Investment Highlights

• We maintain HOLD on MyETF DJ Islamic 25 but tweak our fair value (FV) down slightly to RM1.32 (from RM1.34) based on our FVs (for stocks under our coverage) and consensus FVs (for stocks not under our coverage). It is at a premium of 14% to its NAV of RM1.16 (Exhibit 3).

• Following its latest quarterly review, the index providers S&P Dow Jones Indices decided to maintain the Dow Jones Islamic Market Malaysia Titans 25 Index component stocks with adjustment to their weighting, effective after the close of trading on 21 June 2021. We are reflecting these changes in our revised valuation.

• The component stocks with increased weightage are Petronas Chemicals Group, IHH Healthcare, Press Metal Aluminum, Digi.Com, Petronas Gas, Telekom Malaysia, Maxis, Nestle (Malaysia), Inari Amertron, QL Resources, Kossan Rubber Industries, Westports Holdings, Duopharma Biotech and Hibiscus Petroleum. Those with reduced weightage are Top Glove Corp, Hartalega Holdings, Dialog Group, IOI Corp, Kuala Lumpur Kepong, Sime Darby Plantation, Petronas Dagangan, Sime Darby, MyEG Services and Fraser & Neave Holdings. Meanwhile, Comfort Glove’s weighting is unchanged.

• We maintain our view that the upside to glove stocks and the healthcare sector is now capped, on the back of Covid-19 vaccines’ rollout worldwide. This paves 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.

• Telcos are riding on a new wave of digitalisation of the economy. The price war among mobile telecommunications operators will be somewhat alleviated assuming the proposed merger between two key players is to materialise.

Source: AmInvest Research - 22 Jun 2021