Suggest Take Profit for Malaysian Market

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The KLCI shot directly up from 1,660 and we think that the recent volume could not justify the current rise. Other factors such as an over expanded MACD which would normalize once the range of gains decline on day to day basis.

The market sees passive selling from foreign funds when the ringgit weakened against the USD breaching RM 4 to the dollar earlier last month.

As Ringgit stabilized the selling stopped and sees some buybacks changing hands to local funds. Problem is the amount of buying in terms of volume remain weak.

We suggest you take profit on shares at target KLCI of 1,758.

Previously bought shares nearing 1,660 on the index could be shifted back to cash for the time being. Our recommendation earlier CIMB already saw a 4.5% gain from our target buy of RM 5.50.

You can de-risk index related counters and buy them back when the market dips again.

In the mean time, the 100 point rise seems un-natural and likely would see a correction underway.

 

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NovaMSC – Singapore’s very own MYEG?

NovaMSC could be seen trading among the top 5 in terms of volume day after day on the Malaysian market. The stock almost doubled in 1 month propelled by order book replenishment and a sudden explosion in contracts received over these periods.

The stock wasn’t covered under CIMB’s Research team but getting as hot as it is now, they too decided to publish a short introduction to the company.

Do you think you should have a piece of this? Have a look at their latest report!

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CIMB’s Strategy June 2018

June is definitely a bear market but July just started which also marks the start of the 2nd half for 2018. Being down sharply for the last 2 months, we see possibilities for July to close higher than the 1st half.

CIMB posted its Malaysian strategy and it is clear that the weakest component on the KLCI I still the construction sector. Meanwhile, miners get a lift through higher oil prices.

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Furthermore, the report includes a very important chart where we see the correlation of foreign buying versus the value of Ringgit against the US Dollars.

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In short, weakening RM gets foreign funds selling. We missed the divergence for foreign money to come back after the election, but we believe that it takes time for confidence to rise and money to flow back in. The cabinet is in full force and business continues as usual.

CIMB only placed overweights on the oil and gas industry this time around.

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Take a look at their strategy report. A lot of information and data provided for your reference.

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CIMB Cuts KLCI Target

Cut KLCI earnings growth to 5% for 2018 and target to 1,767 pts

The weak corporate results have led us to cut our market earnings for the stocks in our universe by 6-7% for FY18-19, as we cut earnings forecasts for Axiata, Telekom and the banks.

This resulted in slower KLCI earnings growth of 5% for 2018 (from 8%) and 8% for 2019. In line with our earnings revision, we lower our end-2018 KLCI target to 1,767 from 1,820 points, still based on P/E of 15.4x (1 s.d. below three-year average mean P/E)

CIMB Research

Have a look at the summary after Q2 Results

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CIMB on Inari Amertron

Our top pick post election due to expectation of weakening ringgit reported its results yesterday. As expected, revenue should see a decline Q-o-Q but the profit remained solid.

As the report from CIMB tells us,

We learnt that the second phase expansion at P13 had recently been completed. The second phase could add another 250 RF testers, raising Inari’s capacity to 1,200 units. Following completion, P13B plant will be the largest plant in the group with a total manufacturing floor area of 340 sq ft. The group is in the midst of getting production equipment and it expects to start ramping up production from Jul onwards.

We think that indeed it is still a growing company. Expect the price to trade close or breach to its previous high of RM 2.50 (adjusted after bonus issue)

Have a look at the report!

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What if Etiqa is Listed?

Well the rumors might seem to be true eventually with the likelihood of Etiqa going listed. A couple of other insurance companies are queuing to get listed due to Bank Negara latest regulation. But it seems odd for Etiqa to get listed since its 69% Maybank owned.

Anyway the report below by CIMB elaborates more on this round’s spin off.

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As long term investors to Maybank, we are firm that this spin off will make the operations clearer on the P&L and balance sheet.

Indifferent towards the growth prospect.

Sasbadi – So Many Buy Calls, So Confusing

Just posted the latest results yesterday and the comment by investment banks place a big miss on the company’s earnings towards their expectation. No doubt almost all the reports we can scour, the deal is to buy Sasbadi.

Education is something that people pay without question and seek only the best!

We still think that this quarter’s revenue gain doesn’t do good judgement but no doubt we are still interested in collecting this counter. Just that at this price, everything looks so cheap but you will never know how the next quarter’s results might fare.

We are giving recommendation to wait and be patient looking at the next quarter’s results.

Have a look at these reports.

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