*MKE Kopi-O will be posting our final Kopi of the year on 17 Dec 2021. We will resume publication on 3 Jan 2022. Wishing everyone Happy Holidays, a Merry Christmas and a Happy New Year!*
*Maybank Kim Eng Kopi-O (14 Dec 2021)*
Nikkei 28640.5 0.71%
Kospi 3001.7 -0.28%
SSE 3681.1 0.40%
HSI 23954.6 -0.17%
TWSE 17767.6 -0.33%
SET 1625.8 0.47%
JCI 6662.9 0.15%
STI 3120.0 -0.50%
KLCI 1494.9 0.40%
*MKE Key Calls*
*Thailand Energy Sector - World reopens*
Despite strong FY21E earnings, sector performance has lagged as market has been quick to price in a top. In aggregate, we estimate FY22E earnings will edge 3% lower YoY. Nevertheless improving core profits, attractive valuations, and reopening narrative could be a catalyst for a push higher. We see upside risk to earnings as reopening momentum builds. We recommend investors to position for a stronger 1H22. Our TOP picks are PTTEP and IVL with FY22 estimates 16% and 23% above consensus.
*MY*
o Expect trading to be choppy after Wall Street tumbled overnight. Stocks will remain volatile in the coming days, as investors focus on the upcoming FOMC meeting later this week, which is expected to speed up stimulus withdrawal. Notably, ECB and BOE are also expected to unveil their rate decisions on Thursday. Technically, we expect the benchmark index to range between 1,470 and 1,510 today, with supports at 1,484 and 1,450.
o *Sapura Energy (SAPE MK)*: 9MFY1/22 results continued to disappoint, on wider QoQ losses, continuously affected by higher opex and Covid-19 challenges. SAPE remains vulnerable for its negative mix of stretched balance sheet, tight cashflows, legacy contracts, poor execution & continuous cost overruns, which are affecting its ability to recover. There is also a greater need to restructure its operations. Assets divestment is imperative. We cut FY22-23 earnings, not expecting a return to the black over our forecast period. Maintain SELL with a TP of MYR0.03.
o *Ramssol (RAMSSOL MK)*: Its wholly-owned subsidiary Rams Solutions S/B had entered into a strategic marketing and collaboration agreement with ELMU V S/B to promote co-operation in the conduct of legal framework, corporate liability, corruption risk management and organizational anti-corruption plan course. The latest collaboration should be welcomed as it will be able to leverage on ELMU. Stock trades at 18x annualized 9M21 EPS.
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