Tuesday, November 09, 2010

Laggards

The markets barely started its bull run and you already have houses recommending laggards. Are we in a bull run? Yes, we have barely started. You can sense more and more funds being poured into the markets. There is a willingness and belief that you can make money from the markets. This is not the time for long term fundamental plays. You have to adjust your market strategy accordingly.


Credit Suisse like the following laggards: Laggards with potential catalysts: Bursa, Public Bank, IJM Corp and Alliance Bank. They also like low-beta laggards with high dividend yields, which may be off investors’ radar screen in the short term as the market appears to be chasing for beta – they include Berjaya Sports Toto, Maxis, Digi and Sunway REIT. Low beta stocks are out for me, you are wasting your time. Its like you can have any ride at Disney, and you go and pick the teacup ride.

Bursa (beta of 1.33). Possible catalysts: 1) Rising liquidity; 2) Improving capital market related news flow (Including record listings). Investment view: CS maintains an OUTPERFORM as it is a proxy to the strong markets, with liquidity returning to the market. Its foreign shareholding was 19% as of October 2010, close to an all-time low of 14% (versus peak of 44% in October 2007). Well, I don't prefer Bursa, if its volume play, go for TA and OSK.


IJM (beta of 1.49). Possible catalysts: 1) Completion of te selldown of IJM shares by major shareholder Zelan, 2) positive news flow on the expansion prospects of its construction orderbook, 3) rerating of its listed property arm, IJM Land. Investment view: CS continues to rate IJM an OUTPERFORM, as they believe that its construction orderbook expansion prospects appear promising and expect near-to-medium-term positive news flow on contract wins to rerate the stock. IJM trades at 14.0x 2011E P/E (versus 15.4x for Gamuda), a discount to the market's 15.7x. I like IJM too, especially with Zelan finishing its sell down, and a possible corporate exercise with IJM Land.

Alliance Finance (beta of 1.08). Possible catalysts: 1) Potential takeover target, 2) beneficiary of rising interest rates, 3) renewed IR initiatives could raise earnings visibility and 4) a huge potential for provision write-back. Investment view: CS have an OUTPERFORM on Alliance. The key senior management team remains intact, and the stock should get rerated as the market gets more comfortable with the new CEO. Alliance could be a beneficiary of improving Singapore-Malaysia ties as authorities may become increasingly more flexible on Temasek's exposure to Alliance. To me, there are better stocks to trade in the current market trend.



NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

6 comments:

sapekuluk said...

Dali,

Any comment on Petronas Checm IPO?
Going to be hit like MMHE IPO also?


ciao

Salvatore_Dali said...

Pet chem will not be as attractive as mmhe ... maybe 10 sen premium, not worth the time to subscribe

sapekuluk said...

hrmmm, thought it's going to be attractive one based on news, etc...biggest capitalization, strong Q3 result, etc...it is one of the petronas core business after Carigali if I'm not mistaken...

any further comment on Pet Chem?...just interested to know...

ikan bilis said...

hope the kopitiam aunties and uncles will not start liquidating their entire holdings in laggard MAXIS and dump into any MEGAN, IRIS or MUDAJAYA high beta stocks. Not anyone can be Salvatore Dali of investing/trading. Or even 50%. I think a better advise will be "don't throw everything into laggards, time to rebalance your portfolio for some high beta plays"? i know it's your personal blog, but it is widely followed by kopitiam aunties and uncles. I have met people that throw their entire saving into one single high beta counter chasing bull... amen.

jeremy tan said...

however, Pet Chem is 6 times over subscribed. CIMB is expecting it to open with a positive high end note

Salvatore_Dali said...

ikan bilis,

of course its better to go high beta in current mkt... but never did i mention iris or megan ... there are better stocks with high beta, if u cannot discern that, u ought to lose all your monies ... my blog is not going to take hold of everybody's hands or aim for the lowest common denominator, then it will be a useless standard 6 blog