10 stocks brokers say to buy in 2022
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Edge CEO Morning Brief Section: Front Page Ad Value: RM 48,995 5-Jan-2022 Size : 2,560cm2 PR Value: RM 146,985 10 stocks brokers say to buy in 2022
Edge CEO Morning Brief Section: News Ad Value: RM 48,995
5-Jan-2022 Size : 2,560cm2 PR Value: RM 146,985
10 stocks brokers say to buy in 2022 (cont)
10 stocks brokers say to buy in 2022
SHAHRINYAHYA/THE EDGE
务
BY SULHI KHALID year,s tail end.
theedgemarkets.com These battered the FBM KLCI
benchmark index, which contracted
KUALA LUMPUR (Jan 5): After a 3.67% year*on-year3 to close at its dec
tumultuous 2020 following an unprec ade low of 1,567.53 points on Dec 31.
edented pandemic outbreak, the year Investors and analysts are now
2021 saw continued volatility amid hoping for a better 2022, fuelled by
various headwinds, chief of which was optimism about the resumption of
still the seemingly endless pandem economic activities and growth in Hong Leong Bank
ic threat, which saw the emergence corporate earnings. So, what are the
of new variants that sent cases surg best stocks to have?
ing and brought back strict lockdown Below are 10 stocks that have been
measures. chosen by three local research hous
In Malaysia, there were also polit es —Kenanga Investment Bank Re
ical uncertainties to contend with, as search, CGS-CIMB Research and Hong Leong Bank Bhd
well as the bout ofg< once in 100 years” TA Securities — —as their top picks CGS-CIMB and TA Securities also like
massive floods that came towards the for the year: Hong Leong Bank Bhd (HLB), which
CGS-CIMB has highlighted as one of the
most defensive banks against credit risks
from Covid" 9,
CGS-CIMB also likes Public Bank
QL Resources Bhd Bhd and RHB Bank Bhd in the banking
QL Resources Bhd
One of the top picks ofboth CGS-CIMB space, which it has an “overweight” call on
Research and TA Securities is QL Re RM expectation of the anticipated economic
sources Bhd, which is involved in ma 6.5 recovery and a potential rate hike, which
rine products manufacturing (MPM), will be positive for banks* While it not
consumer food and integrated livestock 6.0 ed banks5 CY22F core net profit will be
farming, QL,s share price fell from a dragged by the one-off Cukai Makmur or
high of RM6.14 in May 2021, to a low RM5.86 Prosperity Tax, excluding this, it expects
of RM4.47 in November, before ending banks' CY22F core net profit to increase
the year at RM4.57, by a rate of 9.4%.
5.0
Given the over 20% share price de But HLB is its “top pick among Ma
cline in the past 12 months, CGS-CIMB laysian banks, for its defensive qualities
said in a mid-December 2021 strategy against the credit risks from Covid-19 and
RM4.69
note that QL had turned into an attrac good growth prospects from the expect
tive proxy for the expected recovery in ed decline in loan loss provisioning, and
Jan 4,2021 Jan 4,2022
consumer spending in the first half of strong growth in associate contributions
2022. Source: Bloomberg EDGE
from Bank of Chengdu in FY22*23F
“We believe the worst is over in CONTINUES ON PAGE 5
1HFY3/22, with QL expected to record
stronger results ahead. This is mainly timesj is currently trading at a discount to Hong Leong Bank Bhd
driven by: i) higher poultry prices to pass its five-year average PER of 44,12 times.
on the recent rise in raw material costs Likewise, TA Securities believes QL RM
(which led to margin compression in will benefit from economic recovery as 20
1HFY3/22); ii) higher contribution from poultry and fisheries, which it is involved
its MPM operations (lifting of lockdown in, are among the most sought-after pro RM18.96
restrictions leading to stronger consumer tein sources in Malaysia and the region. 19
demand and higher production output); Its aggressive store openings planned for
and iii) better economies of scale. Family Mart were also highlighted as an
RM17 闻
18
“QL should also see higher contribu other earnings growth catalyst.
tion from its Family Mart business, as CGS-CIMB has a target price (TP)
QL expects to grow its total store count of RM5.50 for QL, while TA Securities 17
by 24.4% to 300 by end-FY22EWe also has pegged its TP for QL at RM5.90.
expect consumer footfall to improve in On 2022's first trading day, the
16
tandem with the lifting of lockdown stock closed five sen higher at RM4.68. Jan 4, 2021 Jan 4, 2022
measures," CGS-CIMB added. It climbed another one sen to settle at
Based on Bloomberg data, QL, with RM4.69 on Tuesday, with a market cap Source: Bloomberg THE EDGE
a price-earnings ratio (PER) of 40.96 italisation of RM11.41 billion.
Edge CEO Morning Brief Section: News Ad Value: RM 48,995
5-Jan-2022 Size : 2,560cm2 PR Value: RM 146,985
10 stocks brokers say to buy in 2022 (cont)
FROM PAGE 4 HLB for its high environmental^ social
(which are potential rerating catalysts)w. and governance rating3 with a score of
TA Securities, on the other hand, has 71%, which it noted is one of the high
highlighted HLB's stellar asset quality est among its banking peers, with above
against other banks', with its gross im industry average sustainability efforts.
paired loans ratio having improved to CGS-CIMB has a RM20.56 TP
0.48% in 1QFY22 despite a challenging for HLB, while TA Securities's TP is
macro environment. Around 22% (ver RM21.70.
sus industry's average of 31%) of HLB's HLB serded 20 sen hi助er at RM 18.96
loan base is under the Payment Relief on Jan 45 valuing the bank at RM4 LI bil
Assistance Plans, it noted, indicating the lion. Since January last year, the stock
bank's borrower's profile strength. has climbed 7%,
Besides its established regional pres The stock is currently trading at a
ence, particularly in fast-rising ASEAN trailing 12-month PER of 13 times, be
countries such as Singapore, Vietnam3 low the sectoral Bursa Malaysia Finance
and Cambodia,TA Securities also likes Index's PER of 14.61 times.
Dialog Bhd
Dialog Bhd was one of the worst perform
ing stocks among FBM KLCI constitu
ents in 2021. Its recent earnings saw some
decline, dragged mainly by slower down
stream activities given the lockdown and
slower activity levels.
The stock is down by 22.3% since Jan
uary last year, after declining from a peak
of RM3.43 during that month to as low
as RM2.29 in September.
Notably, the stock is currently trading
below its five-year average PER of 31 *73
times, based on Bloomberg data.
On the potential catalyst to rhe group ,s
share price, Kenanga believes Dialog's sta
ble midstream operations provide a de
fensive base to cash flows and earnings.
“At current share prices, market is fail
Genting Bhd ing to price in any future expansion from
Genting Bhd
Genting Bhd is Kenanga Investment Pengerang which we think is likely as Pe
Bank Research's top pick for recovery RM tronas, Pengerang Integrated Complex is
play as the research house believes the set to commence soon, which we believe
group,s business will recover quickly will help boost prospects for further in
once cross-border restrictions are re vestments into Pengerang,** it said in a
laxed and lifted. RM4.78 research note.
Genting, whose earnings are globally On Jan 4, the stock ended unchanged
diversified with significant earnings de RM4.41 at RM2.65, valuing the group at RM14.96
rived from the US and the UK, would billion.
also benefit from a stronger US dol CONTINUES ON PAGE 6
lar amid a recovery in patronage, said 4.0
Kenanga. Dialog Group Bhd
It added that the new outdoor theme
park — Genting SkyWbrlds Theme Park 3.5 RM
Jan 4,2021 Jan 4,2022
—is expected to drive subsidiary Gent-
ing Malaysia Bhd's non-gaming revenue. RM3.43
Source: Bloomberg TFHEEDGE
Over the past one year, Genting
shares have climbed 8.98%.
3.0
Six analysts have placed a “buy” call “While ticket sales post Movement
on Genting, Bloomberg data showed. Control Order have been slow, the worst
Their TPs for the company range from is over for NFOs as ticket sales should
RM5.20 to RM6,92, for an average of recover to 80% to 85% of pre-Covid 2.5
RM6.05. level in the first half of 2022.
On the sectoral front, the research “The continuous enforcement clamp RM2.65
house believes the gaming sector is ing down on the illegal players is still
2.0
poised to be a major beneficiary of re the key to ticket sales growthJ it added. Jan 4, 2021 Jan 4, 2022
covery play in 2022, with number fore Shares in Genting finished five sen
cast operators (NFOs) still offering an or 1.06% higher at RM4.78, giving the Source: Bloomberg TH ElMSE
attractive dividend yield. group a market value of RM18.53 billion.
Edge CEO Morning Brief Section: News Ad Value: RM 48,995
5-Jan-2022 Size : 2,560cm2 PR Value: RM 146,985
10 stocks brokers say to buy in 2022 (cont)
FROM PAGE 5 “Inari's new system-on-module (SOM)
Inari Amertron Bhd
assembly division at P55 is on track to be
Inari Amertron Bhd gin production in the first quarter of2022. RM
Year 2021 was a remarkable one for Inari We view SOM division as a new growth
4.5
Amertron Bhd as its share price rallied by driver for Inari to diversify and grow its
47% and its net profit doubled in its fi exposure in the automotive and data cen RM3.99
nancial year 2021 (FY21) ended June 30, tre segments. 4.0
2021. Its share price more than doubled “In addition^ Inari is partnering with
from RM1.60 in early January 2020. China Fortune-Tech Capital Co Ltd to
CGS-CIMB expects Inari's earnings set up a joint venture (JV) for outsourced
growth momentum to continue this year semiconductor assembly and test manu-
on the back of rising 5G penetration and facruring services in ChinaJ it said in a
its diversification into auto and industrial research note. 3.0
sectors, CGS-CIMB has placed a TP of
RM2.63
“We continue to like Inari Amertron RM4.95, valuing the company at a fore 2.5 R
Bhd as the largest market cap and most cast PER of 38 times. It believes Inari Jan 4, 2021 Jan 4, 2022
liquid exposure proxy radio-frequency con commands a scarcity premium due to its
tent value. Its recent inclusion in the KLCI size and unique position as a FBM KLCI Scxjrce: Bloomberg T> EEDGE
index is likely to help catalyst its share price. component stock and FTSE4Good Index.
MY EG Services Bhd
CGS-CIMB expects the possible rerating
catalysts for MY EG Services Bhd (MYEG)
are potential new income stream from Ze-
trix blockchain jy hi曲er take-up for its new
health-tech service sa and expansion of its
e-government digital service offerings.
It also said that the group is poised
for stronger quarter-on-quarter earn
ings growth in its fourth quarter of FY21
(4QFY21) ended Dec 31,2021, driven by
higher demand from the health-tech seg
ment, such as private quarantine services
for travellers entering Malaysia and the
roll-out of Covid* 19 breath test systems
at major airports nationwide.
CGS-CIMB has placed aTP ofRMUO
and cited that delays in its new e-govern-
footfall and average sales per store. ment services and lower take-up rate for
MR D.I.Y. Group (M) Bhd
There are 10 analysts having a "buy” its health*tech services are the downside
RM call while one has placed a "hold” call, risks to its “add” recommendation.
4,5 with TPs ranging from the lowest of The TP ofRM1.30 is based on 26 times
RM3.39 to the highest of RM4.85. of the forecast earnings for FY23, which is
CGS-CIMB pegs its TP at RM4,40, above its five-year historical PER of 23 times.
4.0 valuing the retailer at 40 times of the fore
RM3.61 cast earnings for FY23,The stock closed
MyEG Services Bhd
3.5
at RM3.61 on Jan 4.
RM3.12
“We expect its quarterly revenue RM
3.0 W growth trajectory to continue from its 1.20
3QFY21 ended Sept 30,2021, as most of
RM1.09
its outlets are gradually allowed to open,
while both consumer footfall and con
2.5
Jan 4, 2021 Jan 4,2022
sumer sentiment improve J said CGS-
CIMB. RM0.948I
Source: Bloomberg Tl If EDGE In 3QFY21, the group posted a lower
net profit of RM9035 million or 1.44
sen per share versus RM113.45 million
Mr DIY Group (M) Bhd or 1.86 sen per share a year ago due to
This is a stock for recovery-theme play higher operating expenses from higher
on Bursa Malaysia, store count, while outlets remained dosed 0.70
With a 15.82% gain for the past one when Covid-19 movement restriction Jan 4, 2021 Jan 4, 2022
year, Mr DIY is on CGS-CIMB^ top pick measures were enforced.
list as it believes the home improvement Source： Bloomberg Tb'EEDGE
retailer is primed for a strong recovery in CONTINUES ON PAGE 7
Edge CEO Morning Brief Section: News Ad Value: RM 48,995
5-Jan-2022 Size : 2,560cm2 PR Value: RM 146,985
10 stocks brokers say to buy in 2022 (cont)
Telekom Malaysia Bhd FROM PAGE 6
Leong Hup International Bhd
Riding on the 5G roll-out, TA Secu
rities expects Telekom Malaysia Bhd Leong Hup International Bhd Sen
(TM) would get the chance to lease Expectations of better sales at bakery busi
80
its nationwide fibre network. ness and higher poultry average selling
TA Securities believes that TM is price (ASP), according to TA Securities,
also poised to benefit from the govem- will drive Leong Hup International Bhd's 70
ment's efforts to expand the Digital earnings in 2022.
Economy, Cloud service is an area. TA. Securities noted that Leong Hup 68.4 sen
The telco is among the four cloud ser is expected to increase the number ofThe 60
vice providers along with Microsoft, Bakers Cottage stores3 which contribute
Google^ and Amazon that are given to about 10% of its revenue from home
conditional approvals to build and operations. 50
manage hyper-scale data centres and However3TA Securities cautioned that 54 sen
cloud services in Malaysia. the key risk factors are volatility in ASP 40
“Under the Malaysia Digital Econ of poultry products, and inability to pass Jan 4, 2021 Jan 4, 2022
omy Blueprint (MyDIGITAL), the through higher feed and input costs if do
government has outlined plans to mestic lockdown is implemented. Source: Bloomberg EDGE
shift towards a Cloud-First Strategy Leong Hup's share price rebounded from
which targets to migrate 80% of public the low of 49.5 sen on Dec 20,2021 — the
data to a hybrid cloud system by end- lowest level since the equity rout in the first stock are advising clients to invest in Le
2022J it said. quarter of2020. The stock was on a decline ong Hup. TA Securities pegs its TP at 91
On top of that, TA. Securities noted starting in June last year, falling from 77 sen. sen, which is substantially hi^ier compared
thatTM's fixed broadband segment is The poultry firm is another consensus with an average TP of 78 sen. It closed ai
a clear beneficiary of the demand for “buy”, all the seven analysts tracking the 54 sen on Jan 4.
fixed connectivity driven by theYou can also read
