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Thursday, March 6, 2008

Stick to fundamentals

2008 is a year of two elections; thus, we expect the pump priming activities to continue well into the 2H. Moreover, with high commodity prices (good for the rural community), the underlying economy remains intact. We expect the economy to be relatively resilient, reporting growth of 5.3% in 2008 and 5.8% in 2009.

We continue to like the plantation and construction sectors, plus the GLC restructuring theme. In our view, investors should stick to the fundamentals, as politically charged “election plays” could continue to see some selling pressure after polling day. Note that in 3 of the last 4 general elections, the KL Composite Index has underperformed the MSCI NJA Index after the polling dates.

  • Bumiputra-Commerce Holdings Bhd (BUCM.KL, RM10.40, OUTPERFORM, TP RM14.15)
  • IOI Corporation (IOIB.KL, RM7.85, OUTPERFORM, TP RM9.00)
  • Telekom Malaysia (TLMM.KL, RM11.20, OUTPERFORM, TP RM13.30)
  • Tenaga Nasional (TENA.KL, RM8.95, OUTPERFORM, TP RM13.50)
  • Resorts World (RWBW.KL, RM3.72, OUTPERFORM, TP RM5.85)
  • SP Setia (SETI.KL, RM4.90, OUTPERFORM, TP RM6.90)
  • IJM Corporation Berhad (IJMS.KL, RM7.10, OUTPERFORM, TP RM10.30)
  • Alliance Financial Group BHD (ALFG.KL, RM2.81, OUTPERFORM, TP RM4.11)

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