While
uncertainties in the market are certain, this has not stopped investors
and fund managers from attempting the absurd in order to hit a “home
run” in their stock picks. One of the key themes that will come into
play in 2017 will be the US President-elect Donald Trump’s policies as
well as a possible increase in the pace of rate hikes by the US Federal
Reserve. This would lead to a stronger US dollar that could benefit some
of the export players.
The oil and gas sector also sees a gradual improvement in sentiment following the gradual recovery in oil prices after the deal on production cut between the Opec and non-Opec members.
Higher tourist arrivals with 2017 being Asean@50 Year and as Malaysia plays host to the 2017 Southeast Asian Games and Asean Para Games could also benefit airlines, gaming and leisure sectors. A possible early general election in the country could also give a boost to the market. With external headwinds remaining dominant driving volatility, a defensive strategy remains prominent for the Malaysian equity markets.
Inari Amertron Bhd
Inari Amertron Bhd is expected to return to double-digit growth as analysts are positive about the impact from the iPhone’s 10th anniversary that is expected to see something major planned by Apple Inc for the device.
Bloomberg data shows earnings per share for the financial year ending June 30, 2017 (FY17) is expected to grow by 23.4% year-on-year, while revenue will see an increase of 21.9%. The consensus 12-month target price for Inari is at RM3.73, indicating a potential upside of 12.3% from its last closing price on Dec 30, 2016 at RM3.32. Ten out of 12 research houses give a “buy” call on the semiconductor player.
Magni-Tech Industries Bhd
Magni-Tech Industries Bhd, the largest original equipment manufacturer for Nike in Malaysia for apparel products, could ride on the sportswear giant’s impressive growth story as Nike’s latest second quarter for fiscal year 2017 beat estimates on both sales and earnings per share.
Last year, Magni-Tech’s share price performance was disappointing as it fell by 6.47% to close at RM4.19 on the last day of 2016 despite an increase of 31.9% in its net profit for the second financial quarter ended Oct 31, 2016 to RM28.5 million.
Inter-Pacific Research Sdn Bhd has maintained its “buy” call on the apparel manufacturer with a target price of RM5.72, indicating a 36.5% upside from its last closing price on Dec 30, 2016.
With a price-earnings ratio of about 8.5 times (below the industry’s average of 9.3 times) and a strong balance sheet, the year ahead looks bright for Magni-Tech although Inter-Pacific Research cautioned that upside might take some time to materialise. It has zero debt with a total cash holding of RM62.6 million and RM74.1 million invested in investment securiti
Magni-Tech Industries Bhd
Magni-Tech Industries Bhd, the largest original equipment manufacturer for Nike in Malaysia for apparel products, could ride on the sportswear giant’s impressive growth story as Nike’s latest second quarter for fiscal year 2017 beat estimates on both sales and earnings per share.
Last year, Magni-Tech’s share price performance was disappointing as it fell by 6.47% to close at RM4.19 on the last day of 2016 despite an increase of 31.9% in its net profit for the second financial quarter ended Oct 31, 2016 to RM28.5 million.
Inter-Pacific Research Sdn Bhd has maintained its “buy” call on the apparel manufacturer with a target price of RM5.72, indicating a 36.5% upside from its last closing price on Dec 30, 2016.
With a price-earnings ratio of about 8.5 times (below the industry’s average of 9.3 times) and a strong balance sheet, the year ahead looks bright for Magni-Tech although Inter-Pacific Research cautioned that upside might take some time to materialise. It has zero debt with a total cash holding of RM62.6 million and RM74.1 million invested in investment securiti
Gamuda Bhd
Gamuda Bhd has significant upside due to its strong outstanding order book of RM9 billion, supported by the MMC-Gamuda joint venture which secured the RM15.5 billion mass rapid transit (MRT) Line 2 underground works package in March 2016, according to TA Securities.
“We expect close to RM500 million of project development partner (PDP) fee to flow directly to profit before tax throughout the implementation of [the] MRT Line 2,” the research house said in a report.
Other catalysts include Gamuda’s works package for Pan Borneo Highway worth RM1.57 billion and the appointment of SRS Consortium, in which Gamuda has a 60% stake, as the PDP for the Penang Transport Master Plan (PTMP).
Sime Darby Bhd
Sime Darby Bhd, which recently saw Tan Sri Abdul Wahid Omar take up the helm of its controlling shareholder, Permodalan Nasional Bhd (PNB), is set to benefit from a proposed corporate restructuring exercises.
“The expectation is that [Wahid] will unlock value [via] restructuring,” a head of research said.
PNB had a 52.98% stake in Sime Darby as at Nov 30, 2016, according to the group’s website.
Sime Darby was also highlighted as one of CIMB Research’s big cap picks in their strategy note on Dec 2.
“We expect the share price to rerate on potential plans to unlock value and better earnings prospects in view of the higher crude palm oil and coal prices in the future quarters,” CIMB Research said.
Genting Malaysia Bhd
Genting Malaysia Bhd has been touted as a darling of the gaming industry for 2017 on expectations that the Genting Integrated Tourism Plan (GITP) will boost its earnings and improve market sentiment due to the legalisation of casino operations in Japan.
Research houses have pointed to expected higher visitor growth as the main catalyst for the stock in light of the full launch of the first phase of the GITP by end-2017, which includes the opening of the 20th Century Fox theme park.
The consensus 12-month target price for Genting Malaysia is RM5.13 based on estimates by 17 out of 23 investors. The stock was last traded at RM4.73, edging up from its 2017 opening price of RM4.58. Fourteen analysts have placed a “buy” call on the stock, while seven have recommended to “hold”.
TA Ann Holdings Bhd
After a year of lacklustre performance, Sarawak-based Ta Ann Holdings Bhd is set to benefit from the improved demand for timber as well as the turnaround in the plantation sector. The company has been chosen by Kenanga Research, AffinHwang Capital and Public Investment Bank Research as their stock picks for 2017 in their latest strategy reports.
KAF Investment Bank chief investment officer Gan Kong Yik likes Ta Ann as he is upbeat about the plantation sector in 2017 with crude palm oil (CPO) price expected to be firmer.
Furthermore, the demand for timber is anticipated to increase in 2017.
Another plus point for Ta Ann is that it is seen as a beneficiary from the stronger US dollar.
In a strategy note dated Jan 4, Kenanga Research expects Ta Ann to be “a double beneficiary of the sharp CPO price appreciation, as well as stronger US dollar” as the company exports nearly all of its timber products, and sales are denominated in US dollars while costs are entirely in ringgit terms.
SapuraKencana Petroleum Bhd
Integrated oil and gas (O&G) services provider SapuraKencana Petroleum Bhd is one of the biggest beneficiaries of the oil production cut pledge between Opec and non-Opec members.
The deal is expected to start a cyclical recovery for the O&G sector and SapuraKencana is viewed as a good proxy to ride on the gradual recovery of the sector. Several research houses have upgraded their call on the O&G sector recently, after Opec and non-Opec members pledged to cut production.
Chosen as one of the stock picks for 2017 by Public Investment Bank Research, the research house said the worst is likely behind for SapuraKencana.
Given its ability to undertake comprehensive scope of works across the O&G suite, SapuraKencana is said to stand in a better position against its peers on expected recovery in O&G activities.
Bumi Armada Bhd
Bumi Armada Bhd, which saw its share price fall more than 40%, may provide another opportunity for investors in anticipation of improving sentiment and operating outlook of the oil and gas sector.
TA Investment Management Bhd executive director Choo Swee Kee pointed out that Bumi Armada shares were oversold in the past two years and expected there would be strong earnings growth for its floating production storage and offloading (FPSO) business.
“Bumi Armada is one of our top picks for 2017. Moving forward, we think there will be stronger earnings growth for the FPSO. We also like earnings generated from the FPSO as they are seen as more stable,” he told The Edge Financial Daily. Bumi Armada is one of the world’s largest FPSO players.
Public Investment Bank, which has a “buy” call on the counter, expects to see a boost in earnings from four major FPSO & floating gas solutions (FGS) contributions in 2017, according to its note dated Nov 24, 2016.
Protasco Bhd
Protasco Bhd is one of the construction players that are expected to benefit from an early general election in 2017. The well-established player in the construction industry is focused on road maintenance works, where most of them are based on concessions awarded by state and federal governments, providing the company with a steady income stream.
With the heightened expectation of the 14th general election happening in 2017, there is a potential for extra emergency road maintenance works to be carried out, according to Kenanga Research.
Protasco has an outstanding order book of about RM4.4 billion for its maintenance concessions, which could last for about 10 years, contributing about RM400 million to its revenue yearly.
Looking forward, Protasco is eyeing more sizeable concessions, which could potentially contribute another RM100 million to RM200 million to its top-line.
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Thematic investing continues to include construction plays with the rollout of new major infrastructure projects in the country. There has also been a rising earnings prospect for the plantation sector as crude palm oil price remains high and output is expected to improve moving into the second half of 2017.
The oil and gas sector also sees a gradual improvement in sentiment following the gradual recovery in oil prices after the deal on production cut between the Opec and non-Opec members.
Higher tourist arrivals with 2017 being Asean@50 Year and as Malaysia plays host to the 2017 Southeast Asian Games and Asean Para Games could also benefit airlines, gaming and leisure sectors. A possible early general election in the country could also give a boost to the market. With external headwinds remaining dominant driving volatility, a defensive strategy remains prominent for the Malaysian equity markets.
Inari Amertron Bhd
Inari Amertron Bhd is expected to return to double-digit growth as analysts are positive about the impact from the iPhone’s 10th anniversary that is expected to see something major planned by Apple Inc for the device.
Bloomberg data shows earnings per share for the financial year ending June 30, 2017 (FY17) is expected to grow by 23.4% year-on-year, while revenue will see an increase of 21.9%. The consensus 12-month target price for Inari is at RM3.73, indicating a potential upside of 12.3% from its last closing price on Dec 30, 2016 at RM3.32. Ten out of 12 research houses give a “buy” call on the semiconductor player.
Magni-Tech Industries Bhd
Magni-Tech Industries Bhd, the largest original equipment manufacturer for Nike in Malaysia for apparel products, could ride on the sportswear giant’s impressive growth story as Nike’s latest second quarter for fiscal year 2017 beat estimates on both sales and earnings per share.
Last year, Magni-Tech’s share price performance was disappointing as it fell by 6.47% to close at RM4.19 on the last day of 2016 despite an increase of 31.9% in its net profit for the second financial quarter ended Oct 31, 2016 to RM28.5 million.
Inter-Pacific Research Sdn Bhd has maintained its “buy” call on the apparel manufacturer with a target price of RM5.72, indicating a 36.5% upside from its last closing price on Dec 30, 2016.
With a price-earnings ratio of about 8.5 times (below the industry’s average of 9.3 times) and a strong balance sheet, the year ahead looks bright for Magni-Tech although Inter-Pacific Research cautioned that upside might take some time to materialise. It has zero debt with a total cash holding of RM62.6 million and RM74.1 million invested in investment securiti
Magni-Tech Industries Bhd
Magni-Tech Industries Bhd, the largest original equipment manufacturer for Nike in Malaysia for apparel products, could ride on the sportswear giant’s impressive growth story as Nike’s latest second quarter for fiscal year 2017 beat estimates on both sales and earnings per share.
Last year, Magni-Tech’s share price performance was disappointing as it fell by 6.47% to close at RM4.19 on the last day of 2016 despite an increase of 31.9% in its net profit for the second financial quarter ended Oct 31, 2016 to RM28.5 million.
Inter-Pacific Research Sdn Bhd has maintained its “buy” call on the apparel manufacturer with a target price of RM5.72, indicating a 36.5% upside from its last closing price on Dec 30, 2016.
With a price-earnings ratio of about 8.5 times (below the industry’s average of 9.3 times) and a strong balance sheet, the year ahead looks bright for Magni-Tech although Inter-Pacific Research cautioned that upside might take some time to materialise. It has zero debt with a total cash holding of RM62.6 million and RM74.1 million invested in investment securiti
Gamuda Bhd
Gamuda Bhd has significant upside due to its strong outstanding order book of RM9 billion, supported by the MMC-Gamuda joint venture which secured the RM15.5 billion mass rapid transit (MRT) Line 2 underground works package in March 2016, according to TA Securities.
“We expect close to RM500 million of project development partner (PDP) fee to flow directly to profit before tax throughout the implementation of [the] MRT Line 2,” the research house said in a report.
Other catalysts include Gamuda’s works package for Pan Borneo Highway worth RM1.57 billion and the appointment of SRS Consortium, in which Gamuda has a 60% stake, as the PDP for the Penang Transport Master Plan (PTMP).
Sime Darby Bhd
Sime Darby Bhd, which recently saw Tan Sri Abdul Wahid Omar take up the helm of its controlling shareholder, Permodalan Nasional Bhd (PNB), is set to benefit from a proposed corporate restructuring exercises.
“The expectation is that [Wahid] will unlock value [via] restructuring,” a head of research said.
PNB had a 52.98% stake in Sime Darby as at Nov 30, 2016, according to the group’s website.
Sime Darby was also highlighted as one of CIMB Research’s big cap picks in their strategy note on Dec 2.
“We expect the share price to rerate on potential plans to unlock value and better earnings prospects in view of the higher crude palm oil and coal prices in the future quarters,” CIMB Research said.
Genting Malaysia Bhd
Genting Malaysia Bhd has been touted as a darling of the gaming industry for 2017 on expectations that the Genting Integrated Tourism Plan (GITP) will boost its earnings and improve market sentiment due to the legalisation of casino operations in Japan.
Research houses have pointed to expected higher visitor growth as the main catalyst for the stock in light of the full launch of the first phase of the GITP by end-2017, which includes the opening of the 20th Century Fox theme park.
The consensus 12-month target price for Genting Malaysia is RM5.13 based on estimates by 17 out of 23 investors. The stock was last traded at RM4.73, edging up from its 2017 opening price of RM4.58. Fourteen analysts have placed a “buy” call on the stock, while seven have recommended to “hold”.
TA Ann Holdings Bhd
After a year of lacklustre performance, Sarawak-based Ta Ann Holdings Bhd is set to benefit from the improved demand for timber as well as the turnaround in the plantation sector. The company has been chosen by Kenanga Research, AffinHwang Capital and Public Investment Bank Research as their stock picks for 2017 in their latest strategy reports.
KAF Investment Bank chief investment officer Gan Kong Yik likes Ta Ann as he is upbeat about the plantation sector in 2017 with crude palm oil (CPO) price expected to be firmer.
Furthermore, the demand for timber is anticipated to increase in 2017.
Another plus point for Ta Ann is that it is seen as a beneficiary from the stronger US dollar.
In a strategy note dated Jan 4, Kenanga Research expects Ta Ann to be “a double beneficiary of the sharp CPO price appreciation, as well as stronger US dollar” as the company exports nearly all of its timber products, and sales are denominated in US dollars while costs are entirely in ringgit terms.
SapuraKencana Petroleum Bhd
Integrated oil and gas (O&G) services provider SapuraKencana Petroleum Bhd is one of the biggest beneficiaries of the oil production cut pledge between Opec and non-Opec members.
The deal is expected to start a cyclical recovery for the O&G sector and SapuraKencana is viewed as a good proxy to ride on the gradual recovery of the sector. Several research houses have upgraded their call on the O&G sector recently, after Opec and non-Opec members pledged to cut production.
Chosen as one of the stock picks for 2017 by Public Investment Bank Research, the research house said the worst is likely behind for SapuraKencana.
Given its ability to undertake comprehensive scope of works across the O&G suite, SapuraKencana is said to stand in a better position against its peers on expected recovery in O&G activities.
Bumi Armada Bhd
Bumi Armada Bhd, which saw its share price fall more than 40%, may provide another opportunity for investors in anticipation of improving sentiment and operating outlook of the oil and gas sector.
TA Investment Management Bhd executive director Choo Swee Kee pointed out that Bumi Armada shares were oversold in the past two years and expected there would be strong earnings growth for its floating production storage and offloading (FPSO) business.
“Bumi Armada is one of our top picks for 2017. Moving forward, we think there will be stronger earnings growth for the FPSO. We also like earnings generated from the FPSO as they are seen as more stable,” he told The Edge Financial Daily. Bumi Armada is one of the world’s largest FPSO players.
Public Investment Bank, which has a “buy” call on the counter, expects to see a boost in earnings from four major FPSO & floating gas solutions (FGS) contributions in 2017, according to its note dated Nov 24, 2016.
Protasco Bhd
Protasco Bhd is one of the construction players that are expected to benefit from an early general election in 2017. The well-established player in the construction industry is focused on road maintenance works, where most of them are based on concessions awarded by state and federal governments, providing the company with a steady income stream.
With the heightened expectation of the 14th general election happening in 2017, there is a potential for extra emergency road maintenance works to be carried out, according to Kenanga Research.
Protasco has an outstanding order book of about RM4.4 billion for its maintenance concessions, which could last for about 10 years, contributing about RM400 million to its revenue yearly.
Looking forward, Protasco is eyeing more sizeable concessions, which could potentially contribute another RM100 million to RM200 million to its top-line.
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Source - http://www.theedgemarkets.com/article/top-10-stock-picks-2017
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