Highlights

Stock Pick Contest Year 2020

Author: Tan KW   |   Latest post: Fri, 30 Oct 2020, 5:41 PM

 

Stock Pick Year 2020 by The Star

Author:   |    Publish date:


BURSA MALAYSIA has been one of the worst performing bourses in Asia last year.

Throughout 2019, the FBM KLCI has been lacklustre with investors adopting a “wait-and-see attitude” following the absence of clear growth catalysts for the country.

 

Not surprisingly, as of Dec 31, the FBM KLCI was down 4.73% on a year-to-date basis.

Initially, Malaysians were filled with hope when Pakatan Harapan won the general election in May 2018. However, some 18 months later, sentiment on the local bourse remains subdued amid unclear leadership succession plans and flip-flop policies.

Nonetheless, the undemanding stock prices and weak ringgit could see the market finally play catch-up to its regional peers. With the arrival of a new decade, analysts and fund managers present to StarBizWeek 20 stock picks which they opine will outperform the market.

Below is a compilation of the stocks:
 




Gan Eng Peng (pic)

Director of equity strategies and advisory, Affin Hwang Asset Management

Stock picks: MALAYAN BANKING BHD and Perdana Petroleum BhdMalayan Banking Bhd (Maybank)

Price: RM8.75


To gain exposure to the big cap theme, we are picking Maybank. With its ample capital, Maybank has the capacity to increase its cash dividend yield to 4.5%, which is decent for a large cap stock.

It has been gradually reducing its dilutive scrip dividend which will help support return on equities. Although we expect one more rate cut in 2020, Maybank would have adequately prepared for this by reducing the duration of its deposits.

Even after the last rate cut, Maybank’s net interest margins rebounded in only one quarter. In any case, one interest rate cut has been factored into analysts’ forecasts.

We think asset quality would also gradually improve. As an added bonus, there is potential of unlocking value given the top level changes at the major shareholder level.

Perdana Petroleum Bhd Price: 40 sen

Our second pick is a turnaround stock, Perdana Petroleum.

Perdana is a high-risk choice given that in the nine months of 2019, it was losing money and the turnaround is not certain although it has returned to the black in its third quarter results.

Perdana is in the business of providing offshore support vessels (OSV) to oil and gas companies. Looking at the latest Petronas Activity Outlook report, OSV players are in for good years ahead. Petronas has forecast 30% to 40% higher demand for OSV, which ties in with the need to have more exploration and production activity globally to arrest declining production growth.

Utilisation and pricing should go higher, which is almost pure profits for OSV players.

The financial distress, which all OSV players had gone through in the last couple of years, has sunk a few players in Malaysia and Singapore. This means capacity is constrained with some OSV players being not financially viable as a business partner.

Perdana has completed a fundaising exercise that has substantially reduced its debt load. Part of the turnaround is driven by interest savings.

Perdana is owned by DAYANG ENTERPRISE HOLDINGS BHD which is an oil and gas service provider.

Dayang’s share price has risen five times in 2019 as strong execution and new job wins drove its business prospects. Perdana’s prospects is somewhat intertwined with Dayang as it uses a portion of Perdana’s OSV to support its business.

Lim Suet Ling(pic)

CEO, UOB Asset Management (M) Bhd

Stock picks: Carimin Petroleum Bhd and GAMUDA BHD


Carimin Petroleum Bhd

Price: RM1.30


Carimin is an oil and gas service provider specialising in construction, hook up, commissioning (HUC) and top side major maintenance (TMM), manpower services and marine services. It deploys marine vessels such as work barges, accommodation vessels, crew boats, and anchor handling tug supply vessels.

It has grown steadily over the past decade from being a manpower service provider to a dynamic contractor in integrated maintenance, rejuvenation, hook-up and commissioning works onshore and offshore. It also provides sub-sea underwater inspections, repair, maintenance works and services for the oil and gas industry.

Since its inception, Carimin has completed projects valued at more than RM1bil.

Among its notable clients are oil majors such as Petronas Carigali, Shell, Murphy Oil, Repsol, Exxon Mobil, New Field, Petrofac, HESS and Nippon Oil.

Carimin returned to profitability in FY19. Amid a challenging operating environment, it recorded a profit after tax of RM27.7mil compared with a loss of RM25.4mil a year earlier. The turnaround was a result of increased offshore activities contributed by its maintenance, construction and modification (MCM) contract.

Going forward, Carimin’s earnings momentum is expected to be underpinned by two main factors. Firstly, we expect high levels of maintenance works for the HUC and TMM segments in 2020.

Secondly, Carimin’s venture into sub-sea activities is expected to contribute positively as it commands higher margins compared with its existing MCM business. To recap, Carimin ventured into the sub-sea segment with the acquisition of a 60% stake in Subnautica Sdn Bhd in March 2019.

It has a strong balance sheet with a net cash (including short-term investments) position of RM106mil (equivalent to about 37% of its market cap) as of end-September 2019.

Carimin’s resilient balance sheet has enabled the company to weather the recent oil and gas industry downturn without the need for an equity call.

Valuation-wise, Carimin trades at a price earnings ratio of 8x for FY20, which is at a discount to its peers and the market.

Gamuda Bhd

Price: RM3.90


Given its strong track record in executing mega infrastructure projects, Gamuda is arguably the best proxy to large construction jobs in Malaysia. Some of the mega projects which were shelved immediately post the 14th general election have been revived including Bandar Malaysia and the East Coast Rail Link. There have been reports that the government is reviewing the MRT 3 and the High Speed Rail projects. If the two mega infrastructure jobs were revived, we see Gamuda as a potential beneficiary. Gamuda has submitted alternative proposals for the MRT3 to reduce the burden on the government’s finances. MRT3 is an essential part of the Greater Kuala Lumpur Integrated Rail System to achieve public modal share target of 40% in urban areas by 2030.

There are also other opportunities for Gamuda including the Penang Transport Master Plan (PTMP). Gamuda has already received the letter of award for the PTMP from the Penang state government.

Besides Malaysia, Gamuda is looking for opportunities offshore. It has recently acquired a 50% stake in Australian-based Martinus Rail, Australia’s largest independent specialist rail constructor. This acquisition will fast-track its expansion into the Australian infrastructure market, especially the Australian railway market which is estimated to offer about A$20bil of projects.

Gamuda’s proposed divestment of four highways to the Finance Ministry would result in the group receiving RM2.36bil in net proceeds, if the plan materialises.

The proceeds are expected to be used to fund future projects and reward shareholders with a special dividend.

Gamuda continues to enjoy cashflows from its highway concessions.

Based on consensus estimates, Gamuda currently trades at a price earnings ratio (PER) of 12.5x in FY20, which is at a discount to the market, while dividend yield is 3.9%.

Mohd Redza Abdul Rahman(pic)

Head of research MIDF Research

Stock picks: MMC Corp Bhd and AIRASIA Group Bhd

MMC Corp Bhd

Price: 98.5 sen


We continue to favour MMC Corp due to the valuations supported by the market capitalisation of its listed associate Malakoff whereby the expected net gain disposal on Malakoff’s 50% stake in MacArthur Wind Farm of RM546mil (expected completion in 1QFY20) could be channelled to firm up Alam Flora’s operations or Malakoff’s existing business segments.

Meanwhile, Gas Malaysia’s FY20 gas volume sales will increase in line with its recently acquired customers. Aside from that, synergies from the full acquisition of Penang Ports supported by the container terminal business and the cruise terminal operations (in collaboration with Royal Caribbean Cruises Ltd), will be driven by the growth in tourism in Penang in tandem with Visit Malaysia Year 2020 (VMY2020). Other catalysts for MMC Corp include the possible reinstatement of the KVMRT3 project at a revised cost (possibly half the original price tag of RM45bil). Latest updates indicated that consultants have been appointed to find a suitable model, and a decision on the MRT3 project would be made in middle of this year. Key downside risks to our call include: (i) prolonged global trade tensions; (ii) weak container volumes of MMC Corp’s ports; and (iii) downward revision of its listed associates.

All factors considered, we reiterate our buy call on MMC Corp with an unchanged target price of RM1.30 per share based on sum-of-parts valuation. On a side note, MMC Corp has already been included as a constituent of the FTSE Bursa Malaysia Mid 70 Index effective end trading day on Dec 20,2019.

AirAsia Group Bhd (AAGB)Price: RM1.69AirAsia Group was weighed down by the adoption of MFRS 16 which led to the higher-than-expected finance cost. However, finance cost movement is expected to be flat in CY20. Although MFRS 16 will continue to feature in the medium term, AAGB is expected to gain from lower amount of interest as the tenure reaches the end of the lease term.

The 18.8% year-on-year (y-o-y) increase in passengers for AAGB contributed to higher 9MFY19 ticket sales of 18.9% y-o-y to RM6.6bil, also resulted in the airline’s related ancillary income revenue growing by 15.3% y-o-y. Non-airline ancillary segments, total revenue more than quadrupled to RM475.2mil, mostly coming from Teleport at 70.2%. The performance of Teleport will be enhanced by: (i) the launch of “teleport.social” – a platform enabling sellers to integrate with Teleport’s logistics infrastructure; (ii) JV with Gobi Partners in EasyParcel; and (iii) direct interline agreement with Lufthansa Cargo.

In addition, revenue from AAGB’s new products such as BigPay and AirAsia.com, is expected ramp up next year. As such, we expect the contribution of non-airline ancillary revenue to overall ancillary revenue to increase from 23.3% in 9MFY19 to around 30.0% in FY20.

AAGB has hedged 69% to 82% of their fuel requirements at US$60 per barrel in FY20, mitigating oil price volatility. Moreover, AAGB will be having four A321neos by year-end and six more in FY20.

The shift towards aircraft equipped with fuel efficient technology will lead estimated fuel savings of 15% by FY20, translating into 10% reduction in cost per seat as it has 50 additional seats compared with the A320neo, which bodes well with the expected increase in tourists from VMY2020.





Choo Swee Kee (pic)

Chief investment officer TA Investment Management Bhd

Stock picks: OCK Group Bhd and MAH SING GROUP BHD

OCK Group Bhd

Price: 61 sen


OCK is involved in the telecommunication infrastructure space by providing telco tower-related services that include the owning and leasing of telco towers, network design, deployment, operations and maintenance, as well as mechanical and electrical engineering services.

The company has about 4,200 towers mostly in Myanmar and Vietnam and managed more than 20,000 towers for telco operators such as Maxis, Digi and Celcom.

The tower leasing business contributes to one third of its revenue and is expected to grow rapidly with more requirement for towers as the Indochina region extend its coverage areas.

OCK is targeting to grow its ownership of towers to more than 5,000 within a year. As a comparison, Axiata’s Edotco owns almost 30,000 towers in Malaysia, Bangladesh, Cambodia, Sri Lanka, Myanmar and Pakistan.

OCK is a growth story and is a key beneficiary of the 5G deployment and infrastructure projects under the national fiberisation and connectivity plan.

Technology-wise, we understand that 5G network requires significantly more transmission towers, equipment and antennas than 4G network.

Over the next two years, we believe that capital is the main constraint to OCK growth. The group is actively looking for strategic investors to drive this growth. If successful, it would unlock the value of this tower business by providing a base reference value.

Its earnings growth for 2019 is reflective of its potential with three consecutive quarters of growth. We expect consistent earnings growth of 10% over the next three years.

Mah Sing Group

BhdPrice: 69.5 sen


Mah Sing is a value stock trading at 40% to its book value while still giving a potential dividend yield of 5%. Do note that the numbers already took into consideration that corporate earnings PATAMI had fallen 45% from its high four years ago.

This is in line with the current property market condition which is very challenging.

It is during challenging times that we can differentiate between proactive and passive management. Mah Sing has tweaked its product range to match market demand for mid-end and affordable housing.

The company is also aggressive in selling its products at home exhibitions and shopping complexes. So far, its affordable products in the Klang Valley were well-received, registering strong take up rates of above 80% (M Vertica, 83% for the first three blocks and M Centura, 90%).

Hence, in its latest quarterly results announcement, Mah Sing recorded new property sales of RM375mil in the third quarter of 2019 (-18% quarter on quarter, +36% year-on-year (y-o-y), bringing the nine months to 2019 sales to RM1.1bil (-7% y-o-y).

We believe in buying for the future rather than worry about the current depressed market.

All markets, inclusive of the property sector, are cyclical and the future could only change for the better.

Part of the problem with the Malaysian property market is the mismatch between demand and supply as there is a large supply of unaffordable units while there is a low supply of the affordable units. The government has to come up with a solution to bridge the gap.

For those looking for long-term investment with yield, why buy a property at market value yielding 4% to 5% when you can get the property developer which owns land at 60% discount and still provide a 5% yield?



Lee Chung Cheng (pic)

Head of Research JF Apex Securities Bhd

Stock Picks: JHM CONSOLIDATION BHD and OKA CORP Bhd

JHM Consolidation Bhd

Price: RM1.70


We like this technology/electronic manufacturing services (EMS) company, as we see several catalysts that should be able to propel its stock higher from the current levels.

Firstly, the group has successfully ventured into the aerospace segment after having received purchase orders of machining parts with estimated values of US$1mil per year. We foresee the potential of the company securing more orders, with potential values of US$3mil per year.

Secondly, there is potential of the company expanding the order book for its automotive segment in 2020, with the conclusion of the labour dispute for its existing major customer in the United States.

And thirdly, we think JHM could potentially win more orders from new customers, benefiting from the US-China trade war, as more companies are considering supply chain diversification.

Although the Phase 1 of the US-China trade deal has been resolved, market expects technological restrictions imposed by the United States on China to remain.

JHM’s shares are currently trading at 19 times of estimated price-earnings (PE) for the financial year ending 2020, and 16 times PE for 2021, which are at discounts to its peers.

Our fair value for JHM is RM1.96, which implies 23 times PE for 2020, and 20 times PE for 2021.

For the first nine months of 2019, JHM posted a net profit of RM22.7mil on revenue of RM186.9mil, compare with RM23.8mil on revenue of RM190.5mil in the corresponding period last year. Dividend declared year to date totalled 1.5 sen per share.

Stock Picks: Oka Corp Bhd

Price: 74 sen


We see upside potential for the shares of this building-materials company, supported by several catalysts.

Firstly, the group is envisaged to benefit from the improving outlook of the construction prospects, following the revival of several mega infrastructure and property projects such as the Light Rail Transit 3, Klang Valley Double Track Phase 2, East Coast Rail Link, Bandar Malaysia, and KL-Singapore high-speed rail.

As a leading precast concrete manufacturer, with a proven track record of supplying building materials to mega projects in the country, we believe Oka group could clinch sizeable orders in the near future.

Secondly, we believe worst is over for the group. After a dismal showing for the financial year (FY) ended March 30,2019, where Oka’s net profit fell 55% to RM11mil from RM24.6mil in the preceding year, Oka could see its bottom line improve for FY2020.

This is evidenced by its earnings recovery, with a net profit of RM7.8mil for the first half of FY2020.

We expect Oka to post earnings of RM15mil for FY2020, which represents an annual growth of 36.4%. Its net earnings could further strengthen to RM21mil for FY2021.

In addition, its decent dividend yield of around 5% for FY2020 (assuming a dividend per share of 3.7 sen as per last financial year and based on current share price) should lend support for the stock.

Our fair value for Oka’s shares is 86 sen, which represents 10 times its estimated PE for FY2021.



Ivy Ng Lee Fang(pic)

Head of research CGS-CIMB Securities Sdn Bhd

Stock Picks: Pentamaster Corp Bhd and Yinson Holdings Bhd

Pentamaster Corp Bhd

Price: 4.52

We see the recent pullback in Pentamaster’s share price due to its exclusion from the Securities Commission’s shariah list as a good opportunity for investors to accumulate the stock. The exclusion will not alter the company’s fundamentals and growth prospects. We maintain an “Add” on the stock with a RM5.40 target price based on an estimated 19.6 times FY20 price-to-earnings (P/E). This is a 10% premium over the semiconductor equipment sector at about 17.8 times.

Pentamaster is also expected to deliver strong revenue growth in FY20 driven by higher contributions from the automotive and medical segments following its acquisition of medical equipment provider, TP Concept Sdn Bhd in September 2019.

Higher sales contributions from the automotive and medical segments will provide better earnings stability due to long-term demand visibility and higher margin portfolio.

Overall, weproject an impressive three-year (2018-2021) net profit compounded annual growth rate (CAGR) of 27% that will be driven by automated test equipment and factory automated solution segments on the back of capacity expansion at Batu Kawan plant and potential new customer wins in North Asia.

Hence, we see higher contribution from auto and medical device segments to provide Pentamaster better earnings stability, thanks to their long-term demand visibility and higher margin portfolio. Pentamaster is also a beneficiary to the government push towards IR4.0 initiative among domestic SMEs in Budget 2020. This bodes well for the group, which is a key player in the domestic Factory Automation Solution market.

CGS-CIMB also believe that the move will help equipment makers such as Pentamaster to diversify beyond the semiconductor market.

The earnings accretive acquisitions such as TP Concept, new customer wins and a weaker ringgit versus the US dollar are potential re-rating catalysts for Pentamaster.

Yinson Holdings Bhd

Price: 6.48

2020 is expected to be a good year for Yinson. It was recently awarded by Petrobras with the Marlim-2 Floating Production Storage and Offloading (FPSO) contract, with strong returns expected. In addition, the Parque and Pecan FPSO contracts may follow suit.

We have an “Add” on Yinson with an unchanged some of parts-based target price of RM9.18, as its earnings in 2020 will benefit from the commissioning of two new FSPO contracts.Despite the downtrend in its earnings, Yinson’s share price has done very well because the market is confident that the company could win more FPSO contracts, priced attractively and profitably.

Also, two existing projects have been/will be delivered soon, resulting in an estimated strong earnings growth in FY21. These include the FPSO Helang based offshore Sarawak, which has recently started work, and the FPSO Abigail-Joseph in Nigeria, which is expected to be commissioned by the end of first quarter FY21 (Feb-Apr 2020).

Petrobras’ Marlim-2 FPSO which is a 25-year contract, has a time charter value of US$5,400mil (US$591,780/day), and based on a capex of US$1.1bil. CGS-CIMB has estimated that Yinson will earn a projected internal rate of return of 13% over 25 years, commencing from first oil in 2023, which the brokerage described as very good.

Our target price assumes that Yinson will hold a 75% stake in FSPO Marlim-2, and two potential FPSO contract wins, for example the FPSO Parque das Baleias from Petrobras in six months time (also a 75% stake), and the FPSO Pecan contract from Aker Energy in Ghana (a 100% stake). Our target price deducts RM0.15/share for a potential RM500mil equity issue to fund the new projects.

The downside risks include the challenge of project execution in the unfamiliar environment in Brazil.



Thomas Yong(pic)

CEO, Fortress Capital Asset Management

Stock picks: Airasia Group Bhd and NTPM HOLDINGS BHD

NTPM Holdings Bhd

Price: 50 sen

NTPM manufactures and retails consumer tissue and personal care products. Its portfolio of household brands includes Premier, Royal Gold, Cutie, Intimate and Diapex.

While recent profitability has been negatively affected by rising raw material costs of paper pulp, we expect profit margin to recover given that pulp prices have declined by more than 20% in 2019. This low pulp price environment appears to be sustainable in 2020 as global pulp demand is not expected to catch up with the recent capacity addition by global pulp players. Pulp costs account for a substantial 30% of its revenue and the company holds 5 to 6 of pulp inventories.

Aside from the recovery in profit margins, we expect revenue growth in 2020 to be driven by a tissue paper capacity expansion in its Vietnamese plant, which now accounts for close to 30% of total capacity. The utilization rate of this Vietnamese plant, which targets the broader South East Asian market, is expected to escalate going forward and allowing some economies of scale benefits.

While liquidity for the stock is limited as a result of the lack of analyst coverage and institutional following, valuation has not priced in any potential recovery in earnings at the current price level.





Kenny Yee (pic)

Head of Research

Rakuten Trade

Stock picks: RCE Capital Bhd and Vertice Bhd

RCE Capital Bhd

Price: RM1.65

One of our stock picks for the year is financial services firm RCE Capital Bhd, given that it provides financing to over 80,000 civil servant customers via its salary deduction scheme.

We also believe the group has plenty of room to grow in 2020, with its 5% market share vis-a-vis Malaysia’s civil servant population.

RCE Capital has shown consistent improvements in asset quality over the years, while its non-performing loans (NPL) ratio stands at a healthy rate of about 4%.

The group also has a net interest margin of about 8%, which is higher than its industry peers.

We also note that the financial services firm has been enjoying cheaper cost of funding via its recent sukuk programme amounting to RM2bil.

Another reason we will be watching this stock is it undemanding valuation, given its current price to book value (P/BV) ratio of 0.9x, backed by an anticipated dividend yield of about 5%.

The stock performed well in 2019 – we saw buying momentum building up and we expect this to intensify in 2020.

While other non-bank financial institutions have also seen their stocks gain interest from investors, we believe RCE Capital provides an even better platform for investors.

Its salary deduction scheme for civil servants minimises the chances for NPLs, and the group is also careful about the quality of loans it provides, which allows it to maintain its NPLs at good levels.

Vertice Bhd

Price: 87.5sen

Our second stock pick for 2020 is construction firm Vertice Bhd, which was formerly known as VOIR HOLDINGS BHD.

We are looking at this stock as the group is expected to return to profitability after streamlining its operations to focus on construction.

Last year was a transitional year for the group, following the sale of its majority stake in its fashion retailing business in 2018.

The outlook for the group’s construction business is bright, given Vertice’s alliance with the main contractor of the RM6.3bil Penang Transport Masterplan project, Consortium Zenith Construction Sdn Bhd.

There are four construction packages under main contractor, with Package 2, worth RM815mil having been awarded to Vertice.

Package 2 involves the construction of a by-pass from Bandar Ayer Hitam to Lebuhraya Tun Dr Lim Chong Eu.

The groups alliance with the main contractor of the project also provides the possibility of Vertice securing further work packages.

We also expect a boom in the construction sector this year, with mega infrastructure projects like Bandar Malaysia coming up, and this should be beneficial for Vertice.

Its participation in the construction scene in Penang is also positive, given that Penang is among the states with the most construction activities in the pipeline.

Overall we are optimistic on Vertice given its strong outstanding orderbook of RM1bil, and as the works on the Penang Transport Master Plan project will keep the group busy, providing earnings visibility for the next three to five years.



Vincent Lau

Rakuten Trade Sdn Bhd vice-president of research

Stock picks: Supercomnet Technologies Bhd (Scomnet)

Price: 74sen

Few are aware that Malaysia is the world’s leading producer and exporter of medical devices such as catheters and supplies 80% of global demand. One example of a listed Malaysian medical device company is Scomnet, which has been quietly delivering stellar results over the last eight quarters.

More importantly, Scomnet counts blue chip companies such as New York listed Edward Lifesciences Corp, and Denmark listed Ambu AS as its major clients.

Scomnet has served both these companies for more than ten years, with the orders rising over the last few years. Earnings visibility has been clear, and management has so far delivered on its guidance.

Scomnet supplies catheters, cannulas and urine bags for its medical devices division.

For the next three years, Scomnet’s earnings are set to rise, as orders from both these companies further increase.

Scomnet’s fortunes only changed after it acquired the remainder 80% of its medical subsidiary, Supercomal Medical Products Sdn Bhd in early 2018.

Prior to that, its earnings were volatile as it was predominantly involved in the manufacturing of PVC compound and cables and wires for electronic devices and data control switches.

For the most part of 2019, the stock has rested despite strong earnings momentum. As the company continues to deliver strong results, it will be a matter of time before investors perk up and recognize this as the next growth stock.

Earnings-wise, Scomnet has delivered a 40.5% increase in net profit to RM14.3mil for its nine months to Sep 30,2019. Revenue increased 48% to RM90.57mil.

The catalysts going forward would be a potential dividend, and more stellar earnings in the next few quarters.

Ang Kok Heng

Chief Investment Officer

Phillip Capital Management

Stock picks: Malayan Banking Bhd, Datasonic Bhd and VIZIONE Bhd

Datasonic Group Bhd

Price: RM1.48

The company that is in the provision of solutions for immigration-related services saw a rebound in its share price following improvements in its bottom line last year.

This was a change compared with 2018 where its profitability was on a downtrend.

Datasonic supplies chips for passports and identity cards, which is a critical component for the documents.

People passing through the electronic gates at the Immigration points in the airport would sometimes see Datasonic personnel at hand to assist passengers.

Going forward, Datasonic is in the running for two major border control projects under the Immigration Department. One of them is the provision of e-Visa services for foreign national from China, India and other countries.

It is learnt that the proposal by Datasonic is for the revenue to be shared with the government in return for the company providing the infrastructure and maintaining the system.

The other project for Datasonic is an integrated system for the Immigration Department where all segments of border control are in communication with each other to trace fugitives coming in or leaving the country. This was previously known as the Sistem Kawalan Immigration Nasional or the SKIN project which is up for re-tender.

Although the share price of Datasonic has risen in recent months following its better results and speculation of upcoming projects, I feel that Datasonic still has some room to go pending the announcements of the two projects.

At the moment, its supply of chips for passports and identity cards already provides the company with a stable income.

Datasonic also has a new shareholder and new management team.

Vizione Holdings Bhd

Price: 87 sen

It is one of the few construction companies that continues to be profitable even though the sector had been badly hit by the change in government in May 2018.

The contractor, which is now steering its attention towards building infrastructure, managed to achieve decent margins of more than 10 %, which is higher than most other players in the sector.

Previously Vizione, which is led by Datuk Ng Aun Hooi, was focused on building affordable homes.

On Oct 16 last year, Vizione received a big break when the company was awarded a letter of intent from Jabatan Air Negeri Sabah for the construction of the Papar Dam.

So far, not many details are available on the project but Ang views it as a game changer for Vizione. He says that it would more than double the order book and will firmly put Vizione as a contractor of infrastructure instead of just affordable homes.

The Papar Dam project is to replace the Kaidun Dam that was proposed by the previous government. The Kaidun Dam project was to provide 1,000 MLD of water to Penampang and generate 37MW of hydroelectric. It was to cost some RM2.7bil.

However, the Kaidun project did not take off and eventually was shelved. The new Papar Dam is expected to have capacity of 1,000 MLD but would supply 100MW of renewable energy.

Apart from the dam project in Sabah, Vizione is also a 50% partner for the construction of a RM815mil highway on Penang Island that is part of the traffic dispersal system for the tunnel project between Butterworth and Gurney Drive on the island. It also is actively seeking to build hospitals for the government.

Serba Dinamik Holdings Bhd

Price: RM2.33

Among the large oil and gas companies, Serba Dinamik is said to be the cheapest large market-capitalised oil and gas stock.

While other large market-capitalised stocks trade at price earnings multiple of more than 20 times, Serba Dinamik is trading at midteens.

Ang likes the company for its aggressiveness in bidding for contracts and its business model that is aimed at providing engineering services to companies with operations within the country and overseas.

In Malaysia, Serba Dinamik has, among others, secured more than RM1.5bil worth of jobs in Pengerang from building office spaces to the provision of maintenance, repair and overhaul (MRO) services to oil and gas companies there. The bulk of its revenue comes from MRO as well as the inspection, repair and maintenance works.

Ang says Serba Dinamik’s is looking at an additional RM8bil for its order book this year.

“‘Even if it secures half of it, it will be a big increment from the current order book of RM10bil,” says Ang.

Serba Dinamik is largely managed by its major shareholder Datuk Mohd Abdul Karim Abdullah who holds a 24% stake in the company.

Last year, Abdul Karim made headlines in the corporate world by taking up major stakes in Sarawak Concrete Industries Bhd (SCIB) and Kumpulan Powernet Bhd.

His foray into the two other listed companies raised concerns on his expansion outside the oil and gas industry.

But a fund manager says Mohd Karim has some non-oil and gas related projects from Pengerang that he had wanted to inject into Serba Dinamik. But the funds did not like the idea.

These projects may be injected into Kumpulan Powernet and SCIB.

https://www.thestar.com.my/business/business-news/2020/01/04/top-20-stock-picks-for-2020
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SCOMNET 2.02 -0.06 (2.88%) 913,400 
PLS 0.945 -0.005 (0.53%) 198,200 
DSONIC 0.54 +0.03 (5.88%) 25,613,800 
VIZIONE 0.41 +0.01 (2.50%) 2,694,100 

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ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 AT 0.20+0.03 
 VIVOCOM 0.805-0.05 
 IRIS 0.355+0.055 
 KANGER 0.180.00 
 EAH 0.035+0.005 
 XDL 0.070.00 
 ASIABIO-OR 0.01-0.025 
 KNM 0.205-0.005 
 KSTAR 0.305-0.03 
 AT-WC 0.20+0.045 

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