MBSB Research said it expects market leadership to broaden.
PETALING JAYA: After a volatile year marked by global policy uncertainty and uneven market participation, Malaysian equity strategists are increasingly looking to last year’s underperformers for potential gains this year.
In its Trading Radar report published yesterday, MBSB Research noted that while concerns over US tariff policy and its spillover effects on growth and inflation dominated much of last year, those pressures eased toward the end of the year.
However, the market rebound that followed was narrowly driven.
“The ensuing local equity market recovery saw investor interest gravitating mainly toward select heavyweights,” the report said, adding that investors “generally shied away from the mid and small-cap counters”.
As a result, the FBM KLCI managed to recover earlier losses to end last year up 2.3%, but the broader market lagged.
The FBM 70 fell 10.8% for the year, while the FBM Small Cap Index dropped 12.2%, highlighting the extent to which gains were concentrated in a narrow group of stocks.
Looking ahead, MBSB Research said it expects market leadership to broaden, as it pointed to “tariff war de-escalation, resilient macro performance, and accommodative liquidity environment” as key dynamics that could support a broader risk-on appetite among investors this year.
Against that backdrop, the research house screened for stocks that had recorded steep price declines last year but still carry high expected price returns of at least 20%, alongside a “buy” recommendation.
The result was a list of 10 stocks spanning the energy, property, construction, consumer and industrial sectors, many of which were among last year’s hardest hit.
At the top of the list was Bumi Armada Bhd
, whose shares fell nearly 55% last year.
MBSB Research remains optimistic about Bumi Armada’s long-term prospects, citing progress at the Akia production sharing contract (PSC), early-stage work at the Kojo PSC, both in Indonesia, and expectations of increased tenders for floating, production, storage and offloading vessels as Petroliam Nasional Bhd ramps up activity.
Top Glove Corp Bhd, which also saw its share price halve last year, features prominently as well, with MBSB Research expecting recovery to be underpinned by “steady replenishment cycles and new opportunities region-wise and innovation-wise”, with utilisation rates already rising to between 80% and 90% as the group considers reactivating more production lines.
Meanwhile, property developers S P Setia Bhd and Mah Sing Group Bhd also made the list, reflecting a valuation-led argument rather than near-term earnings strength.
S P Setia is described as trading at a 72% discount to its latest net tangible assets, with potential value unlocking from a planned real estate investment trust (REIT) listing and industrial development growth.
Mah Sing is seen as benefiting from “stable new sales prospects” and growing exposure to industrial developments in Johor, where demand has been buoyed by manufacturing and logistics investments.
In the construction space, IJM Corp Bhd and WCT Holdings Bhd were highlighted as earnings-recovery plays, with the former having secured RM5.3bil in new jobs, with 66% concentrated in data centre projects, which MBSB Research said should reduce margin drag from legacy low-margin contracts.
WCT is expected to see stronger earnings contributions as work progresses on expressway widening projects and the Pavilion Damansara Heights development.
Consumer and logistics exposure roundedout the research house’s list, with Aeon Co (M) Bhd’s prospects being supported by “steady consumer spending and supportive government measures”, while Tasco Bhd is expected to benefit from upside in its warehousing division driven by new customer wins and added capacity.
