CIMB Research upgrades Malaysia’s Small Cap sector to Outperform

by **Cals** Wed 19 Jun 2013, 08:41

Published: Wednesday June 19, 2013 MYT 8:29:00 AM
CIMB Research upgrades Malaysia’s Small Cap sector to Outperform

KUALA LUMPUR: [url=http://archives.thestar.com.my/search/?q=CIMB Equities Research]CIMB Equities Research[/url] said the first quarter 2013 (Q1, 2013) quarterly results for small caps continued to improve from the bottom in 3Q12.
It said on Wednesday the FBM Small Cap Index outperformed the KLCI this year, up 28% compared to the KLCI's 4.8% gain. The strongest outperformance was obvious just after the May general elections.
“We upgrade the sector from Neutral to Outperform. Although small caps have significantly outperformed the KLCI in the past month, we remain positive as investors have only just started to show keen interest in this sector in the last month after staying on the sidelines for more than a year,” it said.
CIMB Research said its small cap universe's Q1, 2013 results continued to improve from the bottom in Q3, 2012. None of its small caps quarterly results were above expectations in 3Q12.
However, in the latest Q1, 2013 results, 23% (14% in 4Q12) was above expectations, while 23% (30% in 4Q12) was below. Most of the weak Q1, 2013 results were mainly involved in export businesses.
“MyEG's share price has done very well this year and is the top small cap performer YTD. However, we are switching our top small cap pick from MyEG to Prestariang, which offers potentially greater price upside in the medium term,” it said.
CIMB Research said in early May, it initiated coverage on Prestariang, an education information communications technology (ICT) company, with an Outperform recommendation.
This company is the country's largest provider of ICT training, certification and software licence management and distribution.
“The stock's valuation is still cheap at 8.8 times 2014 P/E and the dividend yield is attractive at 5.6% even after last month's strong outperformance.
"More major ICT orders or stronger-than-expected enrolment in UniMy could catalyse the stock,” it said.