIT) has an asset size of RM3.5bn , just after the largest MREIT - Sunway REIT’s RM4.5bn. PavREIT has two assets – Pavilion KL Mall which is worth RM3.4bn and Pavilion Tower (office) RM128m. The Prime Asset Pavilion Mall is one of the only four premium retail malls in KL. It is designed to complement the malls along Jalan Bukit Bintang, developing the street to a key shopping destination in the region. Located at the “Golden Triangle”, which is the business, shopping, entertainment and...

After an unexpected AAA rating downgrades and an expected correction, KLCI is coming down from its peak of 1,597 points in early July. CLSA come out with a timely report highlighting 5 stocks which investors should focus on even during volatile times. These stocks have resilient earnings, clear earnings visibility and are supported with dividend yields. CLSA: YTD major indices performances as at 08 Aug 2011. Which are the counters? Axiata - Turning into a cash cow Axiata's earnings will remain resilient during downturn as EBITDA is dominated by cellcos in Malaysia and Indonesia where price competition is muted these days. From a highly geared company in 2008, Axiata is now turning into a cash cow with forecast yield rising to 10% in FY13. CLSA is expecting dividend yield of 3.6% for FY11, translating into total shareholders return of 10%. Gamuda - Risk discounted The 22% share price fall from 52-week high has discounted its Vietnam investment risk. US$600m market cap loss is m...

While fears of an European sovereign debt default reverberating worldwide, Malaysia quietly outperformed most of the world in June as the Banking sector led the KLCI higher after the potential M&A of RHB Cap was called off . We had expected the KLCI to trend higher led by banks but our hope was founded on potential excitement driven by the merger rather than on sighs of relief that there would be no overpaying for RHB Cap. OSK Research: Top Gainers and Losers of FBM 100 during the month of June 2011. July looks to be a Strategist’s fantasy? With numerous announcements related to economic reform and infrastructure developments lined up for July, namely: 1 July – The launch of the ETP River of Life project involving the rehabilitation of the Klang River; 5 July – The 7th ETP update during which the PM will also unveil PEMANDU’s efforts to classify some 37 policy change recommendations made in the NEM into 6 Strategic Reform Initiative (SRI) clusters that will signal real economic...