MYEG (0138) - Smallcap-pedia - There is still value here
Small-cap 4Q14 results were disappointing, with 36% of companies under our coverage reporting below-expectation results. However, the small-cap sector outperformed the market in Jan-Feb. Nonetheless, the FBM Small Cap Index is still not expensive at 11.7x 2015 P/E. There is still value in selected small-cap stocks. We remain Overweight on the small-cap sector and our top picks continue to be MyEG, Prestariang and IFCA MSC. Other small caps that could surprise on the upside over the next few months include GHL Systems, Muhibbah Engineering, OWG and Signature International.
We remain Overweight on the small-cap sector and our top picks continue to be MyEG, Prestariang and IFCA MSC. Other small caps that could surprise on the upside over the next few months include GHL Systems, Muhibbah Engineering, OWG and Signature International.
Small caps outperform but valuation undemanding
The FBM Small Cap Index (FBMSC) has outperformed the KLCI YTD. Up to end-Feb, the FBMSC was up 10.5% compared to the KLCI’s slower 3.4% gain. The FBMSC usually trades at an average 30% discount to the KCLI’s P/E. FBMSC currently trades at 11.7x 2015 P/E, at 31% discount to the KLCI’s P/E. In our small-cap universe, the stocks with the lowest 2016 core P/E (4x-6x) include HeveaBoard, SBC Corp, Signature International and Thong Guan. The companies that offer attractive 5%-6% dividend yields include Signature International, Wellcall Holdings and Daibochi Plastics.
Disappointing 4Q14 result
The 4Q14 quarterly earnings of our small-cap universe were disappointing, with 36% below expectations and only 20% above expectations. Generally, the companies that benefited from the weaker Ringgit and lower commodity prices like Wellcall Holdings and Tomypak Holdings reported better-than-expected 4Q14 results, while oil & gas-related companies posted lower-than– expected results. This is not a surprise in view of the collapse of crude oil prices in 4Q14.
Two new initiations in Feb
In Feb, we initiated coverage on two new stocks: 1) HeveaBoard, which is involved in the production and export of particle board and ready-to-assemble furniture, and 2) Only World Group Holdings (OWG), which operates food service outlets located primarily in Genting Highlands. HeveaBoard and OWG’s share prices delivered solid performance, up 39% and 117% respectively since end-Jan.
Source: CIMB Daybreak - 20 March 2015
Small-cap 4Q14 results were disappointing, with 36% of companies under our coverage reporting below-expectation results. However, the small-cap sector outperformed the market in Jan-Feb. Nonetheless, the FBM Small Cap Index is still not expensive at 11.7x 2015 P/E. There is still value in selected small-cap stocks. We remain Overweight on the small-cap sector and our top picks continue to be MyEG, Prestariang and IFCA MSC. Other small caps that could surprise on the upside over the next few months include GHL Systems, Muhibbah Engineering, OWG and Signature International.
We remain Overweight on the small-cap sector and our top picks continue to be MyEG, Prestariang and IFCA MSC. Other small caps that could surprise on the upside over the next few months include GHL Systems, Muhibbah Engineering, OWG and Signature International.
Small caps outperform but valuation undemanding
The FBM Small Cap Index (FBMSC) has outperformed the KLCI YTD. Up to end-Feb, the FBMSC was up 10.5% compared to the KLCI’s slower 3.4% gain. The FBMSC usually trades at an average 30% discount to the KCLI’s P/E. FBMSC currently trades at 11.7x 2015 P/E, at 31% discount to the KLCI’s P/E. In our small-cap universe, the stocks with the lowest 2016 core P/E (4x-6x) include HeveaBoard, SBC Corp, Signature International and Thong Guan. The companies that offer attractive 5%-6% dividend yields include Signature International, Wellcall Holdings and Daibochi Plastics.
Disappointing 4Q14 result
The 4Q14 quarterly earnings of our small-cap universe were disappointing, with 36% below expectations and only 20% above expectations. Generally, the companies that benefited from the weaker Ringgit and lower commodity prices like Wellcall Holdings and Tomypak Holdings reported better-than-expected 4Q14 results, while oil & gas-related companies posted lower-than– expected results. This is not a surprise in view of the collapse of crude oil prices in 4Q14.
Two new initiations in Feb
In Feb, we initiated coverage on two new stocks: 1) HeveaBoard, which is involved in the production and export of particle board and ready-to-assemble furniture, and 2) Only World Group Holdings (OWG), which operates food service outlets located primarily in Genting Highlands. HeveaBoard and OWG’s share prices delivered solid performance, up 39% and 117% respectively since end-Jan.
Source: CIMB Daybreak - 20 March 2015
