Hey, it’s time for the hunt of alpha stocks again! KLCI almost erased its gain from the previous week as the bourse closed slightly above 1500 psychological level. Let’s hope it will remain supported above 1500.

1. PARAMON (1724)

Catalysts

1. Large Landbank and GDV

In its latest Q2FY20 results, PARAMON had highlighted its pipeline launches for 2H2020 is estimated at RM640mil. In addition, PARAMON currently has unbilled sales of RM873mil as at 30 June 2020.

Notwithstanding the above, PARAMON has undeveloped lands amounted to 505.1 acres with potential GDV of RM6,714mil.

2. Reversion to Sector Mean P/E

Based on peer analysis, the Trailing P/E of PARAMON at 6.5x is relatively low as compared to its sector average P/E of 14.6x. Even at a conservative take profit P/E of 10-12x, there is at least 50% upside to PARAMON.

Risks

1. Unexpected delay in project completion
2. Increase in debt burden
3. Lower sales of new properties than expected

2. CCK (7035)

Catalysts

1. Venture into Supermarket Business

CCK had launched its 1st supermarket, CCK Local at Kuching City Mall on 31st July 2020. From its Facebook page, the supermarket has similar layout to premium supermarket such as Jaya Grocer, Cold Storage and Village Grocer. Also, the supermarket seems to carry a fair share of imported groceries from Australia and New Zealand.

Source: https://www.facebook.com/CCKLocal/photos/?ref=page_internal

2. Reversion to Sector Mean P/E

Based on peer analysis, the Trailing P/E of CCK at 10x is relatively low as compared to its sector average P/E of 19.7x. Even at a conservative take profit P/E of 13-15x, there is at least 30% upside to CCK.

Risks

1. Lower sales from retail segment due to MCO
2. Unexpected delay in new supermarket launching
3. Unfavorable exchange rate

3. GADANG (9261)

Catalysts

1. Higher Recurring Income

GADANG has highlighted that the construction of the 9MW mini-hydro power plant in Lintau, Sumatera, is progressing well and is scheduled for completion by the end of 2020.

Based on a conservative profit margin of 10%, the 9MW mini-hydro power plant is expected to contribute approximately RM2.0mil in profit.

Source: https://repit.wordpress.com/projects/feed-in-tariff-fit/

2. Reversion to Sector Mean P/E

Based on peer analysis, the Trailing P/E of GADANG at 7.4x is relatively low as compared to its sector average P/E of 17.0x. Even at a conservative take profit P/E of 10-12x, there is at least 35% upside to GADANG.

Risks

1. Unexpected delay in project completion
2. Lower than expected in order book replenishment
3. Unfavorable exchange rate

DISCLAIMER: The information above is provided for education purpose only and does not constitute a buy or sell recommendation. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of you acting based on this information.