Investment Highlights

• We maintain HOLD recommendation and fair value (FV) of RM1.26 on MyETF DJ Islamic 25 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 14% to its NAV of RM1.11 (Exhibit 3).

• In 1H2021, the ETF reported a net loss of RM26.6mil. This is mainly caused by lower fair value of the financial assets that it holds which have declined in value by RM30.4mil. This is understandable as the ETF is designed to track its underlying benchmark index which is the DJIM25 Index. The ETF tracking error between its NAV and benchmark index were 0.11% as at 30 Jun 2021. This is within its investment objective of 3% tracking error limit.

• The DJIM25 Index had fallen 12.59% in 1H21 to 1005.25 points. This is also the lowest first-half level.

• For the glove sector, we maintain our neutral outlook as the lower earnings outlook for the next financial year is offset by its better ESG outlook. The healthcare sector outlook is expected to improve in 2022 as inpatient occupancy rate should improve. As the Covid-19 situation improves, it should lead to higher confidence among consumers to seek treatments which have been delayed previously.

• We are positive on these key sectors: consumer goods, oil & gas and telecommunications. 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.

• Recently, the 12th Malaysia Plan (12MP) was announced. We believe that the 12MP is long-term positive to Malaysia’s equity market as it promotes higher income per capita and reduces inequalities.

Source: AmInvest Research - 4 Oct 2021