Big caps in focus, says HLIB Research

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KUALA LUMPUR (Sept 15): Hong Leong IB Research said the government’s announcement of immediate measures to stabilise the market was to assure GDP growth, fiscal target, government debt, with no capital controls with further measures in 2016 Budget.

In a strategy note today, the research house said the positive direct impact from the RM20 billion Valuecap fund, equaled RM20.9 billion cumulative foreign outflows since June 2014.

HLIB Research advised investors to expedite focus switch to values big caps and could see more stable ringgit, lower appetite for exporters.

It said despite stellar performance yesterday, still short-term volatility on immediate external issues.

Nevertheless, it said the FBM KLCI’s valuations remained below mean, still expect modest year-end valuation reversion closer to mean. 

“Maintain end-15 target at 1,710 (15x 2016 earnings).

“Slight change in focus themes: 1) increase attention on values big caps (Axiata Group Bhd, DiGi.Com Bhd, IJM Corporation Bhd, Malayan Banking Bdh and Tenaga Nasional Bhd); 2) 11MP (including RAPID) play (UEM Edgenta Bhd, KNM Group Bhd and Mitrajaya Holdings Bdh); and 3) reduce focus on export oriented (Inari Amertron Bhd but excluded Evergreen Fibreboard Bhd and Homeritz Corporation Bhd).

“Other big caps Buy ratings: Astro Malaysia Bhd, Gamuda Bhd, Genting Bhd, RHB Capital Bhd and Westport Holdings Bdh,” it said.