KUALA LUMPUR (Jan 19): UOB KayHian said there are buying opportunities for three thematic plays, namely reopening laggards, dividend catch-ups and relatively cheap stocks with strong earnings momentum.

In a note today, its analyst Vincent Khoo and the Malaysian research team said they expected the market to trend higher as investors price in the economy’s reopening in the second half of 2021 (2H21), despite the lacklustre start to 2021 for the broader market as domestic politics continue to roil while Malaysia returned to stricter movement curbs amid spiralling Covid-19 cases.

“We would be selective in identifying significant year-to-date losers (that well underperformed the FBM KLCI’s 1% year-to-date fall) which continue to be dominated by construction and property stocks,” said the analysts, who foresee significant reopening play laggards.

The analysts have given buy-rated large caps in the reopening laggards category to AMMB Holdings Bhd (AmBank), Genting Malaysia Bhd (GenM) and Sunway Bhd, while notable buy-rated small-mid caps are Carlsberg Brewery Malaysia Bhd, Cahya Mata Sarawak Bhd and Hume Industries Bhd.

Meanwhile, companies undergoing dividend catch-ups with back-loaded dividends or increased payout ratios in their upcoming results would include most banks such as RHB Bank Bhd, as well as Astro Malaysia Holdings Bhd and Top Glove Corp Bhd.

“In addition, companies which are expected to declare significant special dividends include GenM and Tenaga Nasional Bhd,” they added.

In terms of the banks, the analysts noted that AmBank has been a significant laggard and should appeal to longer-term investors although its share price could still negatively react to a likely policy rate cut later this week.

On the other hand, relatively cheap stocks with strong earnings momentum in the fourth quarter of 2020 (4Q20) include Hap Seng Plantations Bhd, My EG Services Bhd (MyEG) and Globetronics Technology Bhd,” the analysts pointed out.

Overall, UOB KayHian's top picks across all three themes are Astro, GenM, Globetronics, Hap Seng Plantations, MyEG and Sunway.

“The upcoming results season is expected to usher in re-rating catalysts in the form of strong quarter-on-quarter earnings growth or fat dividends for all of these stocks except Sunway.”