Malaysia - Market Strategy

[winston]

Looking for opportunities on Bursa Malaysia

by Yap Leng Kuen

Banks are expected to be the key earnings drivers in the absence of a “cukai makmur” or prosperity/windfall tax.

Commodity price levels ensure that plantation companies still enjoy very strong operating earnings;

While the energy commodities sector has been in retreat recently, we cannot rule out a resurgence at some juncture.

As the semiconductor downcycle is expected to bottom out in the second quarter of 2023, the trend of technology demand would make the sector attractive in the longer term.

Accelerated China reopening is a positive for Asean as a whole via tourism, trade and foreign direct investment. Proxies to the upside on China reopening are in the leisure, tourism and aviation sectors, while those with operations in China would also benefit.

Source: The Star

https://www.thestar.com.my/business/bus ... a-malaysia

[winston]

Budget 2023: Developing Malaysia MADANI

We are OVERWEIGHT on banks, oil & gas, gaming, basic materials, NBFIs, healthcare, auto, and property.

Source: RHB

[winston]

Revised Budget 2023: Neutral

Record-high development expenditure and cash handouts to support government’s 2023 GDP growth of 4.5%. Fiscal deficit to narrow

Construction, Transport and Consumer sectors most impacted, but real loser is BAT as vape and Generational Endgame reinforced

Maintain Neutral; focus to return to external environment

Spirce: Affin

[winston]

Here Are the Winners and Losers From Malaysia’s New 2023 Budget

by Joy Lee

WINNERS

Consumption
Tourism
Electrical and electronics sector


LOSERS

Top earners
Tobacco

Source: Bloomberg

https://www.bnnbloomberg.ca/here-are-th ... -1.1887858

[winston]

Kenanga lists its top picks for 2Q FY23

Market continues to lack conviction in both buying and selling, says research house.

Public Bank Bhd, Celcom Digi Bhd, Maxis Bhd, RHB Bank Bhd, Gamuda Bhd, KPJ Healthcare Bhd, Bermaz Auto Bhd, Sunway Construction Group Bhd and Aeon Co (M) Bhd.

Its top sector picks for 2Q FY23 are telcos, banking, construction, retailers, and automotive makers and distributors.

Source: FMT Business

https://www.freemalaysiatoday.com/categ ... -366156373

[winston]

Alpha Picks: Improving Domestic Liquidity

Our Alpha Picks outperformed the FBMKLCI (+0.5% vs -2.2%) in March. FBMKLCI has bottomed out at the 1,400 level (at close to -2SD to historical mean PE), and we expect improving domestic liquidity and the unity government’s stability to lift Malaysian equities through 2H23.

Apr 23 picks: British American Tobacco (BAT), Genting Malaysia (GENM), Malaysia Airports, Mr DIY, My EG Services and Yinson.

Mr DIY was added to our picks as the exit of shareholder Creador has lifted shareholder overhang concern.

Source: UOBKH

https://research.uobkayhian.com/content ... bf84c06192

[winston]

Malaysia: What next?

External vulnerabilities weigh on MSCI Malaysia

Despite the brief rebound post-election, MSCI Malaysia is down -3.9% vs MSCI ASEAN's +2.8% on 3mth basis.

With the index now trading at 13x FY23E PE and more than -2 standard deviation below its 10y mean, it is evident that markets are now pricing in the threat that global growth downside risks pose to Malaysia's economic recovery.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/311534.pdf

[winston]

Preparing For A Warmer 2H23

While wary of the “Sell in May” phenomenon, we continue to expect Malaysian equities
to stage significant gains in 2H23, as investors price in an eventual global economic
pickup, and domestically, a stable political environment and improving trading liquidity.

2H23’s focus investment themes include US-China trade diversion, semiconductor sector recovery, ESG agenda, China’s reopening and blockchain, which favour technology, commodities (particularly O&G stocks) and tourism-related stocks.

Source: UOBKH

https://research.uobkayhian.com/content ... e4d2b7f1ec

[winston]

Malaysia 1Q23 Results Roundup

Broadly Disappointing

Notwithstanding 1Q23’s resilient GDP performance (+5.6% YoY; we have upgraded 2023E GDP growth forecast to +4.5%, from +4.0% previously), research universe core net profit (quarters ended Feb/Mar 2023) was broadly underwhelming, at -4.5% QoQ (-4.7% ex-Gloves) and -0.8% YoY (flat ex-Gloves), representing a 2nd consecutive quarter of both QoQ and YoY decline (Fig 1).

Key drags were Plantations (-59% QoQ, -67% YoY) and Petrochems (-34% QoQ, -82% YoY), with Technology also stumbling (-25% QoQ), with positive offset mostly from Banks (+2% QoQ, +17% YoY) and Utilities (+35% QoQ, +42% YoY), along with some smaller sectors (see Fig4).

Ratio of misses-to-beats jumped to 3.7x (4Q22: 1.1x; Fig 5), mostly due to Plantations, Consumer and Technology, while earnings downgrades-to upgrades was a similarly bearish 7.3x (4Q22: 1.7x; Fig 11 for sector details).

Per Fig 12, 6 stocks were upgraded (4Q22: 2), 5 of which to BUY – Carlsberg, MyEG, RCE, SP Setia, YTL Power; 8 were downgraded (4Q22: 18), of which 3 are now SELLs – Berjaya Food, Leong Hup, Bumi Armada.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/322830.pdf

[winston]

Foreign funds continue to sell down Bursa Malaysia equities

The net selling on Bursa Malaysia continued into its seventh straight week with net foreign outflows of RM506.5mil.

The only countries that recorded outflows were Thailand, Malaysia, Philippines, and Vietnam.

the local equities market has seen net foreign outflows for 16 out of 22 weeks this year, with a total net foreign outflow of RM2.96bil.

There was net selling in every day of the week ended June 2, 2023.

The counters that saw the heaviest net foreign outflows were RHB Bank (RM45.8mil), Hap Seng Consolidated (RM31.9mil) and Public Bank (RM30.7mil).

The most net foreign outflows were recorded in financial services (RM181.6mil), consumer products and services (RM161.5mil) and industrial products and services (RM137.4mil).

Meanwhile, sectors that saw the most net foreign inflows were technology (RM47.3mil), telecommunications and media (RM27.4mil) and transport and logistics (RM24.7mil).

Source: The Star

https://www.thestar.com.my/business/bus ... a-equities