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Kim Hin Joo (Malaysia) Bhd – 10th Mar 21

Kim Hin Joo (KHJ)’s proven track record of over 35 years in marketing new-born and parenting products makes it one of the most trusted retail specialists in Malaysia, operating a wide retail network across the country. Following a decline in net income to RM5.2m in FY20, we project earnings to grow by 56.5% and 29.0% YoY to RM8.2m and RM10.5m, respectively in FY21-22, underpinned by its outlets expansion and improved consumers’ purchasing power. KHJ is valued by pegging its FY21f core EPS of 2.2 sen to 13x PE (c.28% discount to peers’ average of 18.0x), leading to a FV of RM0.28.

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Serba Dinamik Holdings Bhd – 25th Jun 21

The on-going saga that resulted in diminishing of investors’ confidence is expected to see both institutional and retail investors continue to keep their hands off for the time being. Hence, we reiterate our stance to advise investors to steer clear of further position, pending for further clarity from the special independent audit review. Under the prevailing market events, on-going coverage is now impracticable to comply with applicable regulations and hence, we have decided to suspend our coverage on Serba Dinamik. Given the prolonged uncertainties, we have now lowered our valuations metrics and our fair value is RM0.57 (down from RM1.30).

market pulse

Dour trend may persist

The unabated Covid-19 spread in the country which may lead to further pressure on the economy, coupled with the concerns over the revised nation’s growth projection by World Bank have sent the FBM KLCI lower. Following a heavy selldown, we might anticipate bargain hunting activities to emerge on the local bourse. On a side note, the government has approved the licence and incentives for Risen Energy Co Ltd to manufacture solar cells and solar modules in Malaysia amounting to RM42.2bn, which would make Malaysia an integrated production hub for solar products.

Chin Well Holdings Bhd – 24th Jun 21

We are ceasing coverage on Chin Well Holdings Bhd due to reallocation of internal resources and the lack of retail and institutional interest. We expect trading activities to also taper in tandem with the commodities price which appears to have peaked as the Chinese government has step in to tame the surging prices by releasing industrial metals from its national reserves this month as it is difficult for manufacturers to transfer these costs to the end-users. Our last recommendation on Chin Well was HOLD with a fair value at RM1.29. The fair value is derived from ascribing a target PER of 11.0x to its FY22f EPS of 11.7 sen.

market pulse

Hovering near support

The FBM KLCI failed to extend its gains amid pervasive negative sentiment and weak buying interest, bucking the regional uptrend. With the World Bank cutting Malaysia’s 2021 GDP growth projection amid slower-than-expected economic recovery, the sideways trade is likely to persist without a fresh catalyst under the current economic and public health crisis. Investors may also look at the US’s 1Q21 GDP growth rate, while Bank of England’s interest rate decision, which will be releasing tonight. Commodities wise, the oil price has risen above the USD 75 per barrel level.

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