资料收集所 InformationCentre: 11th Malaysia Plan - Vision 2020 Final Lap, Seize The Opportunity

Saturday, May 23, 2015

11MP to be guided by the Malaysian National Development Strategy which stresses on optimal usage of limited resources with focus on high impact projects at low cost combined with efficient and rapid implementation.
Realistic 6 multidimensional goals (real GDP 5-6%, labour productivity growth 3.7%, income per capita of US$15,690 by 2020, 19.7% increase in average monthly household income, higher compensation of employees at 40% of GDP and Wellbeing index growth of 1.7%).
Growth driven by private sector and focus on knowledgeintensive and high-value added-centric.
Also aim to improve government financial positions with an unchanged target of balanced budget in 2020. Implication to the market
No major surprises in terms of projects but should inject positive vibes into the market which has been lacking in positive newsflow.
Major sector beneficiaries are construction and education.
Performance study of last three MPs shows no pre-MP rally. However, by end of the respective years, the KLCI recorded positive returns of 17.7%, 18.3% and 20.9% post tabling of 10MP, 9Mp and 8MP.
Construction index (KLCON) outperformed the KLCI by 3.1%, 17.4% and 6.4% during the same period.

KLCI P/E valuations may not be attractive at slightly below historical mean of 15.5x. However, back in 2010, KLCI traded as high as 1SD above mean post tabling of 10MP.
Moreover, the month of May is historically a good month to accumulate on dip as the KLCI almost always end the year higher than the low in May (15 out of last 20 years or 75%) other than exceptional years like 97 and 08. Excluding the crisis years, the above positive rate goes up to 83%.
With KLCI already corrected from recent high, ample liquidity, lower foreign ownership (cumulative net inflow halved from RM49.2bn peak to RM24.2bn), opportunity during month of May and the tabling of 11MP, we believe it is opportune time to seize the 1-in-5-year opportunity to position for the year end whereby we have an unchanged target of 1,880 (based on historical average P/E of 15.5x 2016 earnings).
For the 11MP thematic play, we prefer UEM Edgenta, IJM, Mitrajaya, Sasbadi and Lafarge.
The first four stocks are also among our overall top picks for the market.