*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 (9 Dec 2021)*
Nikkei 28860.6 1.42%
Kospi 3001.8 0.34%
SSE 3637.6 1.18%
HSI 23996.9 0.06%
TWSE 17832.4 0.20%
SET 1618.4 0.56%
JCI 6603.8 0.02%
STI 3129.8 -0.16%
KLCI 1494.0 -0.26%
*MKE Key Calls*
*Malaysia 2022 Outlook and Lookouts: Divergent fortunes: macro recovery vs. market lethargy*
Malaysia’s economy is forecast to expand a faster +6.0% in 2022 (2021E: +3.8%), supported by economic reopening and sustained expansionary fiscal policy. Conversely, the KLCI is to see yet another YoY earnings contraction in 2022 (-7.4%; 2021E: +39.7%), its fourth in five years, mainly due to a one-off tax levy. Early elections could be a positive catalyst. End-2022 KLCI target is 1,710 (+14%; 15x), with overweight sectors including Financials, Tech, Petrochem, Oil & Gas, Plantations and Gaming.
*MY*
o After yesterday’s setback, the KLCI could stage a rebound today, mirroring gains in overnight US markets. Higher oil price and easing concerns over omicron variant’s threat to the economy will lend support to the market. That said, trading 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 *Axiata Group (AXIATA MK)*: The digital and tower businesses were accorded relatively more airtime in this year’s Investor Day, given their commendable growth profiles. The overarching 20sen DPS target in 2024 remains intact, and is on track. Reiterate BUY with an unchanged MYR4.50 TP (SOP-based). Axiata remains on course for a multi-year earnings recovery.
o *TAFI Industries (TAFI MK)*: Its wholly owned subsidiary TAFI Home & Office S/B was awarded a MYR30m contract to undertake construction related works to complete a mixed commercial development project at Permas City, Johor Bahru. In addition to the MYR30m award sum, it will also be entitled to 30% share of the net GDV proceeds under the Permas City project which is estimated to be around MYR6m. The latest development signifies that its construction division is making progress but its near-term prospects hinges on its furniture segment. TAFI has returned to profitability, reporting a PATMI of MYR2.2m in 9M21 vs. a LAT 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.
o *Scientex (SCI MK)*: Reported a 11% YoY jump in 1QFY7/22 PATMI. Excluding net foreign exchange gain, its 1QFY7/22 core PATMI rose 2% YoY to MYR89.3m. In 1QFY7/22, SCI booked in a net forex gain of MYR13.6m as opposed to just MYR5.4m a year ago. No dividend was declared for the current quarter. Property EBIT rose 18% YoY which more than offset a 6% YoY decline in packaging EBIT. Stock trades at 11.9x consensus FY7/22 EPS.
For more stock ideas and market flows, access Market Insight on Maybank Trade on Apple Store and Google Play now.
Stay Ahead, Trade Smart.