Sunday, January 20, 2008

Five stocks with strong potential upsides

By Biz Times

CREDIT Suisse is recommending to investors KPJ Healthcare and four other small stocks with significant potential upsides over the next 12 months, ranging from 42 per cent to 88 per cent.

It has a RM5.80 target price on KPJ, Malaysia's largest and only listed private hospital group, implying an upside of 88 per cent from the stock's closing price of RM3.08 yesterday

The other stocks it likes are E&O Property Development (target price of RM4.50), Salcon (RM1.72), Boustead Holdings (RM9.75) and Muhibbah Engineering (RM5.30).
The foreign research house believes these companies could deliver strong earnings in 2008 against a backdrop of high oil and commodity prices and slower global economic growth, offset by Government infrastructure spending and moves to boost the domestic economy.

It also noted that Middle Eastern oil money is flowing into Malaysia, seeking a home in property assets and other investments.

"We have picked (those) companies because they are positioned favourably amidst this backdrop to deliver strong earnings growth in 2008," it said in a report dated January 17.

It said E&O Property Development, a property developer in the Klang Valley and Penang, offers investors exposure to Malaysia's high-end property sector.

The company has five upcoming launches with a gross devlopment value of more than RM1.6 billion in the Klang Valley high-end property segment.

Conglomerate Boustead, meanwhile, has plantations and fabrication yards driving earnings, on the back of higher crude palm oil prices and a strong wave of shipbuilding activity, coupled with a potentially huge privatisation contract.

The research house believes there is also hidden value in Boustead's prime property assets.

It noted that KPJ is the cheapest hospital stock in the region, while water-related Salcon is a laggard.

It expects oil and gas (O&G) company Muhibbah to ride on the back of global O&G exploration activity and infrastructure spending.

The stock closed at RM3.74 on friday, while E&O closed at RM2.60, Boustead RM6.30 and Salcon, RM1.07