Stock Idea #3 Aeon Credit Service
Kenaga Research has
maintained its Outperform rating on the company with a target price of MYR 17.20.
Improvement in asset quality and cost controls are going to help the company in its future outlook.
“The group credited lower net impairments seen in 1QFY23 to the same EPF withdrawals which allowed for better repayments.
The better collection translated to higher writebacks for the quarter, mainly arising from the auto
financing segment (28% of total receivables).
Though this may be inorganically induced, we believe near-term recoverability will remain buoyant with the group’s digital onboarding and credit assessment capabilities allowing it to skim for new high-quality accounts.
As of May 2022, the group still holds management overlays of RM38m.
With regards to the possibility of higher OPR in the following months, the group believes there is little
concern to its fund cost as they are mostly supported by long-term debt financing. The group’s debt profile otherwise consists of fixed rate borrowings.
Meanwhile, the group has an existing cash pile of RM551m which they believe is sufficient to sustain working capital needs in the near term.”
>> Read more about the company here.
Stock Idea #4 Genting Malaysia
RHB Bank has maintained its
Buy rating on the company with a target price of MYR 3.45.
Recovery in footfall and customers are the impetus behind the valuation.
“We were pleasantly surprised by the crowd in the casino on a weekday afternoon. While we estimate that c.25% of the tables were still empty, some of the most popular tables had more than 50 patrons gathered around it.
However, outside the casino, the SkyAvenue mall and High Line (bar street) were quite empty in the afternoon, but footfall seemed to have gradually risen later in the day.
We also gather that all of the c.5,000 hotel rooms (out of the 10,500 total hotel rooms at RWG) opened have been fully booked for the weekends.
Given the borders of neighbouring countries have opened, we think Genting Malaysia will likely ramp up efforts
to attract tourists from around the region.
That said, we note that historically, more than 80% of RWG's visitors have been domestic tourists.
With a decent crowd on a weekday afternoon, we think that RWG should see higher footfall on the weekends and holidays, especially as SkyWorlds continues to draw many first timers.
However, we are cautious on the impact of inflation on GENM's recovery, as we think that it could reduce the number of gaming and non-gaming visitors, as well as reduce the drop per person, especially for the mass market segment”
>> Read more about the company here.
Stock Idea #5 IHH Healthcare
Rakuten Research has
maintained its Buy rating on the stock and with its target price at MYR 7.20.
The ability to pass on costs to customers as well as the opening of countries are 2 main factors for the good valuation.
“Demand recovery in 2QFY22 will be stronger than previously assumed as the geographical locations in which IHH operates are exiting the end of the pandemic.
There have been strong returns of domestic patients as well as growth in foreign patients in Malaysia and Singapore.
In Turkey (80% bed occupancy rate) and Europe, IHH foresees high bed occupancy rate to continue. While in India, it expect gradual improvement of non-Covid patients starting from 2QFY22.
The group will continue to drive cost savings and ramp up productivity and increase bed occupancy ratio currently
averaging at 60% in India.
Gleneagles HK turned positive EBITDA since May 2021 and sustains its growth with EBITDA margin at single digit.
Given the low “price elasticity of demand” of private healthcare services, IHH has been able to pass on cost inflation to customers, as reflected in its rising revenue per inpatient over the past several quarters”
>> Read more about the company here.
Stock Idea #6 Gas Malaysia Bhd
Kenaga Research has maintained
its Outperform rating on the company with a target price of $3.40.
The upcoming stellar results will be driving the company's stock price.
“We remain optimistic about GASMSIA’s earnings prospects given the expected strong earnings for the next three years supported by favourable retail margin arising from the better deal in contract renegotiation.
With economic reopening, volume growth is back on track which we projected at 3% annually.
As such, we maintain our OUTPERFORM rating for its earnings defensiveness and above average dividend yield of >7%. Post-earnings revision, our new DCF-driven target price is now RM3.40, from RM3.10 previously ”
>> Read more about the company here.
