Public Watchlist: Maybank’s Top Picks for 2020

For Malaysia equities, a combination of the KLCI’s sharp absolute and relative underperformance over 2019, extended underwhelming earnings delivery and continuing external (trade war) and internal (policy, politics) uncertainties have reset investor expectations to a much lower base. Positive inflection in KLCI-relevant data points such as earnings growth, credit expansion, property sector activity and stimulus would provide the base for a sentiment shift. However, for a sustained market uptrend, investors will need to see traction on structural (thematic; we flag four) issues such as GLC Reforms and investment/capex recovery, underpinned by greater policy coherence towards key economic sectors, political certainty, and trade diversion and investment relocation wins. Potential wildcards are investment and market-supportive measures such as linking corporate tax cuts to market free-float, and abolishing foreign shareholding limits re financials/telcos; note previously-flagged wildcard Petronas Monetisation thematic is seeing execution per recent disposals.

Supported by a forecast, cyclically-led earnings recovery in 2020 (+9.5% YoY; 2019: -2.8%), our end-2020 KLCI target is 1,700 (+8%), which together with 3.5% market yield, is a respectable 11.5% forecast TSR. We are weighted in Oil & Gas (Yinson, Dialog, Velesto, Wah Seong, Favelle Favco), Banks (CIMB, RHB, AMMB, BIMB), REITs (YTL, MRCB-Quill, Sunway), Consumer (BAT, UMWH, MyNews) and externally-driven earnings i.e. PChem, Kossan, MFCB, VSI. Re deep value picks, we flag Tenaga, SP Setia, Lotte Chem and MBM. On the flip side, we have SELL on AirAsia, Bumi Armada, Hartalega, QL and Inari. Our list of conviction dividend stock picks generates 5-8% cash yields.

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Stock Name Ref Date Ref Price Price Diff Last Range Open Change Volume Note
YINSON 16-Dec-2019 6.46 5.12
DIALOG 16-Dec-2019 3.42 3.01
VELESTO 16-Dec-2019 0.38 0.145
WASEONG 16-Dec-2019 1.12 0.88
FAVCO 16-Dec-2019 2.87 2.21
CIMB 16-Dec-2019 5.22 4.09
RHBBANK 16-Dec-2019 5.68 5.15
AMBANK 16-Dec-2019 3.83 2.90
BIMB 16-Dec-2019 4.48 3.88
YTLREIT 16-Dec-2019 1.36 0.84
SENTRAL 16-Dec-2019 0.995 0.885
SUNREIT 16-Dec-2019 1.85 1.46
BAT 16-Dec-2019 14.62 14.40
UMW 16-Dec-2019 4.49 3.23
MYNEWS 16-Dec-2019 1.17 0.885
PCHEM 16-Dec-2019 7.20 8.24
KOSSAN 16-Dec-2019 4.16 4.15
MFCB 16-Dec-2019 4.93 7.06
VS 16-Dec-2019 1.34 2.69
TENAGA 16-Dec-2019 13.18 9.90
SPSETIA 16-Dec-2019 1.37 1.06
LCTITAN 16-Dec-2019 2.33 3.49
MBMR 16-Dec-2019 3.85 3.29

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