Kenanga Research downgraded Malaysia's telecommunication sector to 'neutral' from 'overweight' as it believes the sector's near-term catalysts have been essentially priced in.
The broker, however, said the sector prospects remain intact considering upcoming potential catalysts such as a 6 percent prepaid service tax hike, the final allocation of the 4G spectrum, infrastructure and network collaborations and the introduction of a new business model.
"If these new catalysts materialise, which we believe the earliest could be seen in the fourth quarter of 2012, that could provide a re-rating spark again to the sector going forward," Kenanga said.
On the flip side, Kenanga said it believes the sector's inflection point could arrive when there is limited room for further dividend yield compression and an increase in risk appetite, which may result in the market shifting focus from defensive to high beta sectors.
The research house maintained its 'outperform' call on Telekom Malaysia Bhd , the country's sole fixed-line services provider, with an unchanged target price of 6.45 ringgit. It downgraded DiGi.COM Bhd , Malaysia's third largest mobile phone operator by market value, to 'market perform' from 'outperform' and kept the target price of 5.20 ringgit.
Kenanga kept 'market perform' ratings on Axiata Group Bhd , Malaysia's largest mobile phone operator by market value, and Maxis Bhd , the second biggest operator. It kept target prices on these stocks at 6.33 ringgit and 7.35 ringgit respectively.
0123 GMT (Reporting by Yantoultra Ngui in Kuala Lumpur; yantoultra.ngui@thomsonreuters.com); Editing by Jijo Jacob
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09:22 MALAYSIA STOCKS NEWS-AmInvestment raises Tenaga Nasional fair value
AmInvestment Bank raised its target price on state power firm Tenaga Nasional Bhd to 8.15 ringgit per share from 7.95 on expectations of stronger earnings for the next two years.
AmInvestment kept its 'buy' call on Tenaga due to expected lower capacity costs from winning a tender to build a 3 billion ringgit power plant in the northern Malaysian state of Penang.
Tenaga shares were flat at 7.00 ringgit, outperforming the broader market that fell 0.32 percent.
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(Reporting by Niluksi Koswanage in Kuala Lumpur; niki.koswanage@thomsonreuters.com; Editing by Prateek Chatterjee)
Keywords: MARKETS STOCKSNEWS MALAYSIA/TELECOM