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Mr DIY likely to replace Supermax as KLCI component stock in next review, say analysts

KUALA LUMPUR (May 25): Mr DIY Group (M) Bhd will likely be included in the FBM KLCI index, replacing Supermax Corp Bhd, which has the lowest market capitalisation among KLCI component stocks, said analysts today.

In a note, CGS-CIMB’s analysts Ng Lee Fang and Nagulan Ravi said according to their assessment of market data as at end of yesterday, Mr DIY has risen to the 20th position in terms of market cap ranking, satisfying the rules for inclusion into the KLCI index.

“As such, our analysis suggests that it will be included in the upcoming KLCI review, replacing Supermax, the lowest-ranking market cap stock among the current 30 KLCI constituents as at the end of May 24,” they said.

FTSE Russell is due to announce the results of its upcoming semi-annual review of FTSE Bursa Malaysia Index Series on June 3.

The review will use the market capitalisation data at the close of trading yesterday and all constituent changes in the review will take effect on June 21.

Kenanga Research’s analyst Koh Huat Soon also said in a note today that he expects Supermax to be edged out from the FBM KLCI for being the smallest market cap constituent, with Mr DIY coming in as the largest non-constituent.

"On the closing prices at cut-off date, Mr DIY at RM24 billion market cap was ranked 20th, qualifying it for inclusion into the FBM KLCI," he said, adding that it has cleared the ranking threshold of 25th place as a condition for entry.

Because of Mr DIY’s inclusion, he said, the smallest FBM KLCI incumbent, which happens to be Supermax, has to be dropped from the 30-member constituent.

Meanwhile, Sime Darby Bhd, another vulnerable component did not fall off the list as there were no other non-constituent apart from Mr DIY that was close to the 25th rank threshold. The closest was Westports Holdings Bhd at 31st.

Based on Mr DIY’s represented index shares of 1.95 billion at RM3.89 versus Supermax’s 1.59 billion at RM4.49, Koh estimated that Mr DIY will be coming in at around 1.52% weight versus Supermax exiting at 1.43% weight.

Koh noted that with the latest expected changes, the rubber gloves sector is back to being represented by just two constituents — Top  Glove Corp and Hartalega Holdings Bhd — making up an estimated 8.4% weight based on current prices, down from 9.9%.

This also makes space for the consumer sector weight to rise from 1.7% to 3.2%, he added.

Koh also noted Mr DIY’s consensus earnings per share (EPS) for 2021 of 8.3 sen trails Supermax’s estimated EPS of 113 sen.

Thus, he expects that the estimated FBM KLCI EPS for FY21 will be reduced as a result, by about 4.4% from 112.8 sen to 107.8 sen and for FY22 by 2% from 111.8 to 109.5 sen.

“Our target FBM KLCI of 1,710 remains for now pending final EPS adjustments after the conclusion of the 1Q2021 earnings season next month,” he said.

Separately, Koh said, the updated Securities Commission Malaysia list of Shariah approved stocks will be released after business close on May 27, and he expects all 131 stocks under his coverage to remain status quo.

At 11am, Mr DIY rose one sen or 0.26% to RM3.90, valuing the group at RM24.48 billion.

Supermax, meanwhile, fell 11 sen or 2.45% to RM4.38, valuing the group at RM11.75 billion.


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