Stock Investment Portfolio Review, Outlook & Strategy - 14012011

Faber - Unfavorable News

Faber shocked the investors through the news of non-renewal of its two existing contracts in Abu Dhabi worth RM129mil and RM55 mil respectively. This may subsequently dampen the stock performance and create the uncertainty of its future's perspective. Most analysts have downgraded the "Buy" call to "Hold" position and lower the 12-month target price to around RM2.60. Further to this, I have decided to kick this stock out from my Favourite Stocks List.

Top Picks within Favourite Stocks List

1. TWS

With the strong growth of Revenue & Profit achieved in the last quarters, it is forecasted to achieve an EPS of above RM1.20 in the total of last 4-quarter result. It has just surprised the investors with the generous dividend of 20% announced on 14th Jan 2011. TWS is trading at attractive price at RM7.64 as dated 14 Jan 2011 at PE of around 6.0 only. Thus, TWS is the best strong buy call counter at this moment and I project it may easily break RM10.00 in 1Q2011 or early 2Q2011.

2. KimLun & Cypark
Both of these stocks are considered the new players among the listed companies. The same characteristics between these companies are they have good management team and stand in an advantage position to be benefited directly from the government Economic Transformation Programme (ETP) such as environmental friendly and MRT projects which have just announced recently.

3. Maybank, CIMB, RHBCAP, PBBank
With the combination of several factors like stable economy growth, increase of interest rate prospect, aggressive business acquisition and investment abroad among the finance industry, and together with a large amount of money spend by the government in 10MP, the Banking playsers are definitely one of the main beneficiary.

4. Sapcres, Kencana, Dialog, Pchem, PetDag
Oil & gas sector is one of the main beneficiary which has attracted the government focus. It is anticipated that a lot of giant projects will be tendered out and began in the near future.

Overall Market Outlook
The KLCI stock market looks attractive at the current 1570 level and most analysts and investors are confident with the market performance and have revised 2011 target at 1700 level. Nevertheless, it is very much depends on the global economy recovery too. I would anticipate the global market may continue to recover and the global equity bull run would at least continue the uptrend until the end of 1st half 2011, then follow by a more severe type of retracement in the beginning of 2nd half 2011.

Trading strategy
Sell into Strength, Buy on weakness.

Favourite Stocks Recommendations
Finance: Maybank, CIMB, RHBCAP, PBBank.
Consumer: CI Holdings, GuanChg, TWS, QL,
Construction: Kimlun, Sunway, Gamuda, Wct.
Healthcare: KPJ.
Plantation: BStead, TDM, THPlant, TWSPlant, TSH.
Trading/services: Analabs, Kfima, QSR.
Gaming: Genting.
Telecommunication: Axiata, Digi.
Environmental: Cypark.
Oil & Gas: Kencana, Pchem, PETDag.
Industrial: Ajiya, CanOne, DRBhicom, Daibochi, HPI, LIONind.