The local market has
continued its volatile trading range in the short trading month of February
where the FBMKLCI breached the 1600 psychological level twice. The weak market
sentiment led our On Our Radar tracker to underperform the benchmark index by
20 bps on a MoM basis. During the month under review, we recommended a buy on
PESTECH shares at RM1.18 on 26 February with a target price of RM1.42. The
stock has performed well with an 18% gain since then. On a YTD basis (as of 4
March 2013), our OR tracker portfolio, which comprised of stocks which we still
have a Trading Buy recommendation on, recorded a +0.3% total return in contrast
to the -2.8% return of the FBMKLCI. Meanwhile, the average total returns of
both the realised and unrealised portfolios since inception stood at 8.6% as
compared to the 1.2% gain in the FBMKLCI. Going forward, election jitters will continue
to cap the upside to sentiment this month, and hence we may look to trim our
open positions further to lock in our profits.
PESTECH is our new
buy call in February. In the short trading month of February, we have released
a total of four On Our Radar (OR) reports, where we focused on reviewing two of
our earlier recommendations, namely HOVID and PWROOT, as well as recommending a
new company – PESTECH INTERNATIONAL (“PESTECH”). PESTECH, a home-grown
integrated electric power technology listed on Bursa in May last year, is
currently trading at a fairly attractive FY13 PER of 5.8x with a 5.1% net
dividend yield as opposed to the FBM Small Cap (FBMSC) Index PER of 7.4x. We
like PESTECH for its: 1) profit margin expansion, 2) strong order and tender
book and 3) huge business opportunities in both the local and regional markets.
We had also issued a NOT RATED report on OSK Holdings, where we viewed the company
to be potentially a cheaper proxy for entry into RHBCAP judging from the fact
that the former’s 9.9% stake in RHBCAP was already worth more than RM1.93b, a
28.3% discount to OSK Holding’s market capitalisation of RM1.38b.
As for now, there are still 13 stocks in our OR portfolio
tracker list with Trading BUY recommendations (from 12 companies as at end-Jan
2013). The overall portfolio recorded a 0.7% MoM total return for February,
underperforming the FBMKLCI by 20 bps during the same period. The star
performers during the month were PWROOT (+23%), PESTECH (+11%) and TOMYPAK
(+7.0%) but they were partially offset by the weaker share price performance of
SMRTECH (-11%); BONIA (-7%) and COLA (-6%). On a YTD basis (as of 4 March
2013), our OR tracker portfolio, which comprised of stocks which we still have
a Trading Buy recommendation on, recorded a +0.3% total return in contrast to
the -2.8% return of the FBMKLCI.
Our portfolio tracker
still outperformed the market since inception. Our OR tracker portfolio has
recorded an average total return of 8.6% since its inception in contrast to the
+1.2% return in the FBMKLCI over the same period. The top three best performers
(in terms of total return) in our OR tracker portfolio up to yesterday (4 March
2013) for which we still have Trading Buy ratings on was PWROOT (+56%), FABER
(+52%) and TOMYPAK (18%). We are looking to review our positions on PWROOT and
OCK soon as their share prices have already surpassed our target prices.
Meanwhile, COLA (-20%), BONIA (-15%) and GUAN (-13%) were the top three worst
performers in our OR tracker.
Best and worst of
stocks sold. TWSCORP (+37%) and ADVENTA (+31%) remained as the top
performer in our realised OR portfolio tracker list, where we closed our open
positions on them in Sep and Nov 2012 respectively. On the flip side, MKLAND
topped the worst performer list after we closed our open position on 29 Jan
2012 with a total realised lose of 13.4%.
Source: Kenanga
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