PETALING JAYA: With Bursa Malaysia anticipated to witness choppy times ahead, a research house has advised investors to focus on three key areas – healthcare, technology and net cash and dividend yielders.
Advocating a strategy of “certainty in uncertain times, HLIB Retail Research noted that the healthcare sector will see demand improve due to the Covid-19 pandemic, while the technology sector will benefit from the unavoidable transition from 4G to 5G.
Net cash and dividend yielders, meanwhile, will have the ability to sail through the current trying times, it said in a report yesterday.
In the healthcare space, the research house noted that the gloves sector was likely to do well in FY20 given the higher demand owing to the pandemic.
In addition, it said the recent Prihatin economic stimulus package, which involved a RM1.5bil allocation for the healthcare system, would bode well for companies like Pharmaniaga and UEM Edgenta.
In the technology space, it said that although there may be a soft period in 1H20 due to a slowdown in demand for gadgets, a pickup in demand could be seen later in 2H20, accompanied by the transition to 5G, and the ongoing National Fiberisation and Connectivity Plan.
The research house believes Unisem’s prospects have improved on the back of several factors, including the impending closure of its loss-making Batam plant, the strengthening of the US dollar and its healthy balance sheet.It noted that its potential of being delisted remained, should it fail to meet the public shareholding spread.
Inari, it said, could benefit from the mass deployment of 5G, with its expertise in fibre-optics chips and optoelectronics alongside higher RF content in next-gen smartphones.As for stocks which are in net cash positions and high dividend yielders, the research house recommends Taliworks Corp Bhd, which is involved in the water-related segment; Opensys (M) Bhd, which serves the financial sector; and Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), which may benefit from the recent rebound in oil prices.
HLIB Retail Research noted that Taliworks was a stable dividend paymaster and its water operations will not be affected by Covid-19, although its toll road business should see a decline during to the movement control order period.
OpenSys, on the other hand, is a leading supplier of cheque-deposit-machines and has a dominant position in cash recycling-ATMs, while MMHE had undemanding valuations supported by attractive dividend yield and net cash position.
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