Year-end rally in the works?
Dealers say equities linked to local funds are poised for active buying
PETALING JAYA: Some large caps on Bursa Malaysia are poised for active buying this week as major funds such as Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) head closer to their book closures, dealers said.
“As much as it is really old news, this phenomenon still holds, especially considering that PNB will be closing its books on Dec 15,” pointed out a fund manager.
PNB related stocks that are likely to see some active buying this week include Malayan Banking Bhd, the three Sime Darby stocks, SP Setia Bhd and UMW Holdings Bhd.
In the case of Chemical Company of Malaysia Bhd, a dealer pointed out that he was not expecting much upside this week, considering the stock was up close to 100% year-todate.
In the case of Sime Darby Bhd, which split itself into three separate listed companies on Nov 30, the combined market capitalisation of these three companies was less than what Sime Darby Bhd was on Sept 30.
Bloomberg data showed that Sime Darby’s market cap on Sept 30, the end of its first quarter for financial year 2018, stood at RM61.35bil, versus the current combined value of its three listed entities at RM60.8bil.
The share prices of Sime Darby Plantations and Sime Darby Property fell on the first four days after their listing. Both have chartered 13% and 30% increase in share prices respectively and are still off their listing prices.
As for Sime Darby, it went as high as RM2.30 after the demerger on the account of a 17 sen dividend that went ex on Dec 4. It come down to RM2.12 yesterday.
UMW Holdings Bhd, which went through a demerger exercise in July this year with UMW Oil and Gas Corp Bhd, saw its sales improving since the launch of four facelift models and new variants in September – Vios, Fortuner, Hilux, and Innova.
Its subsidiary, UMW Toyota Motor Sdn Bhd, is working on a network reform programme to strengthen its retail operations.
According to MIDF Research report, UMW’s growth catalysts include the reversal of prior years’ market share loss, monetisation of its 711-acre Serendah land, as well as the quadrupling of mechanical and engineering segment earnings.
Meanwhile, another group of companies likely to benefit from a year end market boost are stocks aligned to the EPF.
They include Tenaga Nasional Bhd, RHB Bank Bhd, Malaysian Resources Corp Bhd (MRCB), Malaysia Building Society Bhd (MBSB) and CIMB Group Holdings Bhd.
MBSB is expected to complete its merger exercise with Asian Finance Bank Bhd by end-January.
The deal, which amounts to RM644.95mil, will enable non-bank lender MBSB to be a full-fledged Islamic bank.
A research report by Kenanga Research stated that the forward shareholders’ funds of MBSB in 2018 were expected to be higher by
RM197mil to RM6.52bil, following the completion of the merger exercise and based on the proforma accounts.
Meanwhile, MRCB is tying up with Gamuda Bhd to bid for the project delivery partner role in the Kuala Lumpur-Singapore high speed rail project.
MRCB’s external construction order book amounted to an estimated RM5.3bil, which, coupled with unbilled property sales at RM1.2bil, would provide the group earnings visibility for the next four years.
MRCB has also recently completed a RM1.73bil rights issue exercise.
“The recent completion of our rights issue has significantly strengthened our balance sheet, and we are well-positioned making it well positioned to fund future growth,” MRCB group managing director Tan Sri Mohamad Salim Fateh Din had said in a previous report.