Affin Hwang Cap sees rebound
KUALA LUMPUR: Affin Hwang Capital expects the FTSE Bursa Malaysia KLCI (FBM KLCI) to rebound this year, despite last year’s heavy selldown.
The firm said although the index was down by 1.3 per cent year-to-date, there was a rotation into stocks that were heavily sold down last year.
“Given that investor expectations have been revised lower and valuation multiples have derated quite significantly, we think that some of these heavily sold-down stocks could rebound rather quickly, especially in the KL Construction Index, one of the poorest-performing sectors last year,” said Affin Hwang in a report yesterday.
It had screened its coverage of 119 stocks and picked those with a “buy” rating.
In the large capitalisation (large-cap) space exceeding RM1 billion, among stocks with over 50 per cent upside potential to target prices, Affin Hwang named Genting Bhd, Inari Amertron Bhd and Globetronics Technology Bhd as stocks that were attractive.
“For the mid-small cap stocks, Bumi Armada Bhd, Jaks Resources Bhd, Gabungan AQRS Bhd, Tune Protect Group and Velesto Energy Bhd were deemed as attractive, given the stock-price pullback and their respective upside target price potential.
“We chose Jaks, Velesto and AQRS as our high-conviction alpha three in our coverage as we believe in significant price upside for this year, ” said Affin Hwang Capital.
The firm expects value in Jaks’ Vietnam power plant while its property issue should be resolved by this year.
Affin Hwang Capital said Velesto’s better job opportunities would likely fuel an earnings recovery, while positive news flow on the construction sector should see investor confidence returning to AQRS.