2008 target @1,650 with baseline target @1,520. Based on our model, we have ascribed 1,650 points as our target for 2008, translating to a market price earnings ratio (PER) of 17x. From a bottom-up approach, our target is set at 1,520 or at mar ket PER of 15.6x, which also forms our baseline target for 2008. We believe our target is tangible given that the TMT (Tenaga Nasional Bhd, Malayan Banking Bhd and Telekom Malaysia Bhd), which have grossly underperformed the CI in 2007, is likely to support the uptrend of the market.
These counters collectively account for about 16% of the CI's total market cap and are at present bogged down by their respective niggling doubts, but should these uncertainties be alleviated, we reck on buying interests should flow back into these stocks. See table for a scenario whereby 1,650 points may be achieved.
(Source: OSK Research)
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