KUALA LUMPUR (Dec 3): MIDF Amanah Investment Bank Bhd, which introduced today its FBM KLCI end-2021 baseline target of 1,700 points, said the research firm believes the automotive, banking and construction sectors will be major beneficiaries of Malaysia's economic recovery during the year (2021).
MIDF strategy head Syed Muhammed Kifni Syed Kamaruddin said today at a virtual briefing on the market outlook that based on the research house's coverage of 116 stocks listed on Bursa Malaysia as at early-December 2020, the aggregate earnings growth for these companies is forecast at 15.4% year-on-year for 2021.
"On a sectoral basis, the consumer products and services (P&S), financial services and idustrial P&S are expected to contribute the largest quantum of incremental earnings while the consumer P&S, industrial P&S and construction sectors are anticipated to generate the highest growth percentages," Syed Muhammed Kifni said.
According to him, the KLCI's 30 constituents are forecast to register 12.85% year-on-year earnings growth in 2021.
MIDF's 1,700-point KLCI target for 2021 implies a price-earnings ratio (PER) of 17.5 times for the index, he said.
At 3.13pm today, the KLCI rose 17.55 points or 1.1% to 1,616.27 for an estimated PER of 24.7 times.
Among Asian stock indices, Bloomberg data shows that Singapore's Straits Times Index trades at a PER of about 24.43 times while Hong Kong's Hang Seng is transacted at around 14.55 times.
During the virtual briefing, Syed Muhammed Kifni said MIDF's top picks include Bermaz Auto Bhd, MBM Resources Bhd, Mah Sing Group Bhd, Public Bank Bhd, Hock Seng Lee Bhd, Gas Malaysia Bhd, RHB Bank Bhd, Sunway Construction Group Bhd, Hong Leong Bank Bhd and IJM Corp Bhd.
Public Bank, RHB Bank and Hong Leong Bank are KLCI constituents.
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