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Rubber Gloves – Malaysia Confluence Of Factors Prompts Downgrade To MARKET WEIGHT
Industry prospects remain intact against a backdrop of undemanding valuations. But we acknowledge that: a) unparalleled share price surge, b) normalising valuations after peak quarterly earnings, and c) negative sentiment permeating through the sector may be too steep to overcome. We downgrade the sector to MARKET WEIGHT from OVERWEIGHT. We normalise our target prices based on 2023 valuations and dividendrelated windfall earnings. Top pick: Top Glove.
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CIMB Group (CIMB MK) Positioning Ahead Of A Strong Recovery; The Worst Is Over
Following our call with management yesterday, we remain optimistic that the worst is over for the group with 2021 earnings well on track to register a 156% yoy growth, underpinned by a significant reduction in lumpy bonds and drop in loan provisions. Given its strong earnings growth, attractive valuations, large cap and liquid high beta nature, the group remains well positioned to benefit from the economic recovery theme. Maintain BUY. Target: RM5.10 (0.80x 2021F P/B, 6.3% ROE).
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UOB KAYHIAN |
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Offshore Marine – Singapore
Very Small Green Shoots Emerging The latest rig utilisation and day rates could indicate that the worst is over for the offshore marine industry. Oil & gas project commitments for the 2021-25 period are forecast to increase by 66% vs the prior five-year period, and the Brent forward curve has risen more than 22% in the past three months to US$55/bbl. More inactive rigs have also been removed from the market in 2021. For now, we maintain MARKET WEIGHT on the sector with YZJ and KEP as our top picks.
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Check out our compilation of Target Prices
