On Our Portfolio - I3investor...2015/10/12  · 16 AFFIN HOLDINGS BERHAD 2.39 15.0 6.3 43 MALAKOFF CORPORATION BERHAD 1.70 7.8 4.6 17 MATRIX CONCEPTS HOLDINGS 2.33 14.6 6.3 44 DIGI.COM

On Our Portfolio

12 October 2015

PP7004/02/2013(031762) Page 1 of 9

On Our Portfolio

Imminent Profit-Taking By the Kenanga Research Team l [email protected]

Profit -taking activities are expected to emerge following the strong rally in the FBMKLCI last week. Indeed, the benchmark index has ventured into our ‘Sell on Strength’ range, thus triggering our strategy of selling into a mark et rally. Technically speaking, we expect the FBMKLCI to trade at between 1,670 and 1,730 thi s week. Selective buying with a range-bound trading strategy remains our preferred strate gy in 4Q15. We have added 10k LUXCHEM shares each into our GROWTH and DIVIDEND YI ELD portfolios last week. Portfolio-performance-wise, all our model portfolio s recorded positive weekly return last week but were below the street performance. Neverth eless, they still outpaced the benchmark index by 477-2,516bps on YTD basis.

Time to take a break. We expect profit taking activities to kick-in this week following the strong performance in the market which had entered into our Sell on Strength range. To recap, we have issued our 4Q15 strategy report last Monday, where we expected the barometer index to be trapped in a wide trading range with selective buying. Hence, a range-bound trading-oriented strategy remains as our preferred trading strategy. Our preferred “Buy on Weakness (B.O.W.) range is pegged at 1,570/1,610 while “Sell on Strength” (S.O.S.) range is targeted at 1,680/1,720 levels. While both the external and internal challenges (i.e. lack of immediate domestic re-rating catalysts,

draining domestic liquidity, concerns over slowing China’s economy) remain largely unchanged, the domestic investment sentiment has gradually improved (based on our PER multiple discount between FBMSC and FBMKLCI studies). Coupled with the revival of ValueCap and a potential market-friendly Budget 2016, the FBMKLCI could have seen a bottom when it tested 1,503.68, at least for the short-term. Strategy-wise, we continued to favour: (i) big caps & GLCs, (ii) selective theme plays (i.e. export-oriented (benefit from the weak MYR), plantation (for rebound play)), (iii) resilient sectors (i.e. consumer & telco), and (iv) bashed-down stocks (i.e. at the 52-week low level). On top of that, we also believe the high dividend yield stocks (as outlined overleaf) could also draw risk-averse investors’ interest under the current uncertainties.

The return of the BULL. The FBMKLCI managed to skyrocket 77.74 points (or 4.77% WoW) to close at 1,706.54 with strong trading volume last week, underpinned by stronger performance in CIMB, AXIATA, and SIME. The bullishness was mainly boosted by external and currency factors where Ringgit recorded its best gain since 1998 (surging 3.7% last Wednesday or 6.5 % WoW to close at RM4.1295/USD) following a jump in oil prices as well as higher-than-expected trade surplus. Oil traders, meanwhile, were generally encouraged by expectations that the world’s two largest oil-exporting countries, Russia and Saudi Arabia may take measures to ease the supply gut, thus offsetting some concerns that China’s slowdown could lead to overcapacity in many industries. On Wall Street, stocks continued to cheer most of the time last week, thanks to better oil prices and dovish Fed minutes. Minutes from the Fed’s September 16-17 meeting emphasized policy maker‘s concerns about the slowing global economy, led by China, and the drag of the stronger dollar on the US thus, lifted confidence that the central bank would not move quickly to hike interest rates.

Added LUXCHEM into the portfolios. We have added 10,000 shares LUXCHEM into our GROWTH and DIVIDEND YIELD Portfolios each at last Wednesday’ closing price of RM1.54/share. We believe LUXCHEM is a small cap worth adding into your investment portfolio given its resilient earnings, above-average dividend yield of 4%-5% and net cash position. Our fair value of RM1.85/share is based on 12.5x FY16E PER which is in line with the small cap index average.

Positive returns but not enough. All our model portfolios recorded positive weekly returns at the 2.0%-3.4% range but were below the market. The lower performance was not a surprise given we had kept more than 50%of our funds in cash in all our model portfolios. The DIVIDEND portfolio was the best performer among the three with fund value higher by 3.4% WoW, extended its YTD gain to 4.64%, followed by the GROWTH (2.89% WoW, 25.02% YTD) and THEMATIC (2.03% WoW, 15.36% YTD).

Total Return (%) Key economic events to watch Date Consensus WoW YTD

FBMKLCI 4.77 -0.13 Malaysia Industrial Production YoY – Aug 12-Oct 4.1% Thematic 2.03 15.36 Malaysia CPI YoY – Sep 16-Oct 2.9% Growth 2.89 25.02 US Industrial Production MoM – Sep 16-Oct -0.2% Dividend Yield 3.40 4.64 China GDP YoY – 3Q 19-Oct 6.8%

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 2 of 9

Figure 1: FBMKLCI Weekly Charting

Source: Kenanga Research

Local bourse looks set to take a breather. Stronger Ringgit and Crude oil prices - the two key catalysts that has spurred the local bourse to stage a strong rally last week after they both surged about 6.46% and 11.36%, WoW, respectively. Besides, the dovish US Fed statement has also cooled investors’ worries over any near-term interest rate hike, further boosting investors sentiment. Technically, the key index managed to breakout from its ‘Triangle’ chart pattern last week as it approaches its +2SD regression level. Both RSI and Stochastic are rolling over from their overbought territories, which suggest the underlying index could consolidate soon to neutralise its recent overdone rally. This has led us to believe that the key index could potentially trade within 1,670-1,730 this week with downside-bias, and we advocate investors to employ a ‘Sell-on-Strength’ strategy this week after the index had ventured deeper into our sell-zone of 1,680-1,720 (where upside potential for several blue chips that enjoyed a decent rally last week could be capped).

Technical Ratings

Resistance 2 1750 MACD Neutral

Resistance 1 1730 Stochastic Neutral Current Level 1706.54 RSI Neutral Support 1 1670

Support 2 1650 Outlook Neutral

Figure 2 : USDMYR Weekly Chart ing

Source: Kenanga Research

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 3 of 9

Kenanga Core Coverage Dividend Yield comparisson

Kenanga Core Coverage Dividend Yield comparisson

No Company Last Price FY16E DPS Div Yield (%)

No Company Last Price FY16E DPS Div Yield (%) 1 AXIS REAL ESTATE INVESTMENT 1.66 21.6 13.0 28 PANTECH GROUP HOLDINGS BHD 0.63 3.5 5.6 2 PADINI HOLDINGS BHD 1.45 12.0 8.3 29 BRITISH AMERICAN TOBACCO BHD 62.50 346.4 5.5 3 WCT BHD 1.50 12.0 8.0 30 HAI-O ENTERPRISE BHD 2.35 13.0 5.5 4 MEDIA PRIMA BHD 1.36 10.8 7.9 31 ANN JOO RESOURCES BHD 0.77 4.2 5.5 5 BERJAYA SPORTS TOTO BHD 3.19 25.2 7.9 32 DUTCH LADY MILK INDS BHD 47.20 240.0 5.1 6 HUA YANG BERHAD 1.78 13.5 7.6 33 KLCC STAPLED GROUP 7.02 34.9 5.0 7 STAR PUBLICATIONS (MALAYSIA) 2.43 18.0 7.4 34 PAVILION REAL ESTATE INVESTMEN 1.51 7.5 5.0 8 KSL HOLDINGS BHD 1.58 11.6 7.3 35 MAH SING GROUP BHD 1.31 6.5 5.0 9 BOUSTEAD HOLDINGS BHD 3.97 28.0 7.1 36 SP SETIA BHD 3.25 15.7 4.8

10 SUNWAY REAL ESTATE INVESTMEN 1.52 10.2 6.7 37 MITRAJAYA HOLDINGS BHD 1.16 5.6 4.8 11 UOA DEVELOPMENT BHD 1.94 13.0 6.7 38 OLDTOWN BHD 1.35 6.5 4.8 12 MALAYAN BANKING BHD 8.60 56.6 6.6 39 UNISEM (M) BERHAD 2.08 10.0 4.8 13 PARKSON HOLDINGS BHD 1.13 7.4 6.5 40 AMMB HOLDINGS BHD 4.80 23.0 4.8 14 MEDIA CHINESE INTERNATIONAL 0.57 3.7 6.5 41 ZHULIAN CORP BHD 1.58 7.5 4.7 15 YTL POWER INTERNATIONAL BHD 1.55 10.0 6.5 42 AEON CREDIT SERVICE M BHD 13.50 64.0 4.7 16 AFFIN HOLDINGS BERHAD 2.39 15.0 6.3 43 MALAKOFF CORPORATION BERHAD 1.70 7.8 4.6 17 MATRIX CONCEPTS HOLDINGS 2.33 14.6 6.3 44 DIGI.COM BHD 5.74 26.3 4.6 18 CARLSBERG BREWERY MALAYSIA 12.04 75.0 6.2 45 PHARMANIAGA BERHAD 6.55 29.5 4.5 19 TA ANN HOLDINGS BERHAD 3.79 23.4 6.2 46 ALLIANCE FINANCIAL GROUP BHD 3.64 16.0 4.4 20 CAPITAMALLS MALAYSIA TRUST 1.39 8.5 6.1 47 DRB-HICOM BHD 1.37 6.0 4.4 21 BERJAYA AUTO BHD 1.97 11.8 6.0 48 LAFARGE MALAYSIA BHD 9.22 40.0 4.3 22 IJM CORP BHD 3.36 20.0 6.0 49 BIMB HOLDINGS BHD 4.13 17.9 4.3 23 IGB REAL ESTATE INVESTMEN 1.29 7.5 5.8 50 BURSA MALAYSIA BHD 8.20 35.0 4.3 24 MAGNUM BERHAD 2.69 15.5 5.8 51 THONG GUAN INDUSTRIES BHD 1.91 7.8 4.1 25 GUINNESS ANCHOR BHD 14.20 80.0 5.6 52 LPI CAPITAL BERHAD 14.50 59.0 4.1 26 PRESS METAL BERHAD 2.15 12.0 5.6 53 WAH SEONG CORP BHD 1.25 5.0 4.0 27 AMWAY (MALAYSIA) HLDGS BHD 9.92 55.3 5.6 54 HARTALEGA HOLDINGS BHD 4.73 18.9 4.0

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 4 of 9

Retail Model Portfolio – THEMATIC

No CATS Code Industry / Company Last

Buy/Sell Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 9 Oct

15

Value Unrealised

Profit / (Loss)

% Change

YTD

Weighting (as % of

NAV)

Latest Dividend Ex-Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM % 1 5168 HARTALEGA HOLDINGS BHD 2-Jan-15 5,000 17,500 3.500 4.730 23,650 6,150 35.14% 17.5% 9/11/2015 0.02 1.37 4.75 0.4%

2 5219 PESTECH INTERNATIONAL BHD 2-Jan-15 3,500 12,250 3.500 5.950 20,825 8,575 70.00% 12.3% 4/14/2015 0.04 1.01 6.11 2.7%

29,750 44,475 14,725 49.50% 29.8% 0.36

Total Dividend Received YTD 600

Total Realised Return 30

Total Return (based on the total allocated amount ) 15,355 15.36%

KLCI FBMKLCI Index 1,752.77 1,706.54 (46.23) -2.64% 3.23

KLCI – TOTAL RETURN -0.13%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 1023 CIMB GROUP HOLDINGS BHD 13-Jan-15 2,000 11,840 5.920 5.50 11,000 (840) -7.09% 2 5115 ALAM MARITIM RESOURCES BHD 3-Mar-15 15,000 11,850 0.790 0.725 10,875 (975) -8.23% 3 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.350 2.340 7,020 (30) -0.43% 4 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.800 12.600 12,600 (1,200) -8.70% 5 5267 XIN HWA HOLDINGS BHD 16-Jul-15 5,000 13,425 0.895 1.190 17,850 4,425 32.96% 6 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.740 0.720 21,600 (600) -2.70% 7 7174 CAB CAKARAN CORP BHD 2-Mar-15 5,000 4,650 0.930 0.985 4,925 275 5.91% 8 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.908 0.840 12,600 (1,025) -7.52% 30

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 1/12/2015 0.02 60.00

2 5168 HARTALEGA HOLDINGS BHD 2,500 3-Mar-15 0.03 75.00

3 5219 PESTECH INTERNATIONAL BHD 3,500 14-Apr-15 0.04 140.00

4 5347 TENAGA NASIONAL BHD 1,000 18/5/2015 0.10 100.00

5 5168 HARTALEGA HOLDINGS BHD 2,500 19/5/2015 0.03 75.00

6 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

7 5168 HARTALEGA HOLDINGS BHD 2,500 11-Sep-15 0.04 100.00

TOTAL DIVIDEND RECEIVED 600.00

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 5 of 9

Retail Model Portfolio - GROWTH

No CATS Code Company Last

Buy/Sell Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 9 Oct

15

Value Unrealised

Profit / (Loss)

% Change

YTD

Weighting (as % of

NAV)

Latest Dividend Ex-Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM %

1 5219 PESTECH INTERNATIONAL BHD 2-Jan-15 5,000 17,500 3.500 5.950 29,750 12,250 70.00% 17.50% 4/14/2015 0.04 1.01 6.11 2.7%

2 5143 LUXCHEM CORP BHD 7-Oct-15 10,000 15,400 1.540 1.570 15,700 300 1.95% 15.40% 9/11/2015 0.02 3.18 1.85 17.8%

32,900 45,450 12,550 38.15% 32.90% 0.67

Total Dividend Received YTD 830

Total Realised Return 11,640

Total Return (based on the total allocated amount ) 25,020 25.02%

KLCI FBMKLCI Index 1,752.77 1,706.54 (46.23) -2.64% 3.23

KLCI – TOTAL RETURN -0.13%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.350 2.340 7,020 (30) -0.43%

2 7081 PHARMANIAGA BERHAD 22-Apr-15 3,500 16,030 4.580 7.300 25,550 9,520 59.39%

3 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.800 12.600 12,600 (1,200) -8.70%

4 5267 XIN HWA HOLDINGS BHD 16-Jul-15 5,000 13,425 0.895 1.190 17,850 4,425 32.96%

5 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.740 0.720 21,600 (600) -2.70%

6 7174 CAB CAKARAN CORP BHD 2-Mar-15 10,000 9,300 0.930 0.985 9,850 550 5.91%

7 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.908 0.840 12,600 (1,025) -7.52%

11,640

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 12-Jan-15 0.02 60.00

2 7081 PHARMANIAGA BERHAD 3,500 9-Mar-15 0.12 420.00

3 5219 PESTECH INTERNATIONAL BHD 5,000 14-Apr-15 0.04 200.00

4 5347 TENAGA NASIONAL BHD 1,000 18-May-15 0.10 100.00

5 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

TOTAL DIVIDEND RECEIVED 830.00

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 6 of 9

Retail Model Portfolio – DIVIDEND YIELD

No CATS Code Industry / Company Last

Buy/Sell Date

No. of Shares

Average Cost

Avg Cost/ Share

Share Price

@ 9 Oct

15

Value Unrealised Profit / (Loss)

% Change

YTD

Weighting (as % of

NAV)

Latest Dividend Ex-Date

Gross Div

Consensus 12M Div

Yield

KNK’s/ Consensus’

TP

Potential Upside/

Downside

RM RM RM RM RM % % RM % RM % 1 1562 BERJAYA SPORTS TOTO BHD 2-Jan-15 10,071 34,200 3.420 3.07 30,700 (2,072) -6.06% 34.2% 10/8/2015 0.02 5.76 4.25 33.2%

2 6947 DIGI.COM BHD 11-May-15 3,000 18,090 6.030 5.550 16,650 (870) -4.81% 18.1% 8/5/2015 0.06 4.43 6.87 19.7%

3 5143 LUXCHEM CORP BHD 7-Oct-15 10,000 15,400 1.540 1.570 15,700 300 1.95% 15.4% 9/11/2015 0.02 3.18 1.85 17.8%

67,690 65,048 (2,642) -3.90% 67.7% 3.26

Total Dividend Received YTD 1,980

Total Realised Return 5,305

Total Return (based on the total allocated amount ) 4,643 4.64%

KLCI FBMKLCI Index 1,752.77 1,706.54 (46.23) -2.64% 3.23

KLCI – TOTAL RETURN -0.13%

Total Realised Return No. CATS Code Industry / Company Last Buy/Sell Date No of Shares Cost @ Avg Cost/Share Share Price @ Value Realised % Change

RM RM RM RM RM % 1 5218 SAPURAKENCANA PETROLEUM BHD 13-Mar-15 3,000 7,050 2.35 2.34 7,020 (30) -0.43% 2 7081 PHARMANIAGA BERHAD 22-Apr-15 3,000 13,740 4.58 7.300 21,900 8,160 59.39% 3 5347 TENAGA NASIONAL BHD 18-Jun-15 1,000 13,800 13.80 12.600 12,600 (1,200) -8.70% 4 0032 REDTONE INTERNATIONAL BHD 30-Jan-15 30,000 22,200 0.74 0.720 21,600 (600) -2.70% 5 7117 CENTURY LOGISTICS HOLDINGS B 15-May-15 15,000 13,625 0.91 0.840 12,600 (1,025) -7.52% 5,305

Total Dividends Received No CATS Code Company No. of Shares Ex-Date Gross Div Div Rec 1 5218 SAPURAKENCANA PETROLEUM BHD 3,000 1/12/2015 0.02 60.00

2 1562 BERJAYA SPORTS TOTO BHD 5,000 28-Jan-15 0.06 300.00

3 7081 PHARMANIAGA BERHAD 3,000 9-Mar-15 0.12 360.00

4 1562 BERJAYA SPORTS TOTO BHD 5,000 6-Apr-15 0.05 250.00

5 6947 DIGI.COM BHD 3,000 13-May-15 0.06 183.00

6 5347 TENAGA NASIONAL BHD 1,000 18-May-15 0.10 100.00

7 7117 CENTURY LOGISTICS HOLDINGS B 5,000 1-Jun-15 0.01 50.00

8 1562 BERJAYA SPORTS TOTO BHD 10,000 15-Jul-15 0.05 500.00

9 6947 DIGI.COM BHD 3,000 5-Aug-15 0.06 177.00

TOTAL DIVIDEND RECEIVED 1,980.00

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 7 of 9

Portfolios Total Return 2013 (based on the total al located amount) vs FBMKLCI Performance

Source: Bloomberg, Kenanga Research Portfolios Total Return 2014 (based on the total al located amount) vs FBMKLCI Performance

Source: Bloomberg, Kenanga Research Portfolios Total Return 2015 (based on the total al located amount) vs FBMKLC I Performance

Source: Bloomberg, Kenanga Research

On Our Portfolio 12 October 2015

PP7004/02/2013(031762) Page 8 of 9

Daily Charting: FBMKLCI Weekly Charting: FBMKLCI

Daily Charting: FBM70 Weekly Charting: FBM70

Daily Charting: FBMSC Weekly Charting: FBMSC

Dail y Charting: DJIA Weekly Charting: DJIA

Source: Bloomberg

On Our Portfolio 12 October 2015

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Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM : A particular stock’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET PERFORM : A particular stock’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERPERFORM : A particular stock’s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT : A particular sector’s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL : A particular sector’s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT : A particular sector’s Expected Total Return is LESS than 3% (an approximation to the

12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). ***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies.

Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Chan Ken Yew Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 Website: www.kenanga.com.my Head of Research