Investment Highlights

• We maintain BUY on MYETF DJ Islamic 25 (MYETFDJ) with a slightly higher fair value (FV) of RM1.22 (from an earlier RM1.21) based on our FVs (for stocks under our coverage) and consensus FVs (for stocks not under our coverage and restriction). It is at a premium of 22% to its NAV of RM1.00 (Exhibit 4).

• Effective 1 July 2022, the creation/redemption unit block of MYETFDJ has been reduced by 25% to 300,000 units from 400,000 units together with adjustments to the in-kind creation and redemption basket.

• Hence, the 1% uplift in ETF’s FV stems mostly from the 30% increase in valuation for Press Metal, 74% for MR D.I.Y., 58% for QL Resources and 19% for TM, which were mostly offset by a 77% drop in Sime Darby, 36% in Nestle, 18% in IHH Healthcare and 43% for Top Glove.

• In terms of ETF’s NAV changes over the past 1 day, Petronas Gas rose the most by 0.7% point and Malaysia Pacific Industries (MPI) 0.5% point while Nestle dropped 2.2% points and KL Kepong/Petronas Dagangan 0.3% point (Exhibit 3).

• We remain OVERWEIGHT on oil & gas, which accounts for the largest share of 27% of the ETF’s NAV. This is given expectations of an extended upcycle from years of underinvestment globally which will re-catalyse capex rollouts for service providers as well as the entire value chain of up-middownstream operators. Hence we like Petronas Chemicals Group, Petronas Gas and Dialog Group.

• The technology sector, which accounts for 6.6% of NAV, continues to enjoy robust global semiconductor demand growth despite supply chain disruptions from the RussiaUkraine conflict and China’s strict zero-Covid policy. Hence we continue to favour Inari Amertron and MPI.

• For the glove sector which contributes 5% of NAV, we are neutral as the average selling price downcycle could be tapering towards the bottom amid heightened inflationary costs. We have HOLD ratings for Top Glove, Hartalega and Kossan.

• Our positive outlook for the ETF is partly tempered by our UNDERWEIGHT rating on the plantation sector, which now accounts for 14% of the ETF’s NAV, on expectations of lower crude palm oil prices in 2H2022 against the backdrop of potentially higher production.

Source: AmInvest Research - 4 Jul 2022