Following the first part of this 2-part series where we highlighted six value laggard plays, we continue to highlight six other value play stocks that have the lowest price-to-earnings (P/E) and price-to-book value (P/B) multiples among KLCI stocks.
Investors Takeaway: Bargain Hunting On KLCI By RHB
Stocks With Low PE
Among the financial stocks, BIMB Holdings (BIMB) is one with a bargain low PE multiple. RHB notes that BIMB’s management is optimistic that its lending business will continue to grow at a faster pace compared to its peers. BIMB is targeting loans growth of eight percent year-on-year for FY19, which might be a shade slower than FY18’s 8.9 percent expansion but still punches above its peers.
As investors gain more clarity on its re-organisation plans, RHB thinks that BIMB’s valuation should rise to levels more reflective of its resilient profitability and position as a proxy to the largest standalone Islamic bank in Malaysia.
BUY, TP RM5.15; Current share price RM4.53
Matrix Concepts Holdings
Matrix Concepts Holdings (Matrix Concepts) takes the “honour” of being one of the lowest PE stock in the KLCI universe. However, do not this with Matrix Concepts not constituting to be a good investment.
Matrix Concepts has been lauded for its sustainable dividend yield, which is supported by consistent cash flows from its township projects in Seremban and Kluang. Its overseas projects in Australia and Jakarta would also be additional earnings growth drivers going forward.
BUY, TP RM2.35; Current share price RM1.99
Stocks With Low PB
IQ Group is an established global leader in the design & manufacture of lighting, security and convenience products. Given that RHB is anticipating a recovery in performance from new product launches, the current low PB multiple puts IQ Group in an attractive valuation standpoint for investors. Moving forward, IQ Group’s plans to consolidate its manufacturing capacity will also catalyze a recovery in its share price.
BUY, TP RM1.37; Current share price RM1.04
Stocks With Both Low PB And PE
MBM Resources has been trading at a sharp discount compared to peers in the same sector. Right now, MBM Resources is trading at around 0.6 times PB. The two main earnings drivers that will help MBM Resources re-rate will be Perodua’s portfolio expansion and narrowing losses at its alloy wheel business.
BUY, TP RM4.10; Current share price RM2.93
Tambun Indah Land
Tambun Indah Land is one of the KLCI stocks with one of the lowest PE. While its share price has not been performing since falling from its 2018 high, RHB notes that Tambun Indah should benefit from improving prospects at Batu Kawan, thanks to the recent opening of IKEA. The local government’s incentive for first-time home buyers to promote homeownership is also a boon for Tambun Indah.
BUY, TP RM0.97; Current share price RM0.76
Tan Chong Motor Holdings
Tan Chong Motor Holdings (Tan Chong) is currently trading around 0.4 times its PB, which RHB opines that there is limited downside. Potential earnings drivers include more new model launches as well as traction at its Indochina business. The low PB also translates to Tan Chong being a good candidate for privatization by the owners of Tan Chong.
BUY, TP RM2.00; Current share price RM1.49