Following a series of lukewarm outlook for the Malaysian market, Malaysian stocks appear to be set for a downtrend in the first quarter of 2019. Furthermore, with business optimism slipping among Malaysian firms, the ominous signs appear to suggest that investors should take shelter from the Malaysian market. However, CIMB begs to differ. With selective stock picking, investors can still find opportunities to outperform the market. According to CIMB, there are six Malaysian stocks you should keep an eye on if you are looking for those opportunities to outperform the market.
Investors Takeaway: Want To Outperform The Market? Check Out These 6 MY Stocks By CIMB
- Axiata Group
Following more than 30 percent decline in share price, value has started to emerge in Axiata Group (Axiata). A rebound in Celcom’s earnings following cost rationalisation, Axiata XL’s earnings recovery following price war with competitors and cessation of equity accounting for Idea post-Vodafone merger will drive a rebound in earnings for Axiata in 2019. With Axiata trading at FY19F EV/EBITDA of 12.5 times, Axiata is trading at a decent discount compared to the ASEAN telco average.
BUY, TP RM4.40; Current share price RM4.09
- Malaysia Airports
There are a few risk events that CIMB thinks the market is overly concerned about. For instance, the government’s move to set up an airport REIT for airport capex funding led investors to think that it is preventing Malaysia Airports to grow.
However, CIMB notes that there is no shortage of opportunities for growth, even with the new airport REIT. The government’s plan to impose departure levies was also thought to create a negative impact on Malaysia Airports’ passenger traffic. However, CIMB believes that the lower passenger traffic will be balanced out by the higher tariffs. Thus, CIMB recommends investors to relook at Malaysia Airports given the unlikelihood of the risk events taking place.
BUY, TP RM 10.27; Current share price RM8.00
- MyEG Services
2019 appears to be an exciting year for MyEG Services (MyEG), with services to register new foreign workers expected to kick start the year and propel MyEG to become one of the largest independent agents for new foreign workers in Malaysia from 2019 onwards.
MyEG is also in a good position to capitalize on the prospective Indonesian market, which is starting to take off in major provinces. CIMB also notes that MyEG is starting to market micro loans to consumers from early 2019.
BUY, TP RM 1.86; Current share price RM1.02
- RHB Bank
RHB Bank (RHB) is CIMB’s top pick among the Malaysian banks for two reasons. Firstly, RHB is displaying an attractive valuation with its forward-FY19 price-to-earnings of 8.4 times is below the sector average’s 12.7 times.
Secondly, RHB’s transformation programme is starting to come to fruition. The bank’s transformation programme has managed to improve its operating efficiency and increase its low-cost deposits. As we head into 2019, these two outcome from its transformation programme will help RHB to rejuvenate its fee income growth.
BUY, TP RM6.38; Current share price RM5.56
- Sime Darby Property
Sime Darby Property’s plan to launch more projects in 2019 is set to underpin its earnings growth in the medium term, according to CIMB. Sime Darby Property is planning to launch projects with a total gross development value of RM3-4 billion. Its massive land bank advantage will allow Sime Darby Property to ride through the bleak property sector outlook and potential changes in national housing policy.
BUY, TP RM 1.29; Current share price RM1.10
- Westports Holdings
After a poor throughput in 2017, Westports Holdings (Westports) has been delivering stronger than expected volume growth in 2018F. Heading into 2019, CIMB believes that the volume growth will continue. As such, CIMB has revised its volume growth expectations for Westports in 2019 on the back of growth in gateway volume.
According to CIMB, Westports has secured government approval to build another 10 container terminals (in Westports 2) to double its capacity. Given its strategic importance to Malaysia’s economic growth, CIMB foresees the government to roll out incentives for Westports to undertake the project, which could catalyse the share price of Westports.
BUY, TP RM 4.72; Current share price RM3.89
Time To Switch Faith Into These 5 MY Stocks