The ups and downs of KLCI had brought us down 5.86% for the 1st half of 2018 or down 6.62% year to do. The report below is somewhat similar to what we posted before the start of this year.
Maybank once again cover the outlook for the 2nd half of 2018 in these 100 pages worth of good reads. The coverage extends from world economy to Malaysia after Pakatan Harapan’s win over the general election.
Have a look! It’s a great read…
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.
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.
Credits to Maybank for this report. An all you need or want to know package for the elections and market.
3 Outcomes in Their Report:
- Baseline, that BN wins with a majority at the parliamentary level, but short of two-thirds.
- Best-case, that BN secures two thirds majority.
- BN wins with a simple majority
So in their view, there is no way Pakatan winning this election, AGAIN…
Anyway have a look at the statistics and how market react prior and after the elections
Multiple new entries under the new guideline such as making REITs more REIT like by demanding 75% of the portfolio to be invested. It was only 50% based on the old guideline.
Strangely the new guideline allows them to do property development which make make REITs more developer like.
Take a look at the Maybank’s Report on new REIT guideline.
Regional Outlook and Themes for 2018
An early look into the 2018 Budget which would be tabled end of October.
Take a look at the whole summary of bank’s report card for 2nd quarter of 2017.
We think that banks had rallied and recovered the losses trading fair to what it is now but we still think that you should hold if you have already seen capital gains holding from last year plus dividend payout that were made.
From now on, the movement is likely broad market related and we do not think that the major banking blue chip would outperform the KLCI. But we are still holding it rather than returning to cash as most stock seem fairly valued too.
What’s your take?
Our high conviction stock post results for Q 2018 and in our view its not that satisfactory coming below our expectation. But the feel good factor comes knowing that there isn’t any deep selling done after a not so well quarter.
Institutions are buying recently with the names of Amanah Saham Bumiputera grabbing the stocks in bulk and this proves in fact showed that price to earnings would remain high with these institutional bodies on board.
If you have bought at a lower price to earnings premium then it is safe to say the asset you are holding on had been re-evaluated in terms of quality.
As attached, Maybank and CIMB reported and recommended a HOLD/Reduce rating for the stock. Since it falls on our high conviction target we are aggressive and holding on tight in return leveraging on this company’s growth.
Meanwhile the chart is showing us chances of a break over RM 5.00 with an ascending triangle in the making. A rough drawn triangle following the upward sloping line marks somewhere just before Nov to determine where it would head.
Coincidentally, it would be near to next quarter’s earnings release. We recommend buying on dips for this stock.
Click for Report
The outlook is still positive but we aren’t that optimistic towards this sector for 2H 2017. From the lack of new models and only the arrival of face-listed ones, we see that this segment still lacks catalyst for the time being.
Unlike Q4 of 2014 where most preferred brands such as Honda, Toyota and Perodua released multiple new models and big cuts to push out old models. It is hard for that period to come back which makes us ponder when should we buy undervalued automotive counters.
Take a look at the latest Outlook & Lookouts for the second half of the year. This is very interesting if you like compiled data analysis on the macro environment.