Investment Highlights

• We upgrade our call on EQ8 DJ Islamic 25 to BUY from HOLD previously with a higher fair value (FV) of RM1.1 (from RM1.17 previously) based on our FVs (for stock under our coverage) and consensus FVs (for stocks not under our coverage). Our FV currently offers a decent 18% upside to the ETF's market price.

• The higher FV is primarily attributed to tech-related stock revisions: i) 63% rise in Frontken Corporation's consensus FV to RM5.01/share (RM3.07/share), driven by heightened demand and strong customer orders of its Taiwan subsidiary, and ii) 21% increase in My EG Services' consensus FV to RM1.45/share (RM1.20/share previously), supported by services from Zetrix blockchain platform, including ZCe and digital ID registration.

• The oil and gas (O&G) sector remains the largest component of the NAV, representing 21% of the NAV. We have recently downgraded the sector's rating to NEUTRAL from OVERWEIGHT. This change reflects the sector's struggle with overcapacity and weak demand from China in the petrochemical segment, as well as increasing risks faced by local O&G maintenance contractors due to recent developments between Petronas and Petros. Nevertheless, we continue to favor individual stocks such as Petronas Gas and Dialog within this sector.

• We also maintain a NEUTRAL stance on both the telecommunication and plantation sectors, each constituting 17% of NAV. Our NEUTRAL view on telecommunication is owing to potential regulatory challenges and intensifying competition in the fixed broadband market. For the plantation sector, we expect large harvests of corn and soybean to limit upward movement in crude palm oil prices.

• Given the likelihood of US interest rate cuts becoming more pronounced following recent signals from Federal Reserve officials, our economist has adjusted the end-4Q202 USDMYR target from 4.63 to 4.40. This adjustment accounts for potential short-term fluctuations, particularly related to the US election cycle.

Source: AmInvest Research - 17 Sep 2024