Valuecap buys 8 more stocks

  • Business
  • Wednesday, 11 Jun 2003

Online investment advisor Surf88.Com writes on prospects for Valuecap

What else has Valuecap bought? After our first write-up in late-April when we reported the investments of Valuecap Sdn Bhd in seven KLSE listed companies, we believe it is timely to provide an update on this topic which is likely to be of interest to many readers.  

As Valuecap buys no more than 5% stake in individual stocks, it is not required to file its interests and dealings to the KLSE.  

This means that we can only fall back on respective annual reports to “uncover” the presence of Valuecap, as we did the last time.  

On this basis, we found another eight listed companies that count Valuecap among their top 30 shareholders.  

These additional eight companies are tabulated in the table, together with Valuecap’s original seven investments as highlighted previously.  

In total, Valuecap’s reported investments in listed stocks are worth about RM461mil based on June 4's closing price, which is less than 5% of its RM10bil fund size. 

Reinforcing dividend emphasis. In the previous write-up, we highlighted that six out of seven Valuecap’s investments offer above-average dividend yields, signalling a probable emphasis on dividend returns.  

This apparent preference is reinforced in our latest findings, where four out of the additional eight already pay superior dividend yields, i.e. Guthrie Ropel (RM3.50), Highlands & Lowlands (High & Low) (RM3.20), MBM Resources (RM2.93) and United Plantations (RM4.48); while PLUS (RM2.42) is expected to commence dividend payments this year with estimated net yields of 3%-4%.  

In total, 11 of the 15 companies listed provide above-average dividend returns, which is a high proportion indeed. 

Preference for plantations as well? At the same time, we also notice that four of the 15 stocks are from the plantations sector, i.e. Guthrie Ropel, High & Low, PPB Oil Palms (RM2.89) and United Plantations. This is the largest number of stocks Valuecap owns in a single sector, and against its otherwise rather diverse portfolio.  

Incidentally, for those looking to play the devil's advocate, we cannot establish that Valuecap particularly favours Government-owned entities, its investments in Telekom notwithstanding.  

Of Valuecap’s 15 listed investments reported to date, seven are linked to the Government while on the other hand, we should also highlight BAT (RM39.25) and JT International (RM4.02) which are foreign-controlled multinational corporations.  

In fact, BAT is Valuecap’s second largest investment by value, accounting for almost 20% of its estimated portfolio worth. 

Reinforcing BUY/Trading BUY for Commerce, PLUS, PPB Oil Palms, Public Bank and United Plantations. Taking a leaf from Valuecap, we would in fact reiterate our BUY/Trading BUY recommendations for Commerce Asset (RM3.30), PLUS, PPB Oil Palms, Public Bank (RM2.36) and United Plantations.  

Meanwhile, Public Finance (RM8) has been suspended from trading since May 30, 2003 pursuant to its privatisation by Public Bank.  

We would also mention MBM Resources which we like for its strategic positioning in the motor industry.  

Although we would not add exposure to MBM at the current juncture in view of the tough industry condition, the stock is certainly on our radar screen for the next re-rating stimulus.  

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