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Saturday, June 18, 2016

Thong Guan Industries among fund managers’ picks

Saturday, 18 June 2016
Thong Guan Industries among fund managers’ picks

IT is easier to make a call when the stock market is on its way up. Optimism drives stock selection with fund managers looking for value and growth.

The same applies when the market is on the downtrend, but the likelihood of picking a winner over a short duration gets slimmer in such a scenario.

Bursa Malaysia saw volatile trading swings last year and at the start of 2016, the fund managers and analysts picks had an element of growth and exposure to steady sectors. The picks made were not trading in nature with the case being made by fund managers as to why those stocks were a “buy” for not just the short-term.

It was those two criteria that saw stocks perform.

The top gainer from the picks in January was Thong Guan Industries Bhd, a packaging company that is exposed to the export sector and benefits from weaker crude oil prices. Selected by KSK Group Bhd director and head of corporate strategy Pankaj Kumar, Thong Guan’s stock rose 23.8% since Dec 31 last year to RM3.90. A combination of growth, new technology and a healthy balance sheet made the stock a top performer.

Fortress Capital Asset Management (M) Sdn Bhd CEO Thomas Yong’s pick RHB Capital Bhd was another performer. Picked at RM5.558, the stock is up 9.8% to RM6.10. The banking stock, which had been battered, saw value emerging and funds nonetheless started to snap up the stock which aided in the rise of its share price.

Next on the list was Gamuda Bhd, a giant construction company that had bagged the large mass rapid transit contracts. Picked by Saturna Sdn Bhd president Monem A. Salam, Gamuda’s stock posted a gain of 2.2% since the start of this year. As construction jobs were being dolled out despite the challenging times, Gamuda’s size and being a proxy to the sector helped keep its stock price afloat.

Apart from those two picks, the other stocks had fallen from the start of the year. SKP Resources Bhd, the contract manufacturer to UK’s Dyson, was down 6.1% from RM1.31 despite the company posting a rise in its first quarter earnings. Picked by TA Securities head of research Kaladher Govindan, the price of SKP Resources might had taken a knock because a slowdown in China might affect sales of Dyson in the country.

Brahim’s Holdings Bhd has had a tough ride the past few months as it stock fell 5.9% from RM1.02 at the start of the year. Making a loss of RM5.03mil in its first quarter of 2016, the food maker is slowly trimming its reliance on its in-flight catering business. Tie-ups with 7-Eleven Malaysia and Keretapi Tanah Melayu Bhd should be positive along with a rise in air travel in the region.

Shares of My EG Services Bhd, picked by CIMB Research senior analyst Nigel Foo, have also fallen from RM2.148 to RM2.05 since the end of last year but the company’s profits continue to rise as it reported a net profit of RM33.1mil in its first quarter. The freeze on foreign worker permits had hurt the country but once that resumes and with increased utilisation of its services for government transactions, the stock might continue on its upward path.

Malayan Banking Bhd at RM8.113 was the pick by Michael Kurtz, Nomura Securities Asia ex-Japan global head of equity strategy and chief strategist, but a slowing economy has hurt banking stocks. Trading at RM8.09, the marginal drop in its share price can be attributed to it being a bellwether stock on Bursa Malaysia and should the economy recover in the second half of this year, banking stocks will start to perform.

Shares of WCT Holdings Bhd has eased slightly from the RM1.589 at the end of last year to RM1.52 but like Gamuda, the construction company, it is backed by steady jobs. Exposure to foreign exchange losses pulled down its profit for its first quarter but stripping that out, the stock picked by UOB KayHian Research head Vincent Khoo, posted a rise in profit during that period.

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