Malaysia - Market Strategy

Re: Malaysia - Market Direction & Strategy

Postby winston » Thu May 10, 2018 6:20 pm

Najib’s Exit – Here’re His Cronies & Stocks You Should Avoid

Source: Finance Twitter

http://www.financetwitter.com/2015/05/p ... avoid.html
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Re: Malaysia - Market Direction & Strategy

Postby winston » Fri May 11, 2018 9:53 pm

New lease of life

New govt is long term +ve, but near-term uncertainties; d/g to Neutral

After the capture of 122 seats (PH and aligned parties) to BN’s 79, Malaysia celebrates the return of a man who is steadfast in bringing financial and policy reforms.

While this is market-positive in the longer term, we expect the next trading day of 14 May 2018 to be soft, as PH grapples with effecting populist (fiscal burden) measures in renegotiating contracts/concessions and areas such as GST collections.

After c.16% TSR (9.5% in KLCI, 2% MYR, 3% pa in Div) since September 2016, we downgrade Malaysia to Neutral for now.

Key sectors affected: +ve for Consumer and –ve for Infra, Banks;

PH’s pledge to review mega projects will inevitably affect timing, scale and margins, even if the likelihood of cancellations seems low. Infra plays to be affected - GAM, IJM.

For Banks, a defensive strategy will endure (pending clarity on policies to meet our 6-7% growth target). This along with PH’s focus towards SMEs (tax benefits) benefits Public. CIMB would be sold off due to perceived BN link.

Consumer: PH’s promise of abolishment of the 6% GST and re-introduction of petrol subsidies would alleviate pressure on the Malaysia consumer. We like Padini.


Switch into selected defensive names before we see tangible improvements

Malaysia has traded at a premium to peers given its stability, high economic growth and liquidity. That said, we believe the market could take a breather as investors assess the incoming government.

As such we downgrade the end-2018 KLCI target from1964 to 1896 (3% upside) at 15.5x PE which is below its 10-year mean multiples.

While the LT prospects are good, we suggest investors look at stocks with external demand (PCHEM, IHH, Glove, HART, TOPG, KRI), MYR depreciation beneficiaries (exporters, petrochem players) and consumer plays (Public, Padini).

Stocks that are likely to be hit are government related/China linked names like TNB, MYEG, MRC, CIMB, AIRA, FGV, GKEN, SAPE, UMWOG, MAHB, GAM and IJM. Good quality companies likely sold off but we would buy on dips include MAHB.


Source: CLSA
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Re: Malaysia - Market Direction & Strategy

Postby winston » Mon May 14, 2018 7:44 am

vested in EWM

A bullish sign from Malaysia, of all places

Mahathir Mohamad’s return to power sends a message that the popular will can turn on privileged and entrenched state power

Source: SCMP

http://www.scmp.com/business/companies/ ... all-places
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Re: Malaysia - Market Direction & Strategy

Postby winston » Mon May 14, 2018 1:30 pm

List of Stocks To Look Out For After PH's Win

Source: LOANSTREET

https://loanstreet.com.my/learning-cent ... PH%27s-win)&mc_cid=4527ddfdfb&mc_eid=4319d17127
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Re: Malaysia - Market Direction & Strategy

Postby winston » Wed Jun 27, 2018 9:34 pm

Malaysian stocks available at compelling valuations rising

A number of stocks looking attractive on valuations are rising as the FTSE Bursa Malaysia KLCI Index’s price-to-earnings ratio has fallen below the historical average of 16 times.

KUALA LUMPUR: A number of stocks looking attractive on valuations are rising as the FTSE Bursa Malaysia KLCI Index’s price-to-earnings ratio has fallen below the historical average of 16 times amid continued selling by foreign investors, Credit Suisse analyst Danny Goh writes in note.

The FBM KLCI's price-to-earnings (P/E) at 15.6 times on Credi Suisse estimates; dipped below historical average only once in last five years when government halted offshore trading of ringgit in 2016.

Stocks trading at or below global financial crisis price-to-book levels include Uzma, Mah Sing, SP Setia, Gamuda, CIMB, AirAsia Group, BAT, Genting, Genting Malaysia, Public Bank.

Shares offering more than 5% dividend yield include Astro, Malakoff, Maybank, SP Setia, Telekom Malaysia, CIMB, BAT, Mah Sing.

Clarity on plans to improve fiscal position, economic growth, ties with China and Singapore, leadership at government-linked companies and finalisation of mega projects can lift sentiment.

Source: Bloomberg

Read more at https://www.thestar.com.my/business/bus ... if1M1XH.99
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Re: Malaysia - Market Direction & Strategy

Postby winston » Mon Jul 09, 2018 8:15 am

Go for high dividend yield stocks

by Izwan Idris

PETALING JAYA: Investors should stick to high dividend yielding counters with strong earnings growth prospects to ride out the current volatility in the stock market, says MIDF Research.

High on its list of recommendations for the third quarter are Mazda dealer Bermaz Auto Bhd
and Malayan Banking Bhd, as well as property plays Mah Sing Group Bhd and UOA Develeopment Bhd.

These counters, the firm said, offer investors a minimum dividend yield of 6% at their current price levels. Recent broad selloff in the stock market have also pushed the share prices of these companies below their fair values.

Mah Sing offers the best mix in terms of defensive quality and strong upside potential. MIDF reckoned at RM1.07, the stock is trading at at a 50% discount to its target price.

Among the big caps, battered banking stock CIMB Group Holdings Bhd trumped Maybank when comparing their share prices upside worth, but Maybank is much superior in terms of steady dividend payout.

For investors looking for hefty capital gain, MIDF top pick is AirAsia Bhd. The firm has a target price of RM4.87 for the airline stock, compared with its market price of RM2.99.

MIDF Research also maintained its positive outlook for the stock market. It expects the FTSE Bursa Malaysia KL Composite Index to close the year at 1,800 points.

Despite the sharp fall, MIDF said that the index is still relatively expensive at 15.6 times projected earnings compared with other regional markets.

After outperforming all key South-East Asian, North American and European markets in the first quarter of this year, the local equity market began to descend in late April.

The price pullback became more precipitous in May 2018 amid a sustained outflow of foreign funds.

At 1,663 points last Friday, the FTSE Bursa Malaysia KL Composite Index had fallen by almost 12% from its recent peak in mid April. At current level, the benchmark is at its lowest level since January 2017.

Source: The Star

https://www.thestar.com.my/business/bus ... Cguvvlf.99
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Re: Malaysia - Market Direction & Strategy

Postby winston » Sat Jul 21, 2018 8:22 am

Furniture and glove makers winners in US-China trade war

Furniture

Within the furniture space, Lii Hen Industries and Latitude Tree Holdings are two stocks which caught the research house’s attention considering 70%-90% of their sales are directed to the US.

Furthermore, both have solid balance sheets with a net cash position, making up 10%-20% of their corresponding market capitalisation. Valuation wise, they are trading at less than 10 times price-to-earnings (PE) while offering commendable dividend yields of more than 3%.


Wood-based panel makers

For wood-based panel makers, potential beneficiaries would be Mieco Chipboard, Evergreen Fibreboard, and HeveaBoard.

That said, the US forms only less than 10% of their total sales. Among them, HeveaBoard has the sturdiest financial position with a net cash pile of RM23mil (5% of its market cap) while Mieco and Evergreen have net gearings of 0.6 times and 0.1 times respectively. They trade at an average PE of 12 times.


Source: The Star

https://www.thestar.com.my/business/bus ... liwybCW.99
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Re: Malaysia - Market Direction & Strategy

Postby winston » Thu Feb 07, 2019 9:27 am

MY: Malaysia Strategy

Fund Flows & Lookouts

by Chew Hann Wong

Strategy Research

Foreign investors net bought MYR1.0b worth of Malaysian equities in Jan 2019, snapping three months of foreign net sell.

We believe that the foreign net buying was thanks to higher crude oil prices and a more ‘dovish’ US Federal Reserve.

Cumulative foreign net buy (since early-2010) as at end-Jan 2019 stood at a still timid MYR3.8b.

We maintain our defensive core equity strategy.

Key domestic lookouts are 4Q18 GDP announcement (14 Feb 2019) and 4Q18 corporate results season.

Although the KLCI was flattish MoM, we noted gains in the share prices of selected stocks from certain sectors (construction, plantation, property and gaming).

Key domestic lookouts in Feb 2019 are:-
(i) 4Q18 GDP announcement on 14 Feb – we forecast 4Q18 GDP growth YoY of 4.4-4.7%
to bring 2018’s growth to 4.7%; and
(ii) 4Q18 corporate results season – we expect our 4Q18 research universe earnings growth to remain tepid, especially the plantation sector.


Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... bc36e3.pdf
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Re: Malaysia - Market Direction & Strategy

Postby winston » Thu Apr 11, 2019 9:10 am

2Q19 – Retail Strategy

Volatile and newsflow-driven quarter

The lingering worries on trade war uncertainties, slower economic growth potential and inverted yield curve as well as the Brexit deadlock situation may continue to dampen the market tone moving forward.

However, we see potential catalysts such as
(i) recovering firmer Brent oil prices,
(ii) optimism in construction sector, with the potential revival of mega projects,
(iii) export-oriented companies amid weakening bias USD/MYR trend and
(iv) defensive (consumer) and high dividend yielding corporates.

Hence, we believe retailers will need to cherry-pick stocks for potential winners under the abovementioned sectors. We like:-
(i) O&G: SAPNRG, EATECH,
(ii) construction: KIMLUN, KERJAYA, TRC, GFM,
(iii) export-oriented: SUPERMAX and
(iv) defensive: DKSH, UCHITEC.

Source: HLIB
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Re: Malaysia - Market Direction & Strategy

Postby winston » Mon Apr 22, 2019 1:45 pm

AmInvest Research positive on Bandar Malaysia, firm Malaysia-China ties

KUALA LUMPUR: AmInvestment Bank Research is maintaining its end-2019 FBM KLCI target of 1,820 and sees the market already at the bottom.

In its strategy report issued on Monday its top picks are Maybank, Petronas Chemicals, RHB Bank, Dialog Group, Top Glove, Serba Dinamik, Bermaz Auto, MPI, Malayan Flour Mills and Berjaya Food.

“We view positively the revival of the Bandar Malaysia project that we believe signifies the return to normalcy of Malaysia-China relations.

“This follows the recent revival of another Chinese-led project, i.e. the East Coast Rail Link (ECRL) project, after the project turnkey contractor China Communications Construction Company Ltd agreed to cut the project cost by RM21.5bil to RM44bil from RM65.5bil,” it said.

AmInvest Research pointed out the key difference between the two is that in the ECRL’s instance, the government was held hostage by a termination penalty amounting to RM21.8bil, while in the case of Bandar Malaysia, the government was under no pressure whatsoever as the question of compensation never arose.

To recap, in 2015, a 60:40 JV between Iskandar Waterfront Holdings (IWH) and China Railway Engineering Corp (CREC) entered into an agreement with 1Malaysia Development Bhd (1MDB) for the purchase of a 60% stake in the 468-acre Bandar Malaysia project in Sungai Besi, Kuala Lumpur, for RM7.41bil.

The deal was subsequently cancelled in 2017. IWH is the parent company of the listed Iskandar Waterfront City.

“We believe the market is caught by surprise (and caught short) by Putrajaya’s sudden departure from its more ‘restrictive’ views towards Chinese businesses following the change in power post-14th general election (GE14),” it said.

AmInvest Research believes the Malaysia-China relations already hit the bottom in August 2018 when Prime Minister Tun Dr Mahathir Mohamad proposed a ban on foreign purchases of properties in Forest City, a US$100bil (RM410bil) property project comprising four man-made islands with a total area of 3,425 acres at the southern tip of Johor, developed by Chinese property giant Country Garden.

“We believe accelerated foreign direct investment (FDI) from Chinese businesses (or the expectations of this happening at some point alone) shall stabilise the stock market, ringgit and business/consumer sentiments, and hence the economy, if not lifting them out of the doldrums at present.

“The latest development could not have come at a more critical time,” it said.

The research house said there have been concerns on capital flight from Malaysia following the recent decision by the Norwegian sovereign wealth fund to reduce its exposure to emerging market bonds (which could result in an outflow from Malaysian bonds estimated at US$1.9bil or RM7.8bil).

There was also apprehension and the news on the FTSE Russell putting Malaysia on the watch list with a view to excluding it from the FTSE World Government Bond Index (which could trigger an outflow of Malaysian Government Securities to the tune of US$8bil or RM32.8bil).

“The revival of Bandar Malaysia alone could immediately bolster the government’s coffers by RM1.24bil, being RM7.41bil deposit plus RM500mil advance payment. The full settlement of the purchase consideration (of which the time frame is still unknown at present) could bring in another RM6.17bil,” it said.

The key sectors that will be impacted by the Bandar Malaysia revival are:

1. Property (Negative): This massive integrated development will add more floor space to the already over-supplied residential, commercial, office and retail segments in the Klang Valley.

The saving grace is Bandar Malaysia may stimulate new demand if it is able to, as advertised, “draw major international financial institutions, multi-national corporations and Fortune 500 Companies to locate their regional headquarters” there, including “(Chinese) tech giants such as Alibaba and Huawei”.

Private developers may face tremendous competition from the proposed 10,000 affordable homes in Bandar Malaysia given the units’ strategic location, public transport connectivity and potentially subsidised pricing;

2. Building Materials (Positive): The project will stimulate demand for cement and steel, of which the extent will depend on how aggressive Bandar Malaysia rolls out its launches; and

3. Construction (Positive): The local participation requirements will ensure that Malaysian construction companies get a fair share of Bandar Malaysia’s construction works.

However, it was mindful that not many local contractors have worked with Chinese main contractors before, and if their experience in time will be a fruitful one.

AmInvest Research said it was more inclined to want to look beyond the sectors in its analysis for the revival of Bandar Malaysia. It believes investors should instead focus on how the improved Malaysia-China ties could help bring down the market risk premium, resulting in multiple expansion for the market.

On the KLCI, it said at last traded 1,622, the FBM KLCI traded at about 16.9 times its projected 2019F earnings.

This was at a one time multiple discount to its five-year historical average of 17.9 times.

“We maintain our end-2019 KLCI target of 1,820pts, which was initially (in December 2018) based on 18.5 timesour earnings forecast, but has since risen to about 19 times as we trim our 2019F earnings growth projection to 2.7% from 4%.

“Fast forward to next year, at 1,820, the KLCI only trades at 17.9 times our 2020F earnings forecast (backed by a 6.3% earnings growth), which is in line with its historical average.

“We are calling the bottom of the market. Our top picks are Maybank, Petronas Chemicals, RHB Bank, Dialog Group, Top Glove, Serba Dinamik, Bermaz Auto, MPI, Malayan Flour Mills and Berjaya Food,” AmInvest Research said.

Source: The Star

https://www.thestar.com.my/business/bus ... WzHvA6B.99
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