• AmResearch model portfolio ended the week at -5.3% YTD, underperforming the broader index. The shortfall was mainly due to Tenaga, which we are Underweight on.
• US restrictions on AI (artificial intelligence) chip exports dominated headlines during the week. The restrictions now face a 120 days comment period, before going into effect. Lacking resolution in the near term, we foresee share price volatility to sustain and take the decision to further de-risk our portfolio from AI related names.
• We increase our weighting to defensive segments such as consumer staples and healthcare. 99 Speed Mart and IHH Healthcare are new additions into our model portfolio. a) 99 Speed Mart, the largest mini market in Malaysia, sells basic necessities, for which demand is inelastic. We expect earnings to grow by ca. 10% YoY over the next two years, underpinned by its store expansions into underpenetrated areas and bulk sales operations. Our TP of RM2.60 is based on 33x FY26 PER, implying a 15% upside. b) IHH Healthcare. IHH future growth is expected to be driven by its bed capacity expansion (+4k beds by 2028) and rising contributions from medical tourism. While there is uncertainty surrounding the Diagnosis Related Group (DRG) system, the impact on the overall group is expected to be manageable because: 1) Malaysian operations contribute only 20% of group revenues and Ebitda and 2) IHH has been implementing a value based model, designed to improve patient outcomes and reduce costs by minimizing unnecessary medical procedures. So far, this initiative encompasses 15% of its medical procedures, including anterior cruciate ligament surgery, colonoscopy, coronary angioplasty, hysterectomy and total knee replacement. IHH trades at a an FY26F EV/Ebitda of 10.6x, which is below its 5 year historical mean of 14x.
• After the adjustments, our portfolio now consists of 34% value, 27% growth, 25% dividends and 14% cash.

Source: AmInvest Research - 20 Jan 2025