Bursa Malaysia stocks that stand tall amid market volatility

On the broader market, a dozen over counters have surged more than 90% in their value for this year


THE change in government ushered in by the 14th General Election (GE14) has seen smart money moving into blue chips from the broader market and as foreign investors scale down their exposure as well.

The FTSE Bursa Malaysia KLCI (FBM KLCI) has appreciated by 0.37% over the last 12 months, but on a year-to-date (YTD) basis, the local benchmark index is down 0.42%.

Data shows five out of the 30 FBM KLCI component stocks saw their share price surging between 20% and over 40% in the last nine months.

On the broader market, a dozen over counters have surged more than 90%, while a handful has appreciated over 100% in their value for this year.

Bluest of Blue-Chip Stocks

After becoming an FBM KLCI component stock in December 2017, Nestlé (M) Bhd has become one of the best performers among the blue chips on Bursa Malaysia.

Valued at just below RM20 per share at the start of 2009, the food and beverage (F&B) manufacturer’s shares are now trading at nearly RM147 with the bulk of the rise in value coming after the stock price passed the RM100 apiece mark at the end of 2017.

On a YTD basis, Nestlé’s share price has increased over 44.91% from RM101.10 on Jan 2, 2018, to RM146.60 a day ago. Over the last 52 weeks, Nestlé has gained 75% in share price value.

Nestlé’s market capitalisation has increased by about 441% to RM34.5 billion between Jan 1, 2009, and Sept 12 this year, placing itself among the top 15 listed entities in terms of market value.

Its F&B sales have been progressively growing, from 1% in 2015 and 3% in 2016 to 4% or RM4 billion in 2017, according to Nestlé.

The multinational corporation is primarily held by its Swiss-based parent company, Nestlé SA, which controls nearly 73% of its equity.

According to Bloomberg data, at the current share price, Nestlé has a demanding valuation of 52.8 times, in terms of price-to-earnings ratio. Nestlé’s 12-month dividend yield is 1.87%.

Four other blue-chip stocks that outperformed the market are Dialog Group Bhd, Hartalega Holdings Bhd, Petronas Chemicals Group Bhd (PetChem) and Hong Leong Bank Bhd (HLB).

These stocks have appreciated between 20% and 40% YTD.

Dialog — the oil and gas (O&G) engineering and asset owner — saw its share price appreciating by 39.6% YTD, rising from RM2.50 at the beginning of the year to RM3.40 at the close last week.

Analysts believe Dialog remains a core O&G stock holding for investors with superior long-term growth prospects. The market value of the counter now is about RM19 billion.

Bloomberg data shows Dialog is trading at 38.9 times its trailing 12-month earnings per share (EPS) and 41 times its estimates for the coming year.

As the only glove maker on FBM KLCI, Hartalega has grown substantially from a company valued at less than RM500 million nine years ago to RM23.24 billion today.

Hartalega’s capacity expansion drive and product segment had seen its share price rising some 16% since the new government took office.

The stock today is priced at RM6.99 apiece compared to RM5.33 on Jan 2, 2018. It returned 27% so far this year and made a gain of 103% in the past 52 weeks.

Hartalega trades at 44 times its estimated EPS for the coming year.

PetChem’s and HLB’s share price value increased 21.15% and 20.68% respectively YTD.

PetChem’s share is priced at RM9.43, while HLB at RM20.46.

PetChem trades at 17.5 times trailing 12-month EPS and 18 times its estimates for the coming year, while HLB trades at 15.8 times trailing 12-month EPS and 15 times its estimates for the coming year.

Biggest Movers on the Local Bourse

Investors who have taken a higher risk by investing in selected small counters on Bursa Malaysia would have found themselves making gains ranging between 90% and 170% over the year.

The stock price of natural latex bedding manufacturer Lee Swee Kiat Group Bhd has returned 191% so far this year and a gain of 208% in the past 52 weeks.

Its share price closed at 98 sen yesterday from 37 sen on Jan 2, 2018.

Lee Swee Kiat’s market capitalisation has almost doubled YTD to RM169.65 million from RM60.88 million in January this year.

The group trades at 18.7 times trailing 12-month EPS and 16 times its estimates for the coming year.

In April this year, the company pleased investors by adopting a minimum 30% dividend payout policy.

Formerly categorised as a penny stock, Ideal United Bintang International Bhd (IUBI) has seen its share value rising to RM1.55 last week, thus offering 133% returns YTD.

Its now trading at 4.3 times trailing 12-month EPS. IUBI’s share price has jumped some 167.8% since GE14 where it was trading at 59 sen a piece on May 8.

The group’s net profit grew over five times to RM15.57 million for the second quarter ended June 30, 2018, as revenue surged to RM194.7 million from RM47.2 million in the same quarter a year ago.

As a property development and trader of heavy machinery and spare parts, its share price trades at 4.3 times trailing its 12-month EPS.

Another small-cap company that has outperformed is Pansar Bhd whose stock price has appreciated by 108% YTD.

The hardware and building products supplier now has a market capitalisation of RM256.55 million.

Priced at just 39 sen a share a year ago, Pansar has experienced a 114% increase in share value in the past 52 weeks to close at 82.5 sen yesterday. Pansar trades at 26.5 times trailing 12-month EPS.

As for the penny stock company that has a market capitalisation close to RM1 billion, Frontken Corp Bhd has been gaining investors’ attention due to its growing business and financial performances.

The semiconductor services provider started the year with its share priced at 48 sen apiece and has returned 95% so far this year, closing at 89 sen yesterday.

Frontken trades at 24.9 times trailing 12-month EPS and 23 times its estimates for the coming year.

YTD, Frontken’s net profit has risen about 41% to RM18.39 million from the same period a year ago, on the back of revenue of RM152.7 million, an 11% growth over RM137.59 million recorded a year earlier.