We continue to highlight five undervalued MY stocks that will be good additions into a defensive portfolio.
Investors Takeaway: 5 MY Value Plays To Build A Defensive Portfolio By DBS
Matrix Concepts has been consistently outperforming its larger peers with record breaking property sales. This is despite having to operate in a challenging property market. DBS notes that Matrix Concepts has continued to chalk up impressive sales at its flagship developments in Negeri Sembilan at lucrative margins, thanks to its inherent competitive advantage of cheaper land bank.
Among the developments, Bandar Sri Sendayan is the jewel in its crown. Its properties at Bandar Sri Sendayan are selling at RM200 psf despite a low average land cost of RM7 psf. Matrix Concepts is sitting on a literal cash cow with significant profit margins. Despite having sustainable earnings visbility and high dividend yield (6.5 percent), Matrix Concepts continues to be trading at an undemanding valuation of 6 times FY20 price-to-earnings.
BUY, TP RM2.40; Current Share Price RM1.90
Gamuda is DBS’ top large cap pick for the construction sector. The recent news of the government’s proposed takeover of four toll concessions will likely be done at discounted cash flow value, according to DBS. This will allay fears that the Malaysian government will expropriate the toll concessions from Gamuda.
The next major catalyst for Gamuda will now be the approval for the Penang Transport Master Plan (PTMP). Once the PTMP is approved, it will pave the way for new contract awards for Gamuda to vie for.
BUY, TP RM3.50; Current share price RM3.23
CapitaLand Malaysia Mall Trust
At its current share price, DBS believes that CapitaLand Malaysia Mall Trust is oversold. The fall in CapitaLand Malaysia Mall Trust share price is largely due to Sungei Want Plaza’s temporary weakness. CapitaLand Malaysia Mall Trust has not seen such a low entry price level since its listing in 2010.
With a unique portfolio of retail assets that are geographically diversified across three regions (Klang Valley, Penang and Kuantan) to support its yield, DBS thinks that the selling has been overdone. DBS notes that the current share price of CapitaLand Malaysia Mall Trust will give investors a sustainable yield of seven percent, which is the highest in the Malaysian REIT universe. The potential capital appreciation on completion of Sungei Want Plaza’s asset enhancement initiative will reward patient investors.
BUY, TP RM1.32; Current share price RM1.12
Time dotCom has a strong growth profile that has been driving its wholesale and retail segment. The stock is now trading at an attractive valuation of 15 times FY19 price-to-earnings (-1 standard deviation) with a strong balance sheet to support its network expansion.
The upcoming implementation of the regulatory Mandatory Service on Access Pricing (MSAP) is likely to be beneficial for TIME in the medium to long term, giving rise to a significant gain in fixed broadband market share for Time.com.
BUY, TP RM9.40; Current share price RM8.85
Media Chinese International
Media Chinese is sitting on a sizeable land bank at prime locations and significant net cash that constitutes 53 percent of its market cap. DBS notes that Media Chinese is currently trading at way below its potential break-up value. Privatisation and asset unlocking exercises could emerge with time for the stock to be re-rated. In the meantime, investors will be rewarded with a decent net dividend yield of 5-6 percent.
BUY, TP RM0.29; Current share price RM0.22
3 MY Banking Stocks To Build A Defensive Portfolio