KUALA LUMPUR (April 3): AllianceDBS Research has lowered its end-2020 FBM KLCI target downward to 1,375, based on 14.2 CY20 earnings (vs 16x previously) – 2SD (standard deviation) below its 10-year mean.
In a strategy note today, the research house said that this is warranted given the challenges faced by Malaysia’s equity market which has been manifest in its low foreign shareholdings.
“We could expect more earnings cuts in the coming months as companies continue to assess the impact of COVID-19 though the end of the pandemic remains uncertain at this juncture.
“Assuming a 0% earnings growth in 2020, this will translate into a lower KLCI target of 1,320.
“Therefore, we reiterate our defensive strategy by sticking to fundamentally strong companies with the means to tide over the challenging period,” it said.
AlllianceDBS said its top picks are DiGi.Com Bhd, RHB Bank Bhd, Sunway Bhd, Time dotCom Bhd, Sunway REIT, Magnum Bhd (MAG) and Globetronics Technology Bhd.