RHB's Top 20 Malaysia Small Cap Jewels 2023

Top 20 Malaysia Small Cap Jewels 2023 marks the 19th edition of the signature product from RHB Research that is part of a regional compendium of 80 top small-cap investment ideas from four ASEAN countries. Rain or shine, we
continue our relentless efforts to conduct sound fundamental research to assist investors in identifying winning stock ideas and unearth new undiscovered gems.

Just as market sentiment was beginning to turn following the worst of the pandemic, as the interest rate cycle enters a matured stage, sentiment took another knock from the banking crisis in the US and Europe, in the aftermath of the swift monetary policy tightening by the US Federal Reserve. Local investor sentiment has remained tentative in the past year as investors were drawn to other regional opportunities and asset classes. Nonetheless, investors continued to show interest in winning small-cap ideas to generate alpha for their respective portfolios – especially as valuations have also retraced. Stock selection remains paramount and we advocate for investors to focus on fundamentally strong companies that have the potential to deliver above-industry growth, as well as turnaround candidates.

Notably, our Top 20 Malaysia Small Cap Jewels 2022 outperformed the broad market with a holding period return of 15.7%, beating the FBM KLCI’s and FBM SC’s returns of -8.5% and -5.5%. As for the 2023 Edition, our picks for this year’s book are spread across seven different sectors with an average market cap of MYR597m. The consumer and industrial products & services sectors feature prominently, making up 50% of our picks. All but four – which are ACE Market-listed – of the 20 names are in the Main Market. None of the 20 companies featured this year are within RHB Research’s existing coverage, as we continue to seek new investment ideas.

RHB Research wishes to express our gratitude to the management teams of the featured firms for their generous time in helping us understand their business models and outlooks. Credit is also due to our fellow dedicated
colleagues who have invested considerable time and effort leading up to the publication of this compendium. Our team is grateful and humbled by the continued interest and support from investors.
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