US markets ended flat on Friday as the election rally takes a breather. Earlier, European stocks declined due to higher coronavirus infections and with more lockdowns being implemented.
On the local market, the FBM KLCI rose 18.15 points to 1519.65 points on pre-Budget rally. Following the mixed performances in the US and Europe, the FBM KLCI could take a breather from recent gains and consolidate below the resistance of 1545 points.
Stocks to watch on corporate newsflow are: LKL International has inked an agreement with AT Systematization to market, sell and distribute natural rubber latex gloves and nitrile gloves; Techfast announced that it has signed a letter of intent (LOI) to supply up to 6.45 million barrels of diesel gas oil worth an estimated RM1.14 billion; Pentamaster’s 3QFY20 net profit fell 30% yoy, due to lower revenue.
Following the Budget 2021 announcement on last Friday, we expect the following stocks to be under investors’ interests:
Telco operators, Opcom (fibre optic), and OCK, Mestron (telco tower) – allocation for implementing the National Digital Network (JENDELA) and RM7.4b to build and upgrade broadband services.
Bus operators such as Gets Global and Konsortium Transnasional – sales tax exemption for purchase of bus.
BAT – benefiting from imposition of excise duty on vaporisers and government’s commitment of clampdown on smuggling activities.
Glove markers – no windfall tax.
Construction counters especially Gamuda, MMC, IJM, Gadang, Sunway Construction, MRCB, Gabungan AQRS YTL Corp - RM15b allocation for infra. projects such as Pan Borneo Highway, Gemas-JB DT, KVDT, MRT3, HSR KL-Singapore, RTS JB-Singapore, Iskandar BRT, Central Spine Road-Kelantan and Pahang.
Technology counters – incentive for high tech and value-added firms as well as electronic clusters in Batu Kawan, Penang and Kulim Industrial Park, Kedah.
Consumer stocks such as Nestle, F&N, Mr DIY, SEM, Mynews, CCK, Aeon, Hup Seng, Hai-O, Kawan Food – benefiting from cash handouts - BPR, lower employee EPF contribution, lower income tax rate etc.
Overall, we deem the Budget to be non-event for the market as not much positive and negative surprises. We are neutral on the market with our FBM KLCI year-end target of 1470 points. Our top picks are Axiata (TP: RM3.93), Tasco (TP: RM2.52), CCK (TP: RM0.79), Wellcall (TP: RM1.21), AME (TP: RM2.21), Frontken (TP: RM4.33) and FoundPac (TP: RM1.30).
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Created by jfapex | Aug 26, 2024
Pesona is valued at RM0.46 based on a Sum of Parts valuation, which also corresponds to a 13.0x 1-year forward PER of the Group’s FY25F EPS of 3.5 sen. This valuation is a discount to Bursa Construc