OSK Stock Picks for March 2011

By OSK Research,

Despite relatively strong results from a number of Blue Chips in February, the market still retreated and ended up in the red so far in 2011. Selling was largely attributed to concerns arising from political unrest in the Middle East although we continue to see limited risk if this does not spread to Saudi Arabia.

Go out and BUY?

Trading Strategy - Buy on Weakness

OSK continue to advise investors to Buy on Weakness in the current volatile market with focus on Banks, especially those that have been sold down recently as we still see robust loans growth of 8.5%. OSK also advise trading in Oil & Gas, Construction and Property counters as the news flow should remain good although they caution that profits will likely to kick in only in 2H of 2011.

March 2011 Top Buys

OSK's top buys did poorly for February, with only 2 stocks matching or exceeding the KLCI namely KPJ and Kencana. For March, as we remain hopeful of a market rebound, we are keeping CIMB, Kencana and SP Setia as our top buys. At the same time, we have added in defensive plays such as Petronas Gas and also retain KPJ.

Source: OSK Research

By Finance Malaysia,

While we are hopeful that the unrest in Middle East will eased soon, without spreading to Saudi Arabia, I think investor should trades cautiously as long as KLCI did not break free from the 1,500 psychological level. In terms of sector, I prefer Oil & Gas and Construction sector mainly because of Malaysia government's "preferred play". I view these sector as more defensive to global uncertainties, as Petronas and government is the main projects sources for O&G and construction sector respectively.

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Latest news on SP Setia (Jan 18)

Lately, SP Setia is in full limelight in local bourse due to some of the announcements made. And, yesterday, SP Setia was awarded a contract and proposed some of the corporate exercises subsequently. Below is some of the useful summary for investors keeping abreast with the latest developments:

The Bangsar land deal

• SP Setia was acquiring a 40-acre land along Jalan Bangsar via a land swap deal
• Government to acquire land in Setia Alam from SP Setia
• Develop a fully integrated health and research complex to be known as 1NIH Complex in Setia Alam under the Ministry of Health's purview
• Redevelop the swapped land into an integrated mixed residential and commercial project and give the Government a 20% profit sharing.

Source: OSK Research

The Proposed Corporate Exercises

• Proposed private placement of up to 15% of paid-up share capital via book-building for the following purposes:
• - RM6bn KL EcoCity, which comprises a corporate tower block and retail podium
• - Setia City project, which comprises a convention centre, corporate HQ and related infrastructure
• - Fulton Lane project. A residential condominium project in Melbourne, Australia
• Proposed 1-for-2 bonus issue after the completion of the said private placement

Source: Company, OSK Research, RHB Research