There are many news on commodities having a super-cycle currently with raw materials almost at all time highs.
This has greatly benefitted sector players like miners, oil producers, and raw materials company.
Being a resource rich nation, Malaysia will definitely be enjoying this bumper ride and pull up other sectors along the way too.
We have scoured and selected 7 Malaysian stocks that you should take note of.
#1 Yinson
RHB has maintained its Buy rating on the stock with a target price of RM 6.49.
The positive outlook of the company granted it a favourable rating.
“The conversion of FPSO Anna Nery is progressing well, at c.90% completion currently. While it is uncertain as to whether it will be affected by the lockdown in China moving forward, the alternative plan is to complete the conversion at other yards before sailing away and the FPSO operations are set to kickstart by 1QCY23.
Management guided that overall global FPSO demand remains robust and Yinson has been receiving queries from potential clients.
The group is currently interested in six projects, including four projects in Angola and one project in Suriname.
The remaining one is the re-deployment opportunity for Lamson in Vietnam. It is also comfortable to secure one large and one medium size project.
As for the renewable energy (RE) segment, Yinson is targeting to secure a 3GW pipeline by end2022 and expand the operating portfolio of 5-10GW by 2028 in 5-7 markets.”
>> Read more about the company here.
#2 Malaysia Airport Holdings
Hong Leong Investment bank has raised the company to a Buy rating with a target price of RM 8.05.
The reopening of the borders and increase in tourism flow are 2 main factors contributing to the good ratings.
“Effective today (1 Apr), Malaysia’s national borders will be reopened to all. Fully vaccinated travellers will need to undertake pre-departure negative PCR/RTK test (within 48 hours of departure to Malaysia) and on-arrival RTK test (within 24 hours arrival in Malaysia) under a certified professional.
Unvaccinated travellers will be subjected to a 5-day quarantine. Non-Malaysians (except for Singaporean) must purchase travel insurance coverage of minimum USD20k.
Travellers are also required to download and activate the MySejahtera application.
Similarly, regional ASEAN countries are also relaxing their requirements and reopening their national borders.
Despite the still high number of cases, governments are treating Covid-19 as endemic – given the less severe Omicron variant with manageable impact on healthcare system – as a reopening strategy to allow economic recovery.
Airlines are planning towards reinstating their international capacities back to pre-pandemic levels. MAHB will be a key beneficiary from the reopening of borders.
We have seen domestic demand recover strongly back to 60% of pre-pandemic levels since gradual domestic relaxation in Oct 2021.”
>> Read more about the company here.
#3 Astro Malaysia
RHB has maintained Buy rating on the company with a target price of RM 1.37.
Commendable results and outlook are good news for the company. “Astro Malaysia’s results were in line with the strong rebound in ad sales as expected.
Stock valuation remain undemanding (-1.5SD below the historical EV/EBITDA mean), supported by its digital pivot which should see churn and subscription revenues stabilise in the medium term.
4QFY22 core earnings leaped 38.5% QoQ (-15.1% YoY), halting three consecutive quarters of contraction.
This was on account of the strong rebound in advertising spend (+56% QoQ) from the economic reopening, and lower content cost.
FY21 core earnings made up 98% of our forecast (consensus: 99%) with the impact of Cukai Makmur masked by deferred tax assets and prior year overprovisions.
A fourth interim and final DPS of 2.3 sen brought FY22 DPS to 6.8 sen, a consensus miss albeit within our expectations (76% payout)”
>> Read more about the company here.
#4 TSH Resources Berhad
Tenaga Research has given an Outperform rating on the stock with a buy rating and a target price of RM 2.08.
Insightful sales of assets and paring down of debt bodes well for the company.
“The intention of selling less strategic assets to pare down debts as well as to accelerate the development of new planting makes sense.
In the case of the 3,001 Ha of Sabah land sold for RM248m, much of the estate is matured area with oil palm trees at (or near) 25 years of age.
For this NE Kalimantan land, only 3,819 Ha have been planted, thus over 70% remains undeveloped.
Management has indicated it plans to pay off RM550m of debts once this sale is concluded. Based on our estimate, TSH should turn net cash after this deal as strong FY22-23 cashflows are also anticipated.
Sales price: CH Willian Talhar & Wong’s Sabah office valued the 13,898 Ha at RM296m using a combination of DCF and Comparison Method.
Meanwhile audited NBV as at 31 Dec 2020 stood at RM271m. As such, the divestment is expected to result in pro-forma gain of RM400m.
The agreed selling price of RM51.2K per Ha is also above market price of around RM45K per Ha for agriculture land in Kalimantan.
Altogether, having paid for agriculture or Hak Guna Usaha land earlier and now selling it with some development land (Hak Guna Bangunan) premium imputed into the price, TSH has come out well”
>> Read more about the company here.
#5 Malaysian Pacific Industries
RHB has maintained its Buy rating on the stock with its target price at RM 43.30.
Resilient demand and chip shortages worldwide are good signs for the company…
“We expect resilient demand for OSATs, amid chip shortages and production bottlenecks, following robust shipments growth of 14% YoY for silicon wafers in 4Q21.
BUY on current share price weakness, as we remain upbeat on MPI’s earnings visibility, with additional capacity coming on stream, the recovery in the automotive sector, China’s localisation efforts, and its adoption of new packaging technology.
Also, its rock solid balance sheet with a net cash per share of MYR4.23 should enable inorganic growth opportunities.”
>> Read more about the company here.
#6 CIMB Group Holdings Berhad
Public Investment Bank has maintained its Outperform rating on the company with a target price of RM 6.00.
Sound strategy moving forward granted the company a good rating.
“Pursuant to its F23+ strategy (unveiled in October 2020) in which the consumer and SME segment were highlighted as key growth drivers going forward, the Group has made some headway in the time since.
This is underpinned by targeted loans growth and reflected by strong income growth in the said segments.
While strong consumer loans growth have been seen in Malaysia, Indonesia and Singapore, this has been partially offset by weaker numbers in Thailand.
That said, its not an immediate point of concern considering the latter’s economic state but which is set to recover.
The commercial business in Malaysia has been driven by its business banking segment as the SME segment remains a work-in-progress.
Loans growth momentum for the Indonesian SME segment is picking up. Indonesia’s Commercial business is showing improved risk-adjusted return on capital and loan loss coverage meanwhile. ”
>> Read more about the company here.
#7 AXIS REIT
Hong Leong Investment Bank has maintained its Buy rating on the company with a target price of RM 2.10.
Newly acquired assets and improved occupancies will help the company on its bottom line.
“Axis started of 2022 with an acquisition in iPark Kulai Johor (completed in 8 Mar) marking its 9
th property within the industrial park, further expanding it footprint within the area.
Another asset situated in Pasir Gudang was acquired and completed on 7 Mar. Axis continues to show strong appetite for yield accretive acquisitions, having previously added five new properties in 2021.
Axis has shown a proven track record of improved occupancy despite Covid-19 (FY21: 96% vs FY20: 91%).
This was thanks to new tenancies secured and property acquisitions concluded with majority of its properties being industrial title (92%) of which it is commonly 100% single-tenanted properties.
Apart from that, Axis successfully managed an 89% tenant retention rate with a strong +5.6% positive rental reversion across its portfolio. Out of 60 properties in its portfolio, 50 properties have 100% occupancy.”
>> Read more about the company here.
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