PETALING JAYA: Investors are advised to target defensive stocks in the consumer, telecommunications, healthcare, construction, oil and gas and plantations in view of the uncertain market outlook.
OSK Research regards the consumer sector as a safe haven business.
“Food and beverage companies should benefit from stable-to-falling raw material prices, which will lift margins, while retail companies should not see a significant drop in revenue, unless the country's unemployment rate rises,” it said.
The telco sector will experience continued demand for services in both the voice and data segments. Telco services are increasingly viewed as a necessity while further capital management from companies in this sector is expected to keep yields healthy.
The demand for private healthcare services remains strong in Malaysia. Even globally, demand for healthcare is sustainable during economic slowdowns.
OSK Research's six top buys under its defensive strategy are Axiata Group Bhd, Petronas Gas Bhd, Telekom Malaysia Bhd, QL Resources Bhd, KPJ Healthcare Bhd and Media Chinese International Ltd. Its alternative defensive buys are AirAsia Bhd and TRC Synergy Bhd while Malayan Banking Bhd (Maybank) and Dialog Group Bhd are its top trading buys.
Kenanga Research holds a neutral to optimistic outlook for 2012, while expecting market volatility to persist. Even so, it said the domestic markets should be resilient and supportive at least until Chinese New Year. Kenanga Research has also advised investors to focus on defensive stocks that have been consistently delivering a positive total return regardless of market position. Its advice includes keeping the focus on high dividend yield stocks.
“We are still positive on the Economic Transformation Programme-related industries such as oil and gas as well as construction sectors,” Kenanga Research said, adding that it favoured the gaming sector due to the favourable seasonal effect.
It has picked Dutch Lady Milk Industries Bhd, Eng Kah Corp Bhd, Genting Malaysia Bhd, Kossan Rubber Industries Bhd, Maybank, Malaysia Airports Holdings Bhd, Petronas Chemicals Group Bhd, Ta Ann Holdings Bhd, UEM Land Holdings Bhd and WCT Bhd.
In the oil and gas sector, Petroliam Nasional Bhd (Petronas) is expected to continue focusing on enhanced oil recovery in 2012 as the additional capital expenditure needed to extract the remaining oil and gas (O&G) was far less than that required by a greenfield.
According to OSK Research, over the past 12 months, Petronas had been busy boosting O&G production not only to catch up with the higher production of the previous years but also to undertake production more efficiently.
The future growth in O&G is likely to be via mergers and acquisitions as the industry is becoming more dynamic. Companies are required to provide a complete range of services which should be delivered reliably and in a timely manner.
As for the plantation sector, the production growth of crude palm oil (CPO) would continue to be strong next year, rising by 2.7 million tonnes versus a 2.9 million increase in 2011.
OSK Research said this would be boosted by favourable weather conditions, rising yields from young trees and newly mature areas in Indonesia. “We maintain our view that the 2012 average CPO price will be lower than 2011.”
Source: Star online