KUCHING: Sarawak-based Cahya Mata Sarawak Bhd (CMS) is expected to report its fourth quarter 2018 (4Q18) results on the last week of February with analysts predicting the cementmaker to expect a good year to come in spite of lower predictions for 4Q. This comes as RHB Research Institute Sdn Bhd (RHB Research) anticipated for 4Q18 […]
PETALING JAYA: As a flattish market in the near term does not bode well for a “buy and hold” strategy, MIDF Research advised the investors to focus on velocity and volatility of sectors and stocks to whither uncertainty.
In a strategy report today, the research house said it recommended a trading strategy focusing on velocity and volatility which is divided into four quadrants, namely “opportunist”, “trading”, “buy and hold” and “bullets”.
Overall, MIDF Research said it observed that construction players are the most suitable for a “trading” strategy due to their high velocity and high volatility.
It noted that construction stocks make a huge part of this quadrant, which include Malaysian Resources Corp Bhd, WCT Holdings and Gamuda Bhd.
For aviation, MIDF believes that AirAsia Group will suit well for a trading strategy too.
“With ample liquidity and a healthy newsflow driven price volatility, a trading portfolio would be ideal to generate returns amidst a ‘flattish’ movement of the benchmark indices.
“Liquidity would support ease of trading movement and the newsflow would provide the incentive to take trading position towards ‘sell high’ and ‘buy ‘low’ investment decision process,” it noted.
The research house said other sectors, such as rubber gloves fit to be used as “bullets” for the execution of the “opportunist” trading strategy.
MIDF said, this “opportunist” quadrant describes stocks that are relatively have low traded volume and highly volatile price movements, and stocks sitting in this quadrant includes YTL, UEM Sunrise, Sunway Construction and Cahya Mata Sarawak.
“All of these are great stocks to be included in the portfolio, but due to low liquidity, investors have to scan the market sentiment and wait for an opportunistic time to buy these stocks, wishing for Lady Luck to show herself.”
MIDF noted that the “bullets” quadrant describes stocks that relatively have high liquidity and low price volatility, while “buy and hold” describes stocks that are relatively have low traded volume and less price movements.
Stocks sitting in “buy and hold” quadrant includes UOA Development, Nestle and KKB Engineering.
The research firm said the FBM KLCI has been on a flattish trend so far this year with a year-to-date growth of less than 1% but expects earnings to grow by mid single-digit amid supportive economic policies.
Overall, it reiterated its FBM KLCI year-end 2019 target at 1,800 points.
KUCHING: The team at AmInvestment Bank Bhd (AmInvestment Bank) is turning cautious on Cahya Mata Sarawak Bhd (CMS) due to the cutback in public infrastructure spending nationwide, including East Malaysia. The firm in a report yesterday said it was mindful of the change in the competitive landscape for the construction and building materials sectors in […]
PETALING JAYA: AmInvestment Bank has downgraded its call for Cahya Mata Sarawak Bhd (CMS) to “underweight” from “buy” and lowered its fair value by 37% to RM2.48 from RM3.91 previously, due to increased earnings risk for the company.
In its report today, AmInvestment Bank said it has raised CMS’ FY18 net profit forecast by 20% to largely reflect better performance from CMS’ associate OM Materials but FY19-20 earnings have been cut by 5% and 14% respectively on weakened prospects for the construction and building materials sectors in Sabah and Sarawak.
“Having recovered by a whopping 59% to RM3.05 from the post 14th General Election low of RM1.92 on May 21, 2018, we believe the stock’s risk premium could now have overshot to the downside (versus overshooting to the upside previously),” it said.
The research house highlighted three potential events that could affect CMS’ performance over the short to medium term namely, the cutback in public infrastructure spending nationwide; the change in landscape for the construction and building materials sectors; and the performance of the group’s various associates particularly OM Materials.
According to AmInvestment Bank, the Sarawak state government has an ambitious plan for public infrastructure spending, including the construction of a new coastal highway and the second trunk road, both of which are multi-billion ringgit projects that would translate to construction jobs for contractors and demand for building materials.
“However, given the scale and size of the projects, we believe it will need funding support from the federal government. We are mindful that this will be a major challenge given the federal government’s adherence to fiscal prudence and sustainability, resulting in a significant cutback in public infrastructure spending across the nation, and Sarawak will have to compete with other states in Malaysia, which are equally hungry for federal funding to finance their respective projects,” it added.
It expects more competition in the construction and building materials sectors in Sabah and Sarawak, potentially arising from open bidding for government jobs, especially federal-funded projects.
Competition could also come from open bidding for road maintenance concessions, especially for federal roads in Sabah and Sarawak as well as the increased participation of peninsular-based companies in the construction, cement and aggregate markets in Sabah and Sarawak.
“These will put a dent on CMS’ prospects of winning new construction jobs, securing extensions for its road maintenance concessions, as well as sustaining high margins for its construction, road maintenance and cement businesses,” it added.
Note that CMS’ outstanding construction order book stands at RM1.3 billion, coming entirely from the Pan Borneo Highway. It has two road maintenance concessions covering 241km of federal roads and 5,847km of state roads in Sarawak.
It is also the sole cement producer in Sarawak with an estimated cement consumption of 1.6 million tonnes in 2018.
KUCHING: Cahya Mata Sarawak Bhd’s (CMS) increased stake in Malaysian Phosphate Additives (Sarawak) Sdn Bhd (MPAS) has generally been viewed positively by analysts as the acquisition a positive catalyst for its earnings the longer term. On Monday, CMS announced that its wholly-owned subsidiary, Samalaju Industries Sdn Bhd (Samalaju Industries), had subscribed for 64.2 million new […]
KUCHING: Analysts are calling on investors to look towards East Malaysia for boosts in construction stocks, following Sarawak’s record budget in 2019 with an allocation of RM11.9 billion — more notably, RM9.1 billion for development expenditure. In tandem with the state’s agenda to alleviate the higher economic progress of Sarawak, a higher amount of RM6.1 billion […]
After a turbulent 2018, 2019 promises to be a slightly better year for Malaysia’s corporate world, with the absence of uncertainties such as the general election held in 2018, the transition of power in the Federal Government, the introduction of several new policies, and others. However, with the changes in policies, and several macro uncertainties […]
KUCHING: The pending implementation of mega projects, especially in Sarawak, will likely provide a boost on the state’s construction outlook next year, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) projected in its sector update. MIDF Research expected construction works mainly for MRT2, LRT3 and Pan Borneo Highway (PBH) to pick up […]
KUCHING: Cahya Mata Sarawak Bhd’s (CMS) ability to grow revenue in most divisions denotes positive tone on production demand and construction progress, analysts say. According to CMS, for the first nine months of 2018 (9M18), the group reported a total revenue of RM1.22 billion, an increase of 21 per cent in comparison to the preceding […]
KUALA LUMPUR (Nov 15): The FBM KLCI drifted lower at mid-morning today, as losses at Public Bank and Tenaga Nasional kept the benchmark index from advancing. At 10am, the FBM KLCI was down 1.29 points to 1,687.12. Gainers led losers by 258 to 202, while 255 counters traded unchanged. Volume was 455.31 million shares valued at RM243.93 million. The top losers included Fraser & Neave Holdings Bhd, British American Tobacco (M) Bhd, Batu Kawan Bhd, Daibochi Bhd, Public Bank Bhd, Tenaga Nasional Bhd, Cahya Mata Sarawak Bhd, Nestle (M) BhdRead More