Malaysia - Market Strategy

[winston]

Malaysia Strategy
Need to adjust for ASP decline distortions

Declines in average selling prices caused significant distortions to the Plantations, Petrochemicals and Gloves sectors during 1H23.

Thus, while overall normalised net profits in our universe were down 2% in 1H23, they grew by 21% excluding these three segments.

YE KLCI target of 1,610. Key picks remain focused on domestic growth and potential reflationary plays should we enter a period of US$ weakness.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... C702C71BC9

[winston]

Malaysia Strategy
One step at a time

One of two key catalysts we highlighted in June is taking shape while the expected capitulation in the US dollar has unfortunately not yet materialised.

In this note, we discuss market implications of policy clarity and continuity, something that has been notably absent since 2018.

We make three upgrades and one downgrade to our sector recommendations and four changes to our top picks list of 20 stocks.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 84C4721843

[winston]

Construction, consumer players stand to gain from Budget 2024, analysts say

By Kang Siew Li

It is of the view that the biggest winner is the construction sector on higher development allocations and new projects, such as the Klang Valley Light Rail Transit’s five new stations worth RM4.7 billion, the RM11.8 billion nationwide flood mitigation programme, and Penang’s first LRT project worth RM10 billion.

The gross development expenditure (GDE) allocation for 2024 is RM90 billion. At RM90 billion GDE, this constitutes 4.5% of gross development product, which is above the 3% minimum threshold under the recently passed Public Finance and Fiscal Responsibility Bill 2023 by the House of Representatives.

Maybank Investment Bank's (Maybank IB) has “buy” calls on IJM Corp Bhd, Gamuda Bhd and Cahya Mata Sarawak Bhd.

Maybank IB also sees the aviation sector as a key beneficiary of Budget 2024, due to higher allocations to boost tourism and promote tourism activities ahead of Visit Malaysia Year 2026.

Within the sector, the biggest beneficiary is Malaysia Airports Holdings Bhd (MAHB), as its passenger service charge rates for international passengers are five times to seven times that of domestic ones.

AirAsia X Bhd (AAX) is also likely to be another big beneficiary, while Capital A Bhd is likely to be a minor beneficiary, as only 50% of its passengers are bound for international destinations. Another minor beneficiary is Genting Malaysia Bhd (GenM),” it added, with “buy” calls on MAHB, AAX and GenM.

The removals of poultry subsidies and price controls is positive for players like QL Resources Bhd ("hold") and Leong Hup International Bhd ("buy"), as it will enable efficient cost-pass through mechanisms to be implemented, and allow market demand and supply forces to dictate average selling price fluctuation for live broilers and eggs.

The restriction on entry points to specific ports only for liquor will ease enforcement efforts on smuggling operations of liquor, which bodes well for both Carlsberg Brewery Malaysia Bhd ("buy") and Heineken Malaysia Bhd ("buy") in terms of sales volume.

ITMAX System Bhd ("buy") is a clear beneficiary of the government’s efforts to revamp public infrastructure pertaining to traffic control and street lighting.

Grants for small and medium enterprises' digitalisation and automation will also directly benefit e-payment solution providers like GHL Systems Bhd ("hold") and CTOS Digital Bhd ("buy"), via its expansive portfolio of credit-related products.

We estimate that the higher service tax rate will trim our earnings estimates for GenM, Magnum and Sports Toto Bhd by a minimal 4% to 5%, and this could be off-set by remedial measures like: i) lower junket commission rates or lower direct VIP rebates rates (by Resorts World Genting);
ii) lower prize payouts (by the number forecast operators); and
iii) more enforcement action against illegal gaming operators.

Within the consumer discretionary sector, our preferred picks remain Berjaya Food Bhd and Power Root,” CGS-CIMB Research said.

Kenanga Research likes banks (for fiscal sustainability), contractors (the roll-out of public projects), telecommunications and utilities (earnings defensiveness), consumer staples and automakers/distributors of affordable vehicles (resilient bottom 40% income group spending).

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/686207

[winston]

Sustaining fiscal consolidation
A mix bag of the expected and the unexpected

Budget 2024’s main highlights and takeaways are:

1) sustaining fiscal consolidation with lower budget deficit to GDP ratio of 4.3% (2022E: 5%;
2020-2022: 6.1%);

2) contain tax and non-tax measures to support fiscal consolidation that are both expected (e.g. Capital Gains Tax, High-Value/Luxury Goods Tax, Global Minimum Tax, targeted subsidy rationalisation, e-invoicing), and unexpected (i.e. hikes in Service and Sugar Taxes); and

3) aligning allocations and incentives with the recently announced policy frameworks, masterplans and roadmaps i.e. 12th Malaysia Plan Mid-Term Review (12MP MTR); New Industrial Master Plan (NIMP 2030); MADANI Economy; National Energy Transition Roadmap (NETR), thus benefitting sectors/industries/areas like construction/infra, MSMEs, electronics, chemical/petrochemicals, RE & EVs, startups, tourism, Islamic finance &
halal, food security and global services hub.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/344596.pdf

[behappyalways]

After the 2024 fiscal package, the Malaysian stock market was sold off for 9 consecutive days, and foreign investors panicked and "escaped"!

2024财案后连9天抛售马股 外资恐慌“大逃亡”！ | 八点最热报 1/11/2023

https://m.youtube.com/watch?v=UTgCc3UZTyg

[behappyalways]

Crisis is an opportunity. How can investors profit from the turmoil in the stock market?

危机即是转机 投资者如何从股汇乱世中获利? | 八点最热报 02/11/2023

https://m.youtube.com/watch?v=YUq5Sr7UXEQ

[winston]

Certain thawing in investor sentiment

At recent meetings, we noticed investor acceptance that policy direction has improved. However, there is still frustration over implementation delays.

Two key areas that need seriousness in execution are approval of an energy exchange and the rollout of the pipeline of several development projects.

We remain constructive on Malaysian equities and heavily weighted on domestic-driven sectors. Our top Overweight is the construction sector.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 3F975BD1A6

[winston]

Malaysia Strategy
Solid 3Q23 results season

Declines in average selling prices caused significant distortions to the Plantations, Petrochemicals and Gloves sectors during 9M23.

Nevertheless, revenue and earnings momentum improved in 3Q23; 9M23 normalised profits were flat albeit up 20% after adjusting for ASP distortions.

We remain constructive on equities and retain an aggressive YE 2024 KLCI target of 1,755. Improved earnings delivery is a potential third catalyst.

The Auto, Finance, Healthcare, Construction, Real Estate, Transport and Telecoms sectors
generated strong earnings growth in 9M23, while Technology, Industrial Goods (mainly
Gloves), Agri Business, Media, and Energy saw significant declines.

However, Industrial Goods returned to the black in 3Q23 while declines in Technology profits have reduced.

That said, cumulative Technology profits were still trailing consensus by a wide margin.

The Energy and Materials performance masks the improved earnings delivery of the Oil
Services sub-segment, overwhelmed by declines for the two Petrochemical stocks.

Demonstrating our conviction on the domestic economy, underpinned by improving policy initiatives, normalising tourism and resilient private consumption, we upgraded Utilities, Telecoms and Consumer Discretionary from Neutral to Overweight.

In addition, we retain Overweight calls on Construction, Real Estate, Financial Services, Conglomerates and Healthcare.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... CB7671004D

[behappyalways]

The Malaysian stock market will be closed in 2023. Will we take laxatives again in 2024?

马股2023黯然封关 2024年还会再吃泻药? | 八点最热报 31/12/2023

https://m.youtube.com/watch?v=7BGNdWiGYx0

[winston]

Malaysia 2024 Outlook & Lookouts

Rising Momentum

Investment themes. We recommend six (6) investment themes for 2024:

1) “The three sisters” – Johor (JSSEZ), Sarawak (Hydrogen) & Penang (Infra, FDIs) -
SPSB, YTLP, CMS, GAM and IJM are our existing BUYs relating to this thematic;

2) Rising FDI momentum – WPRTS and IJM are our existing BUYs here;

3) Renewable Energy transition – SOLAR, CYP and MFCB are our existing BUYs; also, potential
beneficiaries are TNB (HOLD), to watch out for GAM (BUY), YTLP (BUY);

4) Water tariff reset – potential beneficiaries are existing water supply operators and pipe
producers;

5) Tourism recovery – “Malaysia, Truly Asia” – beneficiaries are GENM (BUY), MAHB (BUY), CAPITALA (BUY), AAX (BUY), YTLREIT (BUY), INNATURE (HOLD), OPTIMAX (BUY);

6) A firmer MYR – which would benefit selected Consumer stocks including FFB (our sector top BUY), Media (ASTRO; SELL) and the Airlines. Also, GENT (BUY) is a more liquid exposure to the MYRUSD currency movement.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/356915.pdf