OSK’s small cap corporate day yesterday was attended by over
50 fund managers and buy-side investors. Despite the uncertainty in the market
which merits a more cautious investment stance, most investors were keen to
explore good ideas and continue to be on the lookout for longer-term ‘winners’
in the small cap space. We see pockets of opportunities as valuations (based on
our small cap universe) remained inexpensive at 7.3x FY12 EPS, a 40% discount
to the broader market. There are good underlying re-rating catalysts for the
small cap oil & gas, consumer and consumer-related sub-sectors. We have BUY
ratings on our top picks – DAYANG (FV:
RM2.34), JOHORETIN (FV: RM1.51), PRESTARIANG (FV: RM1.48) and TAKAFUL (FV:
RM4.42). Our NEUTRAL call on the broader market remains with our year-end
target for the FBM KLCI unchanged at 1,620.
Malaysia’s best small
caps unveiled. Held in conjunction with the launch of the 2012 edition of our
small cap handbook (OSK Jewels), our corporate day for small caps drew in more
than 50 local and overseas fund managers as well as buy-side investors. We
showcased 4 companies from the handbook – Prestariang, Johore Tin, Dayang Enterprise
and Syarikat Takaful Malaysia (STM) –
which are among our top picks for this year.
At the outset, investors were given the opportunity to catch a glimpse
of these companies’ core businesses
from the management’s perspective,
followed by individual breakout sessions
(which attracted good sign-ups). Prestariang was represented by its CEO,
Dr. Abu Hasan Ismail, Johore Tin by Edward Goh (Managing Director), Dayang
Enterprise by Bailey Kho (Head of Corporate Affairs) and STM by Dato’ Mohamed
Hassain Ismail (Group Managing Director).
10 new jewels.
The 4 companies showcased form part of the 10 companies featured in our handbook
for the first time (see Appendix). Of the shortlisted top 5 names, Kossan and
Dayang need little introduction as OSK has covered the stocks for some time
already. The companies that generated the most interest were Prestariang,
Johore Tin and Takaful as investors were either unfamiliar or had wanted to
find out more from management on their earnings prospects. Since our initiation
reports on these 3 stocks, their share prices have risen 17-75%. YTD, their share
prices have gained 24-100% relative to the 7% rise on the FBM Small Cap index.
We see further re-rating catalysts for these stocks as more investors warm up
to their fundamentals and growth opportunities.
Source: OSK188
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