TOP MALAYSIAN STOCKS TO INVEST IN 2018
The upcoming year is going to be a challenging year for global markets where the World Trade Organization already projected a slightly lower figure of 3.2% world trade compared to 3.6% this year.
Despite a projected slowdown in the global market the Malaysian economy is expected to perform decently in 2018 on the back of a very efficient management by the Malaysian government and the central bank of Malaysia.
Sufficient international reserves and adaptive exchange rates policy along with well managed key interest rates to control liquidity in the market are the key factors which will play a very important role to keep the growth rates and the economy at a healthy state in 2018 and give a cushion in the global stressful economic conditions.
The key index to measure the overall performance of Malaysian equity market the KLCI Index is trading at a very important level and showing a lot of cyclic volatility in the last month of 2017. We are expecting the KLCI to test the 1770 mark as on technical charts we can see a strong resistance zone is near this level with can hold the bulls.
The benchmark KLCI index gave a strong bullish movement after a long streak of continued losses. The KLCI index had gained a whopping 32.14 points last week which indicates the rejection near 1720 levels by the market. The KLCI index was facing constant sell pressure except for last week where it manages to set off the losses of past weeks and gained nearly 32 points after taking support near 1720 levels last week.
On the technical ground, the KLCI index is expected to test the level of 1770 in near-term and then head to break 1800 psychological level. The recent turnaround in the price of the index is indicating that bulls are coming back in the market and the charts will confirm this after a strong break out of 1800 mark.
However, the index is trading at a very critical level and it is hovering between key support and resistance zones of 1720 and 1770. If the index rejects the 1770 mark and break the support level then it will indicate a control of bears in the market and that can push the price further down.
As the market had expanded its range it is very important for the index to break the key the level of 1800 to give a clear indication of a return of bulls in the market
In a very volatile scenario and an expected sow year, there are few stocks who have a very good potential to generate a good return in the coming year with supportive fundamental background and good technical breakout. We had shortlisted few potential stocks to watch on the basis of technical and fundamentals analysis which can perform well in the coming year.
INARI AMERTRON BHD
Inari Amertron Bhd is one of the few companies in Malaysian equity market who had performed continuously well form last five years. The company had shown a constant growth in margins and revenues in last five year with a growth in EPS and dividend per share.
The order book of Inari Amertron Bhd is well supported in 2018 also which will insure a smooth functioning of the company without any issue related to order book.
On the technical ground, the counter is in a strong bullish trend and it is expected to continue this trend in coming year also supported by the strong margins which we can see on the quarter on quarter basis clearly which is expected to fuel the bulls throughout the year.
AIRASIA one of the biggest players in Malaysian airline industry with nearly RM11 billion market capitalization and a huge market reach. The company had posted a good growth in revenue in the year 2017, however, the margins are still under pressure as compared to the revenue increase due to the increased operating expenses. However, if we see the trend on increase in revenue in last five years it is on a bullish side and we are expecting to profit margins to get on track in coming year supported by a constant increase in revenue and better cost management. Currently, the stock of Airasia is trading at a very attractive price point of RM3.33 for a long-term investment objective.
On the technical ground, the nearest breakout in AirAsia is above the level of 3.40 which is above the short term corrective wave and this breakout can result in a strong bullish movement which can push the price to the previous high of 3.60 in near term.
MY E.G SERVICE BERHAD (0138)
With an attractive ROE above 35% and a constant quarter on quarter performance on quarter on quarter, MYEG SERVICE BERHAD is one of the most attractive stock in Malaysian equity market which has a good potential to grow in 2018.
From more than five years the company had proven itself in the market by giving very stable and growing operating margins which makes this counter a very attractive investment option for long-term investors
On the basis of technical analysis, the counter is in a bullish trend which is still intact after the recent price correction which pushed the price down to a very reasonable price point to buy the stock at current 2.16 levels.
GEORGE KENT (MALAYSIA) BERHAD
Another company which we should include in the stocks to watch for 2018 is GKENT. Which a constant and steady increase in operating margins George Kent Bhd is a must have for every long-term investment portfolio.
Form last three year the company is posting a constant increase in profit margins despite facing challenges on maintaining a constant increase in revenue front. On the latest quarterly report, we can see the company is able to dig out an EPS of 5.10 which is very decent for the service industry.
On the technical ground, GKENT is in an overbought zone. However, it is in an uptrend and it is expected to take a short correction in near-term and test the uptrend line once again and then continue its bullish movement for the long term.
POH HUAT RESOURCES HOLDINGS BERHAD
POHUAT is one of the largest furniture producers in South East Asia with over 30 years of experience in the market. If we see the overall trend in the revenue and profits of the company we can clearly see an upward movement in the profits in line with the revenues which is one of the most attractive points which attracts long-term investors.
On the technical ground, POHUAT had recently shown rejection of 1.75 levels and bounced back to a bullish territory above 1.80 levels that makes it a good buy near current levels of 1.80 for a long-term investment objective with a stop loss below recent lows of 1.65.
There are few more stocks you can add to your watch list for 2018