How the stock picks of StarBizWeek writers and fund managers performed in 2016

Saturday, 31 December 2016

More hits than misses in 2016 stock selection

THERE were more hits than misses in the bag of stock picks by selected StarBizWeek writers and fund managers published on June 18.

Of the writers’ six choices, five outperformed the benchmark FBM KLCI, while among the fund managers’ choices, two out of four outperformed the index, which was up a marginal 0.6% during the period under review.

Using June 17 to Dec 20 as the period of review, semiconductor firm KESM Industries Bhd, picked by Afiq Isa, emerged the winner, posting a strong capital return of 104.8%.

After adjusting for dividends, the company’s stock saw its share price increase from RM4.84 to RM9.91.

This may have been partly due to the illiquidity of the stock, as well as KESM’s improved financials on a year-on-year basis.

For its full financial year ended July 31, 2016 (FY16), KESM distributed dividends amounting to 7.5 sen, translating to a dividend yield of 1.8%.

Destini Bhd, picked by Gurmeet Kaur, rose 14.7% over the period from 58 sen to 66.5 sen.

Its shares hit a high of 88 sen on Oct 24 before trending downwards in line with the softer market.

The engineering specialist company, which counts the Ministry of Finance Inc as a substantial shareholder and caters to the aviation, marine, and oil and gas sectors, is still one to watch for its growth story.

An earnings rerating could be in the offing for the stock if the possibility of securing sizeable new contracts for its marine and newly-diversified rail divisions materialises, giving its existing order book a significant boost.

For the nine months ended Sept 30, 2016, the firm recorded a 82% increase in net profit to RM21mil.

Despite a tough business environment, CIMB Group Holdings Bhd, picked by M. Shanmugam, saw its stock go up by 11.7% to RM4.60 during the period under review.

The stock was chosen partly because of Indonesia’s economic recovery since more than 20% of CIMB’s business comes from Indonesia.

The banking group has also been rationalising its cost, with the efforts beginning to show in its bottom line.

For its third quarter ended Sept 30, it made a higher net profit of RM1.02bil compared with a net profit of RM803.9mil for the same period a year earlier.

The group paid out eight sen per share in dividends during the period under review.

Century Logistics Holdings Bhd, a choice of Intan Farhana Zainul, saw its share price rise as much as 8.5% to 88.5 sen amid news that South Korea-based CJ Korea Express Asia Pte Ltd was buying a 31% stake in the firm.

The stock rose to RM1.04 on that news before profit-taking set in.

CJ Korea had offered RM1.45 a share for the 31% block in Century Logistics, which was almost a 40% premium.

Cafe chain operator OldTown Bhd’s stock, picked by Yvonne Tan, gained 7.4% over the past six months, ending at RM1.89 on Dec 20 after having hit a high of RM2.02 in November.

Over the same period or up to the six-month period ended Sept 30, OldTown had also rewarded its shareholders with total dividends of three sen per share.

The stock was chosen partly because of its fairly high dividend yields, given the volatile market conditions.

For FY16 ended March 31, OldTown paid out dividends totalling nine sen per share, translating into a decent yield of about 5%.

Despite a slower-than-expected recovery in overall consumer spending, the company still has a relatively resilient business model and a strong balance sheet.

IT company Palette Multimedia Bhd’s stock, picked by Tee Lin Say, lost 7.1% at the end of the review period.

It touched eight sen in late June.

The company had no borrowings and had cash of RM1.45mil as of its first quarter to Aug 31, 2016.

For its first quarter, it recorded a loss of RM516,000 on the back of RM222,000 in revenue.

There are no comparative figures as the company recently changed its financial year.

A turnaround for the company looks likely, as just last month, Palette proposed to acquire biomedicine and herbal medicine company Genopharma Sdn Bhd for RM1.53mil.

This acquisition comes with a profit guarantee over the next three financial years.

Palette also has a new income stream from iMedic.

On Nov 17, Palette signed a partnership deal with Shanghai International Medical Centre in China (SIMC), where SIMC will adopt Palette’s Mobile Healthcare platform, iMedic, for all its doctors and specialists.

Read more at http://www.thestar.com.my/business/business-news/2016/12/31/more-hits-than-misses-in-2016-stock-selection/#3qrC8qh7cA4mF9cK.99