KUALA LUMPUR – The market value of shares on Bursa Malaysia evaporated by RM7.32 billion (S$2.2 billion) on Monday, with analysts believing the market is oversold as investor sentiment appears to have drifted away from the fundamentals of a suspended parliament after the country’s first general election.
The sell-off in “sinister” stocks such as betting, tobacco and beer maker counters wiped out a staggering RM2.75 billion as the largest component of the National Alliance (PN) is the Islamist party Parti Islamiah, which could be part of the next government.
On Tuesday, the benchmark FTSE Damarong Composite Index (KLCI) saw a sell-off in blue chips, with the index closing 0.46 percent lower at 1,441.29 points, as foreign investors continued to sell stocks amid political uncertainty and weakness in the external economy amid increased demand from China’s reimposition of the Covid-19 embargo.
Mr Danny Wong, CEO of Areca Capital, said investors have put Malaysia’s strong economic fundamentals on the back burner as they focus on the suspended parliament.
Bank Negara Malaysia Berhad (KLSE: MAYBANK)
Shares of Malayan Banking Bhd. are up 5% so far this year.
According to the latest data released, shares of Malaysia’s most valuable bank have a “buy” rating with an average target price of RM10.18. This is because its “excellent dividend yield (7% to 8%) matches its commendable asset quality readings”. They have a target price of RM11.05 on Maybank.
Sime Darby Limited (KLSE: SIME)
Out of 44 analysts, 37 rate Sime Darby’s stock a “buy” and seven rate it a “hold”.
The diversified conglomerate’s stock has an average target price of RM2.62, representing an upside potential of 19.6% from its latest share price of RM2.19.
RHB’s research team said the stock is worth buying with a target price of RM2.55, despite the recent fallout from the sale of Ramsay Sime Darby Healthcare (RSDH).
While the loss of a potential special dividend from the sale of RSDH is disappointing, we continue to be bullish on Sime Darby’s resilient China Automotive and Australasian Industrial divisions, the analysts wrote, adding that the stock still offers an attractive dividend yield of about 0.5%.
CIMB Group Holdings Limited (KLSE: CIMB)
CIMB stock has a majority rating of “Buy” and an average target price of RM5.87.
This target price represents 7.4% upside potential from the stock’s last trading price of RM5.41.
AmInvest’s equity research team calls CIMB a “buy” with a target price of RM6.70 per share as it remains bullish on the banking sector.
Shares of the country’s second-largest bank have fallen slightly this year.
Top Glove Ltd (KLSE: TOPGLOV)
Top Glove’s share price is down 74% in 2022. Its Singapore-listed shares are down by about the same amount.
The medical glove maker’s total sales revenue fell 66% year-on-year to RM5.57 billion in fiscal 2022, while profit after tax fell 96% year-on-year to RM292 million in the same period.
Commenting on its performance, the group said, “The glove industry is experiencing the impact of normalization after achieving unusually high earnings in the past two years due to the surge in demand for gloves during the pandemic and higher average selling prices (ASP).”
Looking ahead, the group expects the business environment “to remain challenging” through 2023.
Capital A Berhad (KLSE: CAPITALA)
Capital A, the corporate name of low-cost carrier AirAsia, reported revenues of RM1.47 billion in the second quarter (Q2) of 2022, more than double the revenue of the same period last year.
Despite the jump in revenue, the group reported a net loss of RM1.12 billion in Q2 2022, up 55% year-on-year. The company said this was “mainly due to share of losses from associates and foreign exchange losses”.
Capital A shares are down 20% in 2022. Most analysts have a “hold” rating on the stock, with an average target price of RM0.78. The target price represents a 20% upside potential from Capital A’s last trading price of RM0.65.
PETRONAS (KLSE: PETGAS)
Despite the underperformance in 2022, analysts expect Petronas shares to rise 14% in the next 12 months.
Of the 30 analysts who rate oil and gas stocks, 17 have a “buy” rating and 13 have a “hold” rating.
Kennametal researchers recommend investors to “hold” the stock with a target price of RM17, while RHB remains neutral with a target price of RM17.35.