After an unexpected AAA rating downgrades and an expected correction, KLCI is coming down from its peak of 1,597 points in early July. CLSA come out with a timely report highlighting 5 stocks which investors should focus on even during volatile times. These stocks have resilient earnings, clear earnings visibility and are supported with dividend yields.
|CLSA: YTD major indices performances as at 08 Aug 2011.|
Which are the counters?
- Axiata's earnings will remain resilient during downturn as EBITDA is dominated by cellcos in Malaysia and Indonesia where price competition is muted these days.
- From a highly geared company in 2008, Axiata is now turning into a cash cow with forecast yield rising to 10% in FY13. CLSA is expecting dividend yield of 3.6% for FY11, translating into total shareholders return of 10%.
Gamuda - Risk discounted
- The 22% share price fall from 52-week high has discounted its Vietnam investment risk. US$600m market cap loss is more than its US$350-400m investment to date.
- FY12 earnings are underpinned by high-margin construction orderbook worth RM2.7bn, unbilled property sales of RM1bn and recurrent infrastructure earnings.
- MRT project news flow catalyst. Potential 26% upside to RM4.20 target.
Genting Malaysia - Growth, value and net cash
- Its investment thesis remains geared towards growth as the UK casinos rebounds off a low base and the New York facility begins maiden contributions.
- Gaming revenue, particularly in Malaysia, is uncorrelated with economic health. Balance sheet remains robust and it is among the most attractively valued gaming stocks globally.
Maybank - Resilient dividend yield
- Regional expansion strategy through Kim Eng acquisition is earnings accredited.
- Rising productivity and cross-selling activities will improve ROE and regaining domestic market share in profitable loan segments and investment bank deals.
- High net yield of over 6% in FY12, supported by dividend reinvestment plan.
TM - Potential for special dividend
- TM is recording strong growth for HSBB and this product could turn EBITDA positive earlier than expected.
- Management undertakes active capital management and we are expecting special dividend of 3.3% from recent sale of Axiata shares.
Source: CLSA article dated 09 Aug 2011