KUALA LUMPUR (March 2): Hong Leong IB Research said CY4Q15 reporting season has shown further signs of improvement, indicating that earnings deterioration has eased while forecasts have also become more realistic.
In an earnings wrap today, the research house said 35% (CY3Q15: 42%) of HLIB universe were below expectations while 27% (CY3Q15: 12%) surprised on the upside.
It said the revision ratio improved further to 2.7x (CY3Q15: 3.0x; CY2Q15: 7.8x).
“Removal of macro risks after Budget recalibration, potentially better oil dynamics in 2H16 and the ongoing search for yields will make Malaysian equities attractive from foreign investors’ point of view.
“FBM KLCI year-end target maintained at 1,760 (15.0x 2017 earnings).
“Top Picks: Digi.Com Bhd & AirAsia Bhd are in. Evergreen Fibreboard Bhd & Inari Amertron Bhd are out.
“Other Top Picks are Gamuda Bhd, IJM Corp Bhd, Malayan Banking Bdh, Tenaga Nasional Bhd, Westports Holdings Bhd (big caps) and UEM Edgenta Bhd, Mitrajaya Holdings Bdh and Sunway Construction Group Bhd (small/mid cap),” it said.