Alpha Picks: Plenty Of Mileage

Our Oct 21 portfolio outperformed the FBMKLCI (+10.9% vs 2.5%), boosted by MSC, OMH and MYEG. For November, we remove Inari, Magnum and MSC, and add GENT. Alpha Picks for Nov 21: CIMB, GENM, GENT, MyEG, OMH and Scomnet with selections which are mainly economic reopening beneficiaries. Deep-value GENT’s addition to Alpha Picks reflects a differentiated catalyst vs GENM. All of our picks are not materially impacted by Budget 2022’s prosperity tax except CIMB.

WHAT’S NEW

• Market review: reopening. The FBMKLCI declined 2.5% in October even though foreign fund flows remained positive (RM1.6b) for the third consecutive month, perhaps in anticipation of a one-off prosperity tax that was featured in the just- announced Budget 2022. Nevertheless, the market continued to witness selective market outperformances by beneficiaries of commodity supercycle, economic reopening (aviation, gaming, banks) and technology boom.

• Alpha Picks outperformed the FBMKLCI. Our Alpha Picks appreciated 10.9% mom in Oct 21 (FBMKLCI: +2.5%), boosted by Malaysia Smelting Corp (MSC, +27.1%), OM Holdings (OMH, +15.4%) and MYEG (+13.3%).

ACTION

• Nov 21 Alpha Picks: CIMB, Genting Malaysia (GENM), GENT, MyEG, OMH, and Scomnet. We remove Inari, Magnum and MSC from our picks following their impressive run-up given their limited upside to their respective target prices. We added deep-value Genting Berhad (GENT) to our pick given its differentiated catalyst from subsidiary GENM with an expected strong debut quarter (3Q21) for Resorts World Las Vegas. Our November picks are also little affected by the 2022 prosperity tax except CIMB. Catalysts for our picks are elaborated below and overleaf.