Investment Highlights

• We maintain our HOLD recommendation on MyETF DJ Islamic 25, with a slightly higher fair value (FV) of RM1.11 (from RM1.10) based on our FVs (for stocks under our coverage) and consensus FVs (for stocks not under our coverage). Our FV currently offers a mild 14% upside to the ETF’s NAV of RM0.97.

• The ETF’s 2022 net loss decreased by 22% YoY to RM17mil mainly due to lower fair value losses of RM16mil with its NAV declining by 12% YoY.

• The basket of stocks fared worse from end-Dec 2021 to 30 June 2022 with NAV declining by 13%, leading to the ETF’s 1H2022 loss of RM21mil.

• However, the ETF’s NAV recovered slightly in 2H2022, up by 1.3% from 1 Jul 2022 to 31 Dec 2022. This turned around the ETF to a 2H2022 net profit of RM4.3mil.

• We remain Overweight on the oil and gas sector, which account for the largest 21% NAV weightage, as crude oil prices remain elevated at US$80-90 per barrel currently.

• We also like the healthcare sector, which has a 9% NAV weightage, given the ongoing drug shortages and return of influenza (flu) cases in Malaysia.

• However, we are neutral on the plantation sector, which accounts for 18% of the ETF’s NAV, on expectation that higher supply could restrain any upside to CPO prices with our average 2023F assumption at RM3,000/tonne for large planters and RM3,500/tonne for pure Malaysian companies.

• We are also neutral on the technology sector as semiconductor players’ near-term earnings outlook continue to be clouded by the potential slowdown of global economic activities and sustained inflationary pressures, which affect demand for end-products, especially within consumer-driven markets.

• Locally, our inhouse economist expects a robust 2023F GDP growth of 4.5% with inflation largely under control via subsidies, albeit susceptible to slowing global growth prospects.

• The ETF currently trades at an 11% discount to its NAV of RM0.97.

Source: AmInvest Research - 3 Mar 2023