The local market continued its range-bound mode in March where the FBMKLCI traded in a range of 50 points from a low of 1,621.36 to a high of 1,671.63 points. The range-bound trading was in line with our expectation as traders are unlikely to take any major actions ahead of the upcoming general election. Despite a volatile trading sentiment for the overall market, our On Our Radar (OR) tracker outperformed the benchmark index by 310 bps on a MoM basis. During the month under review, we recommended a buy on AQRS at RM0.96 on 28 March with a target price of RM1.29. On a YTD basis (as of 1 April 2013), our OR tracker portfolio, which comprised of stocks which we still have Trading Buy recommendations on, recorded a 1.1% in total return as compared to the -0.6% return of the FBMKLCI. Meanwhile, the average total return of both the realised and unrealised portfolios since inception stood at 7.3%, beating the 3.4% gain in the FBMKLCI as well. Moving forward, we are looking to revisit some of our earlier holdings (i.e. PWROOT, TOMYPAK, etc.) should buying opportunities arise as a result of election jitters.

Gabungan AQRS is our new buy call in March. In March, we issued a total of seven OR reports, where we focused on reviewing and selling off five of our earlier recommendations, namely TOMYPAK, SMR TECH, PWROOT, BONIA and GUAN CHONG, as well as recommending a new company – GABUNGAN AQRS (“AQRS”). AQRS, a relatively small-scale developer that was listed in July-12, is currently trading at 6.6x FY13 PER, which is at around a 15% discount to the average small-to-mid size construction players’ PER of 7.8x. Moving forward, we believe AQRS could potentially make a strong comeback given that: (1) its recent land issue in the Klang Valley has been resolved; 2) there would be a faster recognition of its construction order book and property sales (mainly in Klang Valley); and 3) its potential to secure more government jobs. We also issued a company update report on DIABOCHI post its analysts briefing, where we believe the group’s share price was already fully valued, but we may revisit the stock when its share price retreats close to the RM2.60 technical support level.

Thus far, there are still nine stocks in our OR portfolio tracker list with Trading Buy recommendations (from 13 companies as at end-Feb 2013). The overall portfolio recorded a total return of 5.4% MoM in March, outperforming the FBMKLCI by 310 bps in the same period. The star performers for the month were PESTECH (+23.6%), THONG GUAN (+6.9%) and PERISAI (+6.9%). AQRS was the only stock recording a negative return of -3.7% in the month (we had recommended the stock on the 28th of March). On a YTD basis (as at 1 April 2013), our OR tracker portfolio, which comprised of stocks that we still have Trading Buy ratings on, recorded a total return of 1.1% in contrast to the -0.6% return of the FBMKLCI.

Good performance since inception. Our OR tracker portfolio has recorded an average total return of 7.2% since its inception, beating the +3.6% return in the FBMKLCI in the same period. The top three best performers (in terms of total return) in our OR tracker portfolio up to yesterday (1 April 2013) for which we still have Trading Buy ratings on was FABER (+36%), PESTECH (+23%) and OCK (+11%). We are looking to review our positions on PESTECH and OCK soon as their share prices have already surpassed our target prices. Meanwhile, COLA (-18%), AQRS (-6%) and TASCO (-1%) were the top three worst performers in our OR tracker.

Best and worst of stocks sold. PWROOT (+68%) and TWSCORP (+37%) were the top performers in our realised OR portfolio tracker list, where we closed our open positions in March 2013 and Sept 2012 respectively. On the flip side, BONIA topped the worst performer list after we sold it on 19 March 2013 with a total realised loss of 17.1%.

Source: Kenanga