*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 (8 Dec 2021)*
Nikkei 28455.6 1.89%
Kospi 2991.7 0.62%
SSE 3595.1 0.16%
HSI 23983.7 2.72%
TWSE 17796.9 0.61%
SET 1609.3 1.33%
JCI 6602.6 0.85%
STI 3134.7 0.59%
KLCI 1498.0 0.98%
*MKE Key Calls*
*Malaysia Property - Back to more realistic valuations*
While 2022 property sales should perform better as the economy is recovering, we remain cautious on 2022 earnings/sales outlook as the fragile recovery in the sector could be hit by higher raw material costs and potential interest rate hikes as well as political uncertainties ahead of GE15. Since our sector downgrade to NEGATIVE on 1 Nov 2021, property stocks under our coverage have retreated by -6% to -20% to more realistic valuations. We U/G the sector to NEUTRAL. Our preferred pick: SPSB.
*MY*
o Buoyed by the rally in overnight US markets, the KLCI could extend its gains and challenge the 1,500 psychological level today. O&G and plantation stocks may gain traction after commodity prices ended higher. Trading, however, will remain choppy as investors eye US inflation data later this week. Technically, we expect the benchmark index to range between 1,490 and 1,520 today, with supports at 1,475 and 1,452.
o *Malaysia REITs*: M-REITs’ 3Q results were mostly below expectations, with average core net profit decline -15% YoY, especially for those with high exposure to retail and hotel assets. However, earnings continue to be supported by the long term leases of office and industrial segments. We expect an earnings recovery in 4QCY21. We remain NEUTRAL on the sector. The sector offers FY21/22E average net DPU yields of 4.1%/5.3%. Our Top BUY pick is AXIS REIT; our other BUY is Sentral REIT.
o *Tafi Industries (TAFI MK)*: Proposed to undertake: 1) a 2-for-1 bonus shares issue; and 2) a 1-for-2 bonus warrants issue. The proposed exercises aim to reward its shareholders, improve the liquidity and marketability of its shares, strengthen its capital base, as well as potentially additional working capital for the group. In 9M21, the group reported a PATMI of MYR2.2m vs. a loss after tax of MYR4.1m in 9M20. Note that TAFI has been in the red since FY15. Stock trades at a P/B of 4.2x. It has no borrowings at end-Sep 2021.
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