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Thursday, March 3, 2011

4Q10 results round-up – Below expectations (CIMB)

The 4Q10 results season was generally disappointing as the earnings revision ratio (upgrades/downgrades) stayed negative at 0.8x. We raised CY10-11 EPS by less than 1% while shaving 0.4% off CY12 EPS. The past 4-5 results seasons have been less than sterling, which is one of the reasons why investors need to stay vigilant. Nonetheless, we maintain our OVERWEIGHT stance on Malaysia and end-2011 KLCI target of 1,700 points based on an unchanged P/E target of 14.5x. Valuations are undemanding and there are other catalysts that will give the market a boost in the short- to medium-term including 1) the various transformation programmes and 2) the election effect.

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