A dozen companies lose over RM100b 
in market value over the past year

Genting takes the biggest hit with a total loss of RM14.5b


Malaysia’s stock market has had a tough first quarter, down some 4% year-to-date despite rising inflows into emerging markets.

The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) has fallen 272 points or 14% in the past 52 weeks.

In fact, a total of 12 major companies together have lost over RM101 billion in market valuations over the last one year, with Genting Malaysia Bhd taking the biggest hit.

The casino operator has lost a total of RM14.5 billion year-on-year (YoY) to a market value of RM17.41 billion as of last Friday.

The 45.44% decline in its share price was triggered by a higher exposure to taxes announced in Budget 2019, followed most recently by its purchase of the controversial Equanimity superyacht from the government.

The announcement has drawn mixed comments from industry observers. The superyacht, formerly owned by fugitive businessman Low Taek Jho, was bought for US$126 million (RM514.6 million).

Genting stock price has declined 36% in the past 52 weeks.

Last November, the company sued the Walt Disney Co and Fox Entertainment Group for US$1 billion after the American entertainment companies backed out of a sponsorship deal for a theme park at the casino in Genting Highlands.

Genting argued in a California District Court that Disney forced Fox and its parent company, 21st Century Fox Inc, to abandon the deal after reaching a tentative US$71 billion acquisition for the entertainment conglomerate. Disney has long been opposed to any association with casinos.

Fox and Disney countersued Genting, and the legal battle is ongoing.

CIMB Group Holdings Bhd, Axiata Group Bhd and Telekom Malaysia Bhd (TM) have lost RM12.03 billion, RM12.64 billion and RM12.44 billion respectively in market value in the past one year.

Despite being defensive stocks, the three have not been spared from the investors’ concerns.

CIMB has declined 31% in the past 52 weeks to RM5.07, which now gives the banking group a RM48.49 billion market capitalisation.

TM has seen its market value reduced by 52.53% YoY to RM11.24 billion after the government pushed for lower prices for telecommunications services.

Just a day before the May 9 national polls, TM was trading at RM5 but closed the trading week at RM2.98.

TM, Maxis Bhd, TIME dotCom Bhd and Celcom Axiata Bhd — the country’s four key telecommunications companies — have reached agreements on the mandatory standard on access pricing, which will result in lower fixed broadband prices.

TM’s share weakness is also a result of its exclusion from the benchmark FBM KLCI for the first time since its listing following a huge fall in its market capitalisation.

The industry spillover has also impacted Axiata, whose market value has fallen by 25.44% YoY.

The operating landscape in Malaysia and abroad has been challenging with Axiata’s businesses facing declining profit margin, cut-throat competition and large capital expenditure requirements.

Communications and Multimedia Minister Gobind Singh Deo has indicated that the government intends to introduce more competition by having new players in the telecommunications sector, which could very likely help drive the incumbents to offer better products at cheaper prices.

Investors has sold Axiata, with its stock declining 25% in the past 52 weeks, and closing at RM4.07 last Friday, giving it a market capitalisation of RM37 billion.

Another company that recorded a steep decline in its market value is cement manufacturer, Lafarge Malaysia Bhd, losing about 62.99% or RM3.32 billion from RM5.27 billion a year ago to RM1.95 billion as of last Friday.

The loss could have been bigger if not for some recent buying on expectations that the restarting of mega infrastructure projects like the East Coast Rail Link could increase demand for cement and related products.

The largest cement manufacturer recorded a loss for its financial year 2018 and is expecting to continue bleeding over the course of 2019.

Kenanga Research noted that it remains cautious over Lafarge’s outlook in 2019 due to weak domestic demand woes and continuous overcapacity in the market leading to stiff competition and cement rebates wars.

Seven other companies that have recorded slight to steep declines in market value include Tenaga Nasional Bhd (-14.42%), Genting Bhd (-26.77%), Astro Malaysia Holdings Bhd (-43.06%), Gamuda Bhd (-41.44%), IOI Properties Group Bhd (-40.46%), SP Setia Bhd (-35.01%) and IJM Corp Bhd (-33.93%).

Each company has shaved between RM4 billion and RM11 billion in market capitalisation, Bloomberg data shows.