AmInvest Research Reports

MYETF DJ Islamic 25 - Bursa ETF Watch: Slightly higher valuation from index changes

Publish date: Tue, 21 Mar 2023, 02:16 PM
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Investment Highlights

  • We maintain our HOLD recommendation on MyETF DJ Islamic 25, with a higher fair value (FV) of RM1.12 (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 16% upside to the ETF’s NAV of RM0.96.
  • Following the latest quarterly review by the index’s manager i-VCAP Management, the weightings of the stocks in the fund have changed even though no stock was added nor removed. This took effect after the close of trading on 17 March 2023.
  • The changes in the fund weightings, involving standard 100 shares, are increases for Digi, Petronas Chemicals, IHH Healthcare and Frontken Corp, partially offset by a reduction for VS Industry.
  • We remain Overweight on the oil and gas sector, which account for the largest 21% NAV weightage, on expectations of stronger crude oil prices in tandem with China’s reopening economy.
  • However, we are neutral on the plantation sector with HOLD calls for Sime Darby Planation, KL Kepong and IOI Corp given expectations of increasing palm oil production amid a recovery in foreign labour.
  • Also, we maintain our NEUTRAL recommendation on the technology sector as near-term earnings growth potential could be further capped by rising financial stress in US and European banks, slowdown of global economic activities and sustained global inflation which is affecting demand for end-products, especially within the consumer-driven markets.
  • The glove sector remains NEUTRAL given the persistently oversupplied market amid intense competition from Chinabased manufacturers. Hence, we have HOLD recommendations for Top Glove Corporation and Hartalega.

Source: AmInvest Research - 21 Mar 2023

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