CLSA Top 5 Picks during volatile times (16 Aug 2011)

After an unexpected AAA rating downgrades and an expected correction, KLCI is coming down from its peak of 1,597 points in early July. CLSA come out with a timely report highlighting 5 stocks which investors should focus on even during volatile times. These stocks have resilient earnings, clear earnings visibility and are supported with dividend yields.

CLSA: YTD major indices performances as at 08 Aug 2011.

Which are the counters?

Axiata - Turning into a cash cow

• Axiata's earnings will remain resilient during downturn as EBITDA is dominated by cellcos in Malaysia and Indonesia where price competition is muted these days.


• From a highly geared company in 2008, Axiata is now turning into a cash cow with forecast yield rising to 10% in FY13. CLSA is expecting dividend yield of 3.6% for FY11, translating into total shareholders return of 10%.

Gamuda - Risk discounted

• The 22% share price fall from 52-week high has discounted its Vietnam investment risk. US$600m market cap loss is more than its US$350-400m investment to date.


• FY12 earnings are underpinned by high-margin construction orderbook worth RM2.7bn, unbilled property sales of RM1bn and recurrent infrastructure earnings.


• MRT project news flow catalyst. Potential 26% upside to RM4.20 target.

Genting Malaysia - Growth, value and net cash

• Its investment thesis remains geared towards growth as the UK casinos rebounds off a low base and the New York facility begins maiden contributions.


• Gaming revenue, particularly in Malaysia, is uncorrelated with economic health. Balance sheet remains robust and it is among the most attractively valued gaming stocks globally.

Maybank - Resilient dividend yield

• Regional expansion strategy through Kim Eng acquisition is earnings accredited.


• Rising productivity and cross-selling activities will improve ROE and regaining domestic market share in profitable loan segments and investment bank deals.


• High net yield of over 6% in FY12, supported by dividend reinvestment plan.

TM - Potential for special dividend

• TM is recording strong growth for HSBB and this product could turn EBITDA positive earlier than expected.


• Management undertakes active capital management and we are expecting special dividend of 3.3% from recent sale of Axiata shares.

Source: CLSA article dated 09 Aug 2011