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Trading opportunities for sold-down stocks on local bourse

KUALA LUMPUR: The local bourse will provide trading opportunities for selected sold-down beneficiaries of key investment themes, according to UOB Kay Hian (UOBKH) Research, which says it foresees a reprieve period for global equities (as global inflation expectations ease) in June 2022.

The research unit said such stocks include hard commodities like Press Metal Aluminium Holdings Bhd and Malaysia Smelting Corp Bhd as China emerges from its lockdowns; Bumi Armada Bhd, MISC Bhd, Yinson Holdings Bhd and the refiners, which benefit from lofty crude oil prices; and My EG Services Bhd (MYEG) and VS Industry Bhd – major beneficiaries of the country’s recruitment of foreign workers.

UOBKH Research’s alpha picks for June 2022 include Genting Malaysia Bhd, Magnum Bhd, MYEG, Press Metal, Sunway Real Estate Investment Trust (REIT) and VS Industry.

The research unit said Genting Malaysia is poised for prominent gross gaming revenue and earnings recovery from the second quarter of 2022 onwards, following the borders reopening on April 1, driven by a meaningful influx of international visitorship to Malaysia and Resorts World Genting (RWG).

CGS-CIMB Research’s top three picks are Genting Malaysia, Mr DIY Group (M) Bhd and RHB Bank Bhd.

As for Magnum, it said with the nation emerging from the Covid-19 pandemic, Magnum will chart an uninterrupted swift earnings recovery and meaningful capital appreciation in 2022 and 2023. In the case of MYEG, earnings growth will be largely anchored on its immigration and road-transport segments, while Press Metal will continue to ride on strong aluminium prices. Sunway REIT is a border reopening beneficiary due to the expected substantial increase in tourists coming into Malaysia.

CGS-CIMB Research said it expects the FBM KLCI to continue to trade rangebound in June 2022 as the market weighs the positives from a recovering economy against a potential margin squeeze due to the inability to pass on rising costs to consumers.

“We project better quarter-on-quarter earnings in the second quarter of 2022, driven by strong commodity prices and pent-up/festive demand.

“Post the first quarter of 2022 results season, we estimate that the KLCI’s core net profit will grow by 1% and 11% in 2022 and 2023 respectively,” said the research unit.

CGS-CIMB Research’s top three picks are Genting Malaysia, Mr DIY Group (M) Bhd and RHB Bank Bhd. It said in June, investors’ attention will be on the upcoming United States Federal Reserve (US Fed) meeting on June 14 and 15, and release of the Organisation for Economic Cooperation and Development economic outlook on June 8.

“Also, investors will be focusing on whether government will impose a surcharge to consumers under the Imbalance Cost Pass-Through mechanism to pass through the higher fuel generation costs in the upcoming end-June review.

“Investors will also be following up on how the new minimum wage of RM1,500 per month (effective May 1, 2022) impacts costs for Malaysian corporates,” said the research unit.

https://www.thestar.com.my/business/business-news/2022/06/07/trading-opportunities-for-sold-down-stocks-on-local-bourse
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