MIDF Research says cumulative net foreign inflow into Bursa for 2016 fell to RM2.42bil
KUALA LUMPUR: CIMB Equities Research is positive on the government's push to improve corporate governance via the establishing of integrity and governance unit at government-linked companies (GLCs) and state-owned enterprises.
“We maintain our end-2017 FBM KLCI target of 1,790, which is still based on its three-year average price-to-earnings (P/E) of 16 times.
“Our key sector picks for 2H17 are utilities, construction and small caps. Our three big cap picks are Sime Darby, Gamuda and Tenaga,” it said.
CIMB Group
co-hosted the Invest Malaysia 2017, the flagship Malaysian corporate conference which is now in its 13th year.
It said this year’s event attracted 900 fund managers with total asset under management of US$19.9 trillion, a significant rise from US$11 trillion in 2016, a sign of a revival in investor interest in Malaysia.
Among measures unveiled by the government: 1) launch of the Leading Entrepreneur Accelerator Platform (LEAP) market, 2) plans to establish an integrity and governance unit at government-linked companies (GLCs) and state- or ministry-owned businesses, 3) plans for a single regulator for the property sector, 4) greater gender diversity, corporate governance in Corporate Malaysia, and 5) next-stage development push under TN50.
“Government-linked investment companies (GLICs), which have sizeable exposure to domestic equities, are doubling down on efforts to improve shareholder returns among Malaysian corporates.
“The key enablers of digital disruption are increasing internet and smartphone penetration, a growing middle class population, demographic tailwinds and income growth,” it said.
CIMB Research said with the advent of new technologies, the development and innovation cycles of companies are becoming shorter, requiring businesses to continually adapt to stay relevant.
However, it noted that the omnipresent threat of disruption to traditional business models underlines the risk of overpaying.
The challenge for fund managers is to discover promising companies that are poised to benefit from structural tailwinds early enough to provide that margin of safety.
“We are more upbeat on Muhibbah after the large track session, as the group indicated that it has fully received the RM600mil to RM700mil variation orders claims in relation to its contract with New Doha International Airport.
“We are also more positive on Hartalega’s earnings prospects as the group is confident of retaining its strong profit margin and expects sales volumes for its gloves to remain robust,” it said.
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