Investment Highlights

• We maintain our HOLD recommendation on MyETF DJ Islamic 25, with a higher fair value (FV) of RM1.27 (from RM1.26) based on our FVs (for stocks under our coverage) and consensus FVs (for stocks not under our coverage). The ETF is currently trading at a discount of 2.6% to its NAV of RM1.16 (Exhibit 3).

• In 2021, the ETF reported a net loss of RM21.7mil mainly due to lower fair values of its financial assets which have declined in value by RM27.9mil. 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 was 0.13% in 2021. This is within its investment objective of 3% tracking error limit.

• The DJIM25 Index had fallen 11.04% in 2021 to 1,023.10 points. However, it was improvement from 1,005.28 points which was registered on 30 June 2021.

• We are positive on the oil and gas sector as escalating crude oil prices and rising global demand will catalyse faster order flows across the value chain. The consumer sector is also expected to do well as the economy recovers assuming no lockdown in Malaysia. We also like the technology sector as the world embraces automation and various smart products.

• For the glove sector, we maintain our NEUTRAL outlook as the lower earnings outlook for the next quarter is offset by its better ESG outlook for the listed players. The healthcare sector’s outlook is expected to improve in 2022 as inpatient occupancy rate should improve. However, we are UNDERWEIGHT on plantations as we believe that the CPO price should ease in the 2H2022 as production increases.

• In the recently concluded earnings season for 4Q2021, the plantation and healthcare sectors’ earnings beat expectations. The plantation sector benefited from the surge in CPO price. For the healthcare sector, IHH Healthcare’s Singapore operation registered a strong set of earnings. However, the glove sector underperformed due to a fasterthan-expected drop in average selling price (ASP).

Source: AmInvest Research - 3 Mar 2022