THE “bull” of Bursa Malaysia has had a solid run over the last decade, particularly post-2008 Great Recession that devastated the global economy, including Malaysia.
According to Bloomberg, the benchmark FBM Kuala Lumpur Composite Index (FBM KLCI) has been one of the best performing in the world, rising by nearly 118% since the recovery of Bursa Malaysia after March 2009.
From 838 points on March 12, 2009, the index now stands at 1,820 points, with several analysts expecting the psychological level of 1,900 points to be breached by end-2018.
The surge by FBM KLCI is not surprising, as the domestic market has been well-supported by sound macroeconomic fundamentals, continued growth of the corporate sector and the inflow of foreign funds into Malaysian equities, against the backdrop of international investors seeking alternative to developed economies such as the United States.
Over the last 10 years, Bursa Malaysia’s market capitalisation (market cap) has expanded in value, nearly doubling from RM979bil in 2009 to the current value of RM1.87 trillion.
While the growth of emerging small-cap stocks, as measured by the FBM Small Cap Index, has exceeded the surge in FBM KLCI over the last decade, the real catalyst behind Bursa Malaysia’s market cap expansion remains to be the blue chips.
To put it into context, there are currently 920 companies in the Main Market and Ace Market, providing a market cap of RM1.86 trillion. Out of this, the 30 stocks in FBM KLCI alone control a market cap of RM1.13 trillion, representing 60% of the bourse’s value.
The stellar growth of Bursa Malaysia’s market value was driven by several large-caps over the years, among which are:
In 2009, Hartalega’s market value was worth less than RM500mil and was not even among the top 100 companies of Bursa Malaysia.
However, today, the company boasts a market cap of about RM23.4bil, making Hartalega the only glove company on the top-30 FBM KLCI list.
Known as the world’s largest nitrile glove producer, the stock has seen a stellar increase from just 12 sen in Jan 5, 2009 to RM7.05 on Aug 25, 2018.
This means, a shareholder who bought Hartalega shares in the beginning of 2009, would have seen his or her funds in the company ballooned by nearly 59 times – excluding the dividends and profit gained from bonus issues.
The glovemaker has also had four rounds of bonus issue since its listing on the bourse back in 2008.
Hartalega has been consistently rewarding its investors, and has recorded a three-year dividend growth of 29.14%.
Effective financial year of 2018 (FY18), Hartalega said it will be distributing a minimum of 60% of the group’s annual net profit to shareholders, up from its previous policy to distribute a minimum of 45%.
The higher return to shareholders was mainly due to Hartalega’s strong growth in both top line and bottom line.
The company, which has a PE ratio of 50.14 times, has doubled its size from a revenue of RM1.1bil in FY15 to RM2.4bil in FY18.
According to its FY18 annual report, Hartalega’s single largest shareholder is its founder and executive chairman Kuan Kam Hon, who owns a stake of 50.47%.
Press Metal Aluminium Holdings Bhd
South-East Asia’s largest aluminium smelter, Press Metal is ranked among the top 30 companies on Bursa Malaysia, with a market cap of RM18.8bil.
The company has seen a stellar growth over the one decade, from a penny stock in 2009 to one of the benchmark FBM KLCI constituents.
In 2017 alone, Press Metal’s share price surged by some 200% year-on-year.
A shareholder with 1,000 Press Metal shares at a value of RM100 at the beginning of 2009, would now have RM4,980 – even without taking into account the multiple dividend payouts and proceeds made from the company’s bonus share issuance.
The company had issued bonus shares twice to its investors in the last 10 years – in 2014 and 2016.
Earlier in 2011, the aluminium smelter also had a rights issue exercise, offering one eight-year redeemable convertible loan stocks with one warrant for every three shares held.
Press Metal, whose PE valuation stands at 31.28 times, has a 12-month dividend yield of 1.2%. In terms of dividend growth over the last three years, the dividends paid increased by 23.23%.
Press Metal is among top 50 family-owned companies globally according to Credit Suisse Research Institute.
The company’s group chief executive officer Tan Sri Koon Poh Keong owns direct and indirect shareholding of 15.29% and 24.07% in Press Metal, based on the 2017 annual report.
Ten years ago, the glovemaker’s market cap was valued at RM1.1bil. Today, it is nearly RM14bil.
Shareholders who bought a share of Top Glove at RM3.64 on Jan 5, 2009, would have seen their fortune to nearly double in the last one decade to RM147 currently – excluding the dividends and profit gained from bonus issues.
The group has consistently awarded its shareholders following the adoption of a dividend policy in 2014 to pay annual dividends of not less than 50% of its net profit. On top of that, Top Glove also provided two rounds of bonus issue – in 2010 and 2016 – over the last 10 years.
The bonus share issuances have widened Top Gloves’s share base from 301 million share on Jan 5, 2009 to 1.28 billion currently.
The company’s co-founder and chairman Tan Sri Lim Wee Chai is the single largest shareholder, with an equity interest of about 29%.
Known as the world’s biggest manufacturer of gloves, Top Glove’s stellar growth over the years has been well-supported by its continued operational expansion and strong financials.
From its humble beginnings in 1991 starting as a small company with only one production line, Top Glove has 40 factories, 648 production lines and a production capacity of 60.5 billion pieces of gloves per year. Serving more than 2,000 customers in 195 countries, the company is on track to achieve its 30% market share in the glove market by 2020.
Top Glove has a PE ratio of 40.7 times. Its 12-month dividend yield stands at 1.3%.
Hap Seng is another strong performer of Bursa Malaysia in the last decade. Since its incorporation in 1976, Hap Seng has grown and now diversified into six core businesses – plantations, property investment and development, credit financing, automotive, fertilisers trading and building materials.
In 2016, Hap Seng was added to the FBM KLCI main index which tracks the performances of the 30 largest companies
Between Jan 5, 2009 and Aug 25, 2018, the stock surged by 362%, to RM9.84 per share. Its market cap is currently valued at RM24.5bil.
The company’s share base nearly tripled in the 10-year period to the current size of 2.49 billion outstanding shares. Hap Seng had a bonus issue of two bonus shares for one share in 2011.
Apart from that, the group also had a rights issue in the same year, on the basis of one rights share together with one warrant for every five Hap Seng shares held by investors.
The company regularly rewards shareholders with dividends, as it has a policy of paying out not less than 50% of profit after tax. Hence over a three-year period, dividends have been growing at a rate of 11.87%.
According to the Bloomberg figures, the company’s 12-month dividend yield stands at 3.56%.
Sabah-based tycoon Tan Sri Lau Cho Kun is the controlling shareholder of Hap Seng, with an equity interest of about 74% according to the company’s latest annual report.
Hap Seng has a PE ratio of 21.88 times.
Public Bank is the second largest company on Bursa Malaysia in terms of market cap, at RM96.67bil – just shy of hitting the coveted RM100bil market cap size.
Ten years ago, the bank, which is Malaysia’s third-largest banking group by assets, was valued at about RM31.43bil.
The counter’s share base has not changed much, but the share price has seen an increase of 180% in the 10-year period, to RM24.90 as at Aug 25, 2018. On Aug 23, the stock hit record high at RM25.31.
Public Bank had a rights issue in 2014 on the basis of one rights share for every 10 held.
Through the corporate exercise, the bank listed 350.2 million rights shares on the Main Market of Bursa Malaysia, and was supposed to raise gross proceeds of RM4.83bil.
In the first half ended June 30, 2018 (1H18), Public Bank’s bottom line saw a growth of 8.6% to RM2.80bil from RM2.58bil in the six months ended June 2017.
Revenue-wise, the bank improved by 5.8% to RM10.78bil in the period.
Public Bank founder and chairman Tan Sri Teh Hong Piow pointed out that the higher profit for the period was largely driven by growth in its loan and deposit business, with further impetus from a 4.9% growth in non-interest income.
According to its 2017 annual report, 88-year-old Teh holds the single largest stake of 23.54% in the bank. Public Bank’s PE stands at 17.64 times, while the 12-month dividend yield is 2.43%.
The food and beverages manufacturer is one of the best performers among the blue chips on Bursa Malaysia. Nestle was included as a component stock in the FBM KLCI in December 2017.
From just below RM20 per share at the start of 2009, the stock now values at nearly RM147. While the stock has witnessed a stable capital appreciation over the years, the real acceleration in share price started only close to the end of 2017.
Nestle’s share price surged to nearly RM160 in March this year, as compared to just below RM90 per share in November 2017. One key factor behind the stock’s sudden jump was the uncertainties revolving around the country’s 14th general election, which turned investors defensive and in pursuit of low risk, dividend plays.
With no change in its share base, the company’s market cap increased by about 441% to RM34.5bil between Jan 1, 2009 and Aug 25 this year, putting the company among the top 15 listed entities in terms of market value.
Nestle is mostly held by its Switzerland-based parent company, Nestle SA, which controls nearly 73% of the equity. The share float stands at about 15%.
At the current share price, the multinational corporation has a demanding valuation of 52.98 times, in terms of price-to-earnings (PE) ratio. Nestle’s 12-month dividend yield is 1.87%.
Over the last decade, the utility giant has consistently remained among the top five largest companies by market cap on Bursa Malaysia. TNB is valued at RM89bil, just below Malayan Banking Bhd (RM107.37bil) and Public Bank Bhd (RM96.67bil).
From just RM6.25 per unit on Jan 5, 2009, the company’s share price has surged by over 151% to RM15.70 as of Aug 25 this year.
Long known as a dividend-play, TNB has delivered dividend payouts consistently over the years. Its 12-month dividend yield is 4.17%, and the dividend growth over the last three years is about 31%.
Late last year, TNB’s board of directors decided to increase the current dividend payout range to 30% to 60% of net profit from the previous 30% to 50%.
The company also had a bonus issue exercise in 2011 on the basis of one bonus share for every four existing shares, which expanded the share base to 1.28 billion outstanding shares.
In the recent second quarter ended June 30, TNB reported a net profit of RM1.24bil that bumped up its half-year earnings to RM3.36bil. Revenue in the second quarter stood at RM12.5bil.
Malaysia’s sovereign wealth fund, Khazanah Nasional Bhd, is the single largest shareholder in TNB, holdng a stake of 28%. Meanwhile, the Employees Provident Fund owns about 13% of the utility player.
Valuation-wise, TNB has a PE ratio of 12.62 times.