Improving Malaysia’s competitiveness (CIMB)

Although yesterday’s Economic Transformation Programme (ETP) update held no major surprises, we think it is another confidence booster as the programme’s strategic reform initiatives (SRI) will help sustain and enhance Malaysia’s competitiveness. They also reinforce our preference for major ETP beneficiaries including the construction, oil & gas and property sectors. As for the systematic plan by the government to pare down its stakes in GLCs, we take a positive view as it will free up liquidity and boost interest in GLCs. We maintain our OVERWEIGHT on Malaysia and end-11 KLCI target of 1,700 points, which is based on the mid-cycle P/E of 14.5x. Newsflow on the transformation programmes and the general election which we think will be held by end-11 or early-12 could drive a further re-rating of the market.

Top 10 Picks
AXIATA (TP: 6.20), IJM (TP: 7.81), MAHSING (TP: 3.30), MRCB (TP: 3.00), PERISAI (TP: 1.60), PETCHEM (TP: 9.70), PBB (TP: 16.00), SAPCRES (TP: 5.12), TELEKOM (TP: 4.92), WCT (TP: 4.15).