Following the first two parts of our three-part series on Finding Alpha In MY, we continue the series with two investment themes that CIMB recommends: “Oversold Stocks” and “Riding On Wave Of Consumer Spending”.
Investment Theme: Oversold Stocks
- Dialog Group
CIMB likes Dialog Group (Dialog) for its low risk business model and strong growth prospects. With more of its major tank terminal projects coming onstream in coming quarters, CIMB expects Dialog to benefit handsomely. CIMB forecasts Dialog’s core EPS to rise by 16 percent per annum from its first commercial Liquefied Natural Gas regasification plant, increased stake in Langsat 1 and 2, and the commissioning of Phase 1 of Langsat 3 and SPV2.
BUY, TP RM 4.06; Current share price RM3.52
- Genting Plantations
Genting Plantations is CIMB’s top pick among the Malaysian planters. CIMB likes Genting Plantations for to its young plantation age profile and rich land bank in Sepang and Kulai. As of last year, approximately 44 percent of Genting Plantation’s planted oil palm estates are still young and immature, which are expected to drive future output growth of the group. CIMB highlights that Genting Plantations currently trades at a discount to its target price of RM11.90.
BUY, TP RM 11.90; Current share price RM9.43
Investment Theme: Riding On Wave Of Consumer Spending
- Genting Bhd
With a positive upside to Genting Malaysia and Genting Singapore expected, investors have been flocking into these two stocks. However, CIMB recommends investing in Genting Bhd instead as it is a cheaper proxy to ride on the positive wave of sentiments in Genting. The successful launch of its maiden gaming asset in Las Vegas should also further unlock value for Genting Bhd. Other re-rating catalysts include additional market share gains at Genting Singapore, increased visitor arrivals at Resorts World Genting due to its Genting Integrated Tourism Plan properties and the development and expansion of Resorts World New York.
BUY, TP RM 10.80; Current share price RM8.69
DRB-Hicom is expected to benefit from the full-year impact of narrowing Proton losses from this quarter following Geely’s entry as Proton’s foreign strategic partner in September 2017. As such, CIMB is projecting stronger earnings delivery from its services division in forward-FY19, driven by capacity expansion at Pos Malaysia’s facility and rising ecommerce activities. Investors can also expect DRB-Hicom to benefit from the reduction in GST rate to zero percent and potential revision in vehicle excise duties, according to CIMB.
BUY, TP RM 2.70; Current share price RM2.27