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Tuesday, December 16, 2008

Citi targets KLCI to fall to 691

In general, I tend to more often than not distrust analyst predictions as they are generally biased and often made with vested interests. However, at the same time, I believe there are many useful things that one can learn by reading such analyst reports to see if their reasoning is consistent with yours, so that deviations can be investigated in greater detail to see if you need to alter your own reasoning, or to dismiss the analysts conclusions.

For future reference:

http://www.btimes.com.my/Current_News/BTIMES/articles/citi15/Article/index_html

http://www.btimes.com.my/Current_News/BTIMES/articles/20081215121640/Article/index_html

Interesting extracts:

"MALAYSIA'S stock market may continue to fall for at least another quarter as earnings shrink and a possible drop in domestic spending threatens economic growth"

"The domestic market typically recovers from a slowdown during or after the worst quarter of economic expansion"

"In three of the last four recessions, the bear market ended in or immediately after the worst quarter of GDP growth"

"Corporate earnings in Malaysia will drop 11 per cent in 2009"

"Companies in the utilities sector are expected to see a 23.7 per cent decline in EPS, banks (-8.3 per cent), telecoms (14.4 per cent), plantations (-20.6 per cent) and tobacco (-10.5 per cent)."

"biggest losers will be media companies, plantation owners and utilities"

"valued at 9.8 times reported earnings, the highest among Southeast Asia's benchmark stock indexes"

"new target for the index is 691"

"now using our benchmark the average Asia P/B of 1.2 times - implying a further decline to 691 points"

"Malaysia's slowest growth in gross domestic product might occur in the first quarter of 2009, with expansion of 2 per cent"

"stocks trading at trough P/Bs or have strong earnings visibility are on our top buys list - AMMB (2.28), BCHB (5.85), IGB Corp (1.18), KLCC Property (2.61), Tanjong plc (13) and IOI Corp (3.2). Our top sell ideas are Public Bank (8.3) and Maybank (5.1)"

Reference prices at close of 15 Dec in brackets.

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