UOBKH ALPHA PICKS OCT 2014

Sticking to the variety of investment themes, while adding China mega fiscal stimulus plans as an additional catalytic event driver. Our Alpha Picks are chosen to capitalise on foreign equity inflows (which favour selected banks) and near-term alpha events, including more newsflow on Iskandar 2.0 (eg details of the Special Economic Zone), further data centre related land sales, blockchain, e government project awards, M&As (Yinson is widely expected to deeply monetise its FPSO assets) and beneficiaries of China’s mega fiscal stimulus. A notable confidence booster is RGB International’s recent clarification that last year’s Malaysian Anti-Corruption Commission (MACC) assistance case has been resolved.

Meanwhile, concerns of lumpy forex loss for US dollar earners mostly discounted. Although the market has been wary of US dollar income earners needing to recognise lumpy forex translation losses in the upcoming reporting season (given the sharp rise in the ringgit against the USD), we retain RGB International and VS Industry in our Alpha Picks. These concerns have been mostly priced in as reflected in the stocks’ significant share price retreats from their respective highs in Sep 24, while we look forward to fresh re-rating catalysts.

$RGB / 0037 (RGB INTERNATIONAL BHD) $LAGENDA / 7179 (LAGENDA PROPERTIES BERHAD) $MYEG / 0138 (MY E.G. SERVICES BERHAD) $VS / 6963 (V.S. INDUSTRY BERHAD) $YINSON / 7293 (YINSON HOLDINGS BERHAD)