AffinHwang Capital Research downgrades KLCI to Neutral

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KUALA LUMPUR (March 3): AffinHwang Capital Research has downgraded the FBM KLCI to Neutral (from Overweigh) and said that not unexpectedly, the 4Q14 report card showed another disappointing quarter, but the number of disappointments fell versus 3Q14.

In a note Tuesday, the research house said with the FBM KLCI recording a 0.2% earnings contraction for 2014, it was lowering its 2015E earnings growth by 4 percentage points to 4%.

“We retain our end-2015 KLCI target of 1,820.

“We expect the market to be range-bound with a negative bias, as sentiment remains weak due to macroeconomic concerns,” it said.

The research said it continues to like Astro Malaysia Holdings Bhd (resilient business with recurring revenues); ii) IJM Corporation Bhd (infrastructure exposure); iii) Kossan Rubber Industries Bhd (US$ revenues); iv) Public Bank Bhd and Hong Leong Bank Bhd(consumer banking); and (v) Tenaga Nasional Bhd (broad economic growth).

“Among dividend stocks, we like Malayan Banking Bhd, Berjaya Sports-Toto Bhd, and Maxis Holdings Bhd, beside IGB REIT and Axis REIT. Meanwhile, our least-preferred stocks include AMMB Holdings Bhd, UMW Oil & Gas Corporation Bhd, Malaysia Marine & Heavy Engineering Bhd and AirAsia-X Bhd, for which we do not expect a turnaround in the near term,” it said.