Investment Highlights

• We maintain HOLD on MyETF DJ Islamic 25 but tweak our fair value (FV) down by 5% to RM1.26 (from RM1.32) based on our FVs (for stocks under our coverage), consensus FVs (for stocks not under our coverage) and last traded price (for Dagang NeXchange, which is not under any coverage). It is at a premium of 12% to its NAV of RM1.13 (Exhibit 3).

• Following its latest quarterly review, index provider S&P Dow Jones Indices decided to replace five of the Dow Jones Islamic Market Malaysia Titans 25 Index component stocks, namely Westports, Fraser & Neave, Duopharma Biotech, Hibiscus Petroleum and Comfort Gloves with D&O Green Technologies, Dagang NeXchange, Frontken Corp, MR D.I.Y. (M) Group and Malaysian Pacific Industries, effective after the close of trading on 17 September 2021. We are reflecting these changes in our revised valuation.

• We maintain our NEUTRAL call on the glove and the healthcare sectors. The ASP downtrend is still continuing in the short term. This is caused by higher supply coming from China and Thailand. Having said that, there is some positive impact from the ESG side as the US lifted the ban on Top Glove’s Malaysia-made gloves on 10 Sep as it believed no forced labour was involved in manufacturing those 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 in the near term. We also expect the job market to improve as the economy opens up. As for the oil and gas sector, we believe oil prices should stay strong as they ride on the gradual recovery in global economy.

• We are optimistic on the telco sector on the rising demand for data due to the 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 - 20 Sept 2021