Investment Highlights

• We maintain HOLD on MyETF DJ Islamic 25 but adjust down our fair value (FV) by 4% to RM1.34 (from RM1.39) based on our FVs (for stocks under our coverage) and consensus FVs (for stocks not under our coverage). It is at a slight premium to its NAV of RM1.21 (Exhibit 3).

• Following its latest quarterly review, the index providers S&P Dow Jones Indices decided to replace Dow Jones Islamic Market Malaysia Titans 25 Index component stock Supermax with Telekom Malaysia, with effect from after the close of trading on 19 Mar 2021. We are reflecting this change in our revised valuation.

• We maintain our view that the upside to glove stocks and hence the healthcare sector is now capped, on the back of the rollout of Covid-19 vaccines worldwide, paving the way for the eventual end to the pandemic, and hence an end to the surge in demand for gloves.

• On the other hand, we are positive on the outlook for other key sectors tracked by the ETF, i.e. consumer goods, oil & gas and telecommunications (Exhibit 2). We believe consumer spending will be well supported by cash handouts during the pandemic and the recovery in the job market thereafter. Meanwhile, we believe oil prices will ride on the gradual recovery in global economy, while Opec+ continues to exercise production restraint.

• Telcos are riding on a new wave of digitalisation of the economy. The still intense competition among mobile telecommunications operators amidst escalating capex requirements could also trigger M&As within the sector.

Source: AmInvest Research - 22 Mar 2021