Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
February Market Overview
Following a stellar start to 2018, Feb turned out to be a roller-coaster for the STI as investors took profits amid rising interest rate fears. This led to a 6% share price correction in the first two weeks of the month before the market recovered on bargain hunting to end just 0.5% lower.
The swing shaved the 2-month YTD gain on the STI to 3.4% against the 3.9% rise in Jan. On an unweighted basis, the average total return (incl. dividends) for STI component stocks was 1.1%.
Against this backdrop, our Growth, Value, Yield (GVY) basket of stocks performed exceptionally well with an average YTD return of 12.9%. Notably, 7 out of 17 picks achieved YTD gains of over 10%, while 6 showed losses.
Growth List +22.9% YTD
The Growth portfolio was boosted mainly by the outperformance of AEM following its positive profit guidance and subsequent blowout 4Q17 earnings, backed by growing order book, higher sales, and operational efficiency.
We added iFAST to the portfolio following a commendable set of 4Q17 results at $0.88. The funds administrator appears to be gaining scale amidst continuous efforts to bolster its platform, underpinned by rising assets under administration, which in turn raises recurring fee income. The stock is a good proxy to the burgeoning wealth management industry in Singapore, Hong Kong and Malaysia.
Additionally, we exited Hi-P on 20 Feb at $2.34 following a strong share price rally since our entry at $1.88 at the start of the year, which resulted in a less compelling risk-reward profile given the more expensive valuation of 13x FY18e P/E.
Value List -2.6% YTD
Performance for the Value portfolio was negative in the current environment, which favours large caps and growth stocks.
Yield List +4.3% YTD
For the Yield portfolio, UMS contributed to positive returns following the exit of Micro-Mechanics in Jan.
The former reported in line 4Q17 results, as earnings surged 166% bolstered by rising semiconductor component sales and better margins. It also maintained its final and special DPS of 2¢ and 1¢ post 1-for-4 bonus issue.
Note: * Including dividends
** Priced in USD
This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within Maybank Kim Eng Securities.
This document is being distributed for general information only and it does not constitute an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons.
Opinions, projections and estimates are solely those of Maybank Kim Eng Securities at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be).
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