June 10

[MY] 7 Interesting Stock Ideas [June 2021]

The biggest news that has come out of Malaysia was that it will go into a full lockdown from 1st June 2021 for two weeks.

Malaysia’s government has been hesitant due to the negative economic impact that will arise out of this lockdown. Many industries/sectors will inadvertently be affected especially that its coming on top of the 3rd MCO.

However, its not all doom and gloom in the stock market. There will still be light shone on certain sectors and industries.

Hence, we have identified 7 stocks that you should take note of for the month of June.

#1 Hock Seng Lee

Public Investment bank has maintained its BUY rating on the stock with a target price of RM 1.06.

The positive sentiments are due to its strong order book. ” HSL’s latest estimated outstanding orderbook stands at c.RM1.8bn, translating into healthy level of 4.0x cover on FY20 construction revenue.

In FY21, HSL has secured a RM131 contract for the construction and completion of Leadership
Training Institute for Sarawak Civil Service (Phase 1) in Kuching. ”

Moreover, ” we take comfort in state’s infra backlog which should lead to more opportunities when mass vaccinations pick up.

Among the various projects mentioned in the state budget include Coastal road, Trunk road, Lawas-Limbang road, water supply grid, agropark as well as numerous roads and bridges. ”

>> Read more about the company here.

#2 Berjaya Sports Toto

Hong Leong Investment Bank has maintained its BUY rating with a target price of RM 2.40.

One major push is due to the positive outlook.

“We expect a modest recovery in its 4Q21 results despite the rising Covid-19 cases in Malaysia as its outlets are still allowed to operate. However, we are cognisant of the possibility of the implementation of a stricter MCO. This is the main reason behind our conservative FY22 forecast of RM227.7m (+7% YoY).

We remain optimistic on the vaccination rollouts but note that bulk of the supply (>70%) is back loaded to 2HCY21. We believe that BToto’s customers would have a higher willingness to go out to purchase draws when vaccination rates are higher and Covid-19 cases dissipate.

We also expect the clamp down on illegal NFOs to be more rampant after the MCO restrictions are lifted, which could bode well for BToto’s sales volume.”

>> Read more about the company here.

#3 Bumi Armada Berhad

Public Investment bank has maintained its Outperform rating on the company with a target price of RM 0.58.

The impressive results of the company and the outlook were the drivers behind the sentiment.

“Bumi Armada’s (BAB) reported an increase of 64.7% YoY in 1QFY21 core net profit to RM147.9m, on the back of RM562.7m (+1.8% YoY) revenue.

Performance is mainly supported by the lower operating cost from FPSO Olombendo, resulting in the Group’s operating margin improving by 5.6ppt.

Core net profit is above our and consensus expectations, meeting 35% of full year forecast. We see the Group able to register stable earnings given the steadier performance from FPSO Kraken and Olombendo hence our FY21-23F earnings being revised higher by an average of 11.3%.

Performance for the FPSO (floating tankers) segment is expected to remain steady given the nature of its long-term contracts.

This will help mitigate the impact of weak performance in OSV (offshore vessels) segment on lower utilization and charter hire price.

In addition, management is striving to improve this segment through disposal of its OSV. ”

>> Read more about the company here.

#4 Affin Bank

Credit to AFFIN BANK TTDI KL

Hong Leong Investment Bank has maintained a BUY rating on the stock with a target price of RM 2.15.

The positivity of the analysts is derived from the stable performance and outlook.

“We expect NIM to remain stable premised on no OPR reduction (since it is already at an all-time low) and benign deposit competition in 2021. Also, loans growth is anticipated to continue gradually recovering.

Separately, GIL ratio is likely to creep upwards but we are not overly worried as Affin has already made heavy pre-emptive provisioning in FY20 and in our view, credit risk has been adequately priced in by the
market, looking at the high NCC assumption applied for FY21 by both us & consensus (above the normalized run-rate but below FY20’s level).

Furthermore, we believe the Government and BNM will remain supportive in helping troubled borrowers, limiting a significant deterioration in GIL ratio. ”

>> Read more about the company here.

#5 BIMB Holdings Bhd

Kenaga has maintained its Outperform rating with its target price at RM 5.15.

The conviction of the analyst was because  “the group has carved a 5-year plan (by 2025) to boost its asset size and improve efficiency, with digitalisation expected to be at the forefront.

Meanwhile, investors are expected to be eyeing the progress of the upcoming restructuring plan closely, given it could still serve as a cheaper proxy to TAKAFUL shares.”

>> Read more about the company here.

#6 Lagenda Properties

Hong Leong Investment Bank has maintained its BUY rating on the company with a target price of RM 2.01.

The main driver of the sentiment is the stable outlook of the company despite MCO.

“Encouragingly, management notes that sales momentum remains positive for the month of April and May despite the return of MCO.

We are expecting a stable contribution backed by its robust take-up rates on the affordable landed market.”

Moreover, the results of the company have been encouraging.

“Lagenda recorded 1Q21 core PATMI of RM55.6m (+19.5% QoQ, +1174.9% YoY). The results were within our and consensus expectation accounting for 25% of both our and consensus full year forecast.”

>> Read more about the company here.

#7 Petronas Chemical Group

AM Investment Bank has upgraded to Buy rating on the company with a target price of RM 10.60.

Main driver of the sentiment is its strong performance and outlook.

“QoQ, PChem’s 4QFY20 revenue rose by 22% to RM4.7bil, driven by product prices for the fertiliser & methanol (F&M) and olefin & derivative (O&D) segments, partly offset by plant utilisation (PU) declining by 4 percentage points to 90% caused by turnaround activities at the Labuan methanol plant and maintenance work for the fertiliser plants in Bintulu, Kedah and Sabah.”

Furthermore, “Given the improving earnings prospects of the group’s 50%- owned Pengerang operation in tandem with higher petrochemical prices, PChem currently trades at an attractive FY21F EV/EBITDA of 7.6x, 12% below its 2-year average of 8.6x.”

>> Read more about the company here.

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Tags

7 growth stocks malaysia to buy, Affin Bank, Berjaya Sports Toto, BIMB Holdings Bhd, Bumi Armada Berhad, growth stocks malaysia, Hock Seng Lee, KLSE, Lagenda Properties, Petronas Chemical Group


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