MAYBANK IB UPS BURSA TARGET TO 1,800 POINTS
KUALA LUMPUR: Maybank Investment Bank Bhd (Maybank IB) has raised its FTSE Bursa Malaysia KLCI (FBM KLCI) yearend target to 1,800 points from 1,750 points on higher visibility for equities’ core earnings to resume their growth and expected higher average of oil prices this year.
The bank derives 7.1 per cent core earnings growth for the FBM KLCI this year and seven per cent next year from its bottom-up approach.
Maybank IB also expects loan growth of banks to moderate, stocks in the utility sector to recover on clarity of regulatory developments, telecommunication companies’ mobile revenue to return to growth and better earnings for plantation companies on optimism in crude palm oil prices.
It also expects sizeable job awards this year for the construction sector with the largest likely to be from the East Coast Rail Link worth RM50 billion, of which 30 per cent would go to the locals.
Real estate investment trusts’ (REIT) tenant sales would remain encouraging as prime malls had recorded tenant sales growth of three to 10 per cent year-onyear in the fourth quarter of last year.
Maybank IB said a higher average of oil prices would ease a major pressure point in the oil and gas sector, and this would further be “enhanced” by Saudi Aramco’s US$7 billion (RM31.18 billion) investment for two strategic assets in the Refinery and Petrochemical Integrated Development, Pengerang, as it could catalyse higher levels of capital expenditure spending by Petroliam Nasional Bhd this year and next, thus benefiting the oil and gas value chain.
However, the bank is mindful of the external developments with fiscal and monetary developments in the United States and elections in the Europe being key risk events.
“The US Federal Reserve will act on its first rate hike for this year in its March 14 and 15 meetings.
“On March 15 too, the Holland parliamentary election will be held, which ‘kick-starts’ the string of elections in Europe for this year,” it said.
With external headwinds to remain driving volatility, Maybank IB has reiterated a defensive core equity strategy.
It continued to place “overweight” calls on utility, REIT, construction, oil and gas as well as tourism sectors with top buys that include Tenaga Nasional Bhd, Gas Malaysia Bhd, IGB REIT, MRCB-Quill REIT, Gamuda Bhd, Malaysia Airports Holdings Bhd, Inari Amertron Bhd, Yinson Holdings Bhd and RCE Capital Bhd.
Maybank IB is forecasting 7.1 per cent core earnings growth for the FBM KLCI this year.