*Maybank IBG Kopi-O (17 Feb 2022)*
Nikkei 27460.4 2.22%
Kospi 2729.7 1.99%
SSE 3465.8 0.57%
HSI 24718.9 1.49%
TWSE 18231.5 1.56%
SET 1701.5 -
JCI 6850.2 0.63%
STI 3439.3 0.52%
KLCI 1603.2 0.22%
*Maybank IBG Key Calls*
*Malaysia Gaming - Cautiously optimistic despite the Omicron wave*
Initially, we were concerned that the Malaysian gaming industry is in for another difficult year as new COVID-19 cases are surging due to the Omicron variant. That said, the Omicron variant’s low mortality rate assuaged our fears. We posit that Malaysians are still inclined to participate in gaming despite the risk of being infected with COVID-19 as long as the risk of serious health complications is low. We maintain our earnings estimates, TPs and calls. We like GENM, GENT, MAG and BST.
*MY*
o After rising for six consecutive trading days, the KLCI is poised to take a breather soon. Subdued performance in overnight Wall Street as well as geopolitical tensions will also weigh on sentiment. Profit-taking is set to start in plantation names amid a sharp decline in palm oil price. Technically, we expect the benchmark index to range between 1,580pts and 1,630pts today, with supports at 1,570 and 1,530.
o *Sime Darby Bhd (SIME MK)*: 1HFYE6/22 core net profit of MYR581m (-5% YoY) made up 46% of our FY estimate and we expect a stronger 2H ahead, led by the revival at its Australian industrial ops. Sime is leveraged to ride on the commodity cycle, infrastructure capex spending, consumer recovery and the EV agenda. It offers earnings growth and dividend yield upside. Our TP of MYR2.70 is SOP-based. Maintain BUY.
o *Chin Hin Group Property (CHGP MK)*: Its subsidiary Chin Hin Construction S/B has proposed to acquire a 60% stake in Asia Baru Construction S/B for MYR30m cash, to be funded via a combination of internally generated funds, bank borrowings and fundraising exercise. The proposed acquisition is expected to be completed by 2H of 2022. The proposed acquisition will enable CHGP to diversify into water infrastructure construction works, which is complementary to its existing property development business. Stock trades at 41.2x annualized 6M21 fully-diluted core EPS.
o *Redtone Digital (RIB MK)*: 2QFY6/22 net profit surged 54% YoY and 37% QoQ, lifting 1HFY6/22 PATMI to MYR19m (+49% YoY). The stronger 1HFY6/22 results were attributable to a 3% YoY increase in revenue, higher investment income and margins expansion. These more than offset a 5ppts increase in effective tax rate to 26.6% (1HFY6/21: 21.7%). No dividend was declared for the current quarter. RIB is set to benefit from growing digitalization as it will drive demand for data. Stock trades at 9.4x annualized 1HFY6/22 EPS. It is sitting on a net cash of MYR111m at end-Dec 2021, about 31% of its market capitalization.
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