The local market is still expected to continue with its consolidation mode this week at a tight range of 1,850-1,870, barring any unforeseen external factors. The Ukrainian crisis and on-going corporate earnings report card are expected to be in the limelight. We have added 25k MITRA shares to our DIVIDEND YIELD portfolio last week, which led to an outperformance over the benchmark index, albeit marginally. All our portfolios outpaced the FBMKLCI by 28-71bps WoW. Meanwhile, the THEMATIC (+249bsp) and GROWTH (+124bsp) portfolios continued to outpace the key index on YTD basis while DIVIDEND YIELD Portfolio (-102bsp) remained an underperformer.

Seeking new catalysts. The FBMKLCI is still expected to remain trap in a range-bound sideway band this week, barring any unforeseen external factors. The continued tensions between Ukraine and Russia have led to some investors staying on the sidelines. Any significant changes in the situation could lead the market to experience higher volatility. The domestic trading sentiment, meanwhile, is expected to continue to be lacklustre during the holiday-shortened trading week with a key focus on corporate 1QCY14 earnings report cards. Notably, corporations scheduled to release their quarterly earnings this week include XL Axiata (Wednesday), Dialog (Thursday) and Perisai (Thursday). Technically speaking, the benchmark index is likely to continue its sideways consolidation mode at between the tight range of 1,850 to 1,870 in the short-term. A breakout from this range will see the key index moving in the direction of the breakout.

A lacklustre week as expected. The local market experienced another tight-range trading last week as a result of the lacklustre trading interest from both the local institutional and retail investors. Foreigners, meanwhile, continue to remain as net buyers last week but with a minimal daily inflow of less than RM100m. At last Friday closing bell, the FBMKLCI finished at 1,866.72 points (-0.13% WoW). On the Wall Street front, DJIA settled at 16,583.34(0.43% WoW) while the S&P 500 finished at 1,878.48 (-0.14% WoW). The Fed Chair Janet Yellen told U.S. lawmakers last week that the Fed will continue winding down its unprecedented bond-buying program as the U.S. economy is showing signs of rebounding from a standstill. Meanwhile, the Fed also reiterated its view in keeping its benchmark interest rate near zero for a ‘considerable time’ after asset purchases end.

All portfolios recorded positive return last week with the GROWTH portfolio’s total returns value improved by 0.58% WoW (vs. -0.13% WoW in the FBMKLCI) followed by THEMATIC (+0.47% WoW) and DIVIDEND YIELD (+0.15% WoW). REDTONE-WA (+4.2% WoW) and TENAGA (+0.8% WoW) were the key movers last week while RHBCAP-CP (-2.4% WoW) and TSH RESOURCES (-1.5% WoW) were the key laggards. YTD, THEMATIC portfolio continued to take the lead and registered +5.8% return (vs. +2.8% in the FBMKLCI), followed by GROWTH (+4.0%) and DIVIDEND YIELD (+1.8%) portfolios.

Added MITRA into our Dividend Yield portfolio. We have added 25k Mitrajaya (MITRA) @ RM0.75 per share to our Dividend Yield Portfolio on last Tuesday. We believe MITRA’s earnings have reached an inflection point after its core net profit (netting off the RM4.2m land disposal gain in Rawang) grew significantly by 40% to RM25.1m in FY13, driven by its construction and property divisions. On top of its strong order book of RM1.2b (3.3x to FY13 revenue), the group has also tendered for another RM1.75b worth of work, of which management is strongly confident to secure at least RM300m this year. We believe MITRA is one of the jewels in the construction and civil engineering sector. We have a fair value of RM1.13 for MITRA, based on a targeted 9x Fwd-PER on FY15 earnings.

Source: Kenanga