The politically-linked stocks have started to show signs of strength on the back of election fever heating up, despite the volatility of the global market, reported by The Star.
With the Dow Jones’ sharp correction in the last two weeks even with the fact that most stocks have fallen, it might be a good idea to start positioning oneself in stocks that are deemed beneficiaries of the ruling government.
The first stock to detect is MyEG Services Bhd as the company which started out as a government concession has now seemed to offer every service under the sun – plus, political connection is one thing.
Currently, commercial services, not government concessions, contribute 70 per cent to its bottom line.
In addition, MyEG’s share price has also moved with that same sort of gusto. On Jan 2, MyEG’s largest shareholder, Asia Internet Sdn Bhd, acquired another 8.5 million shares in MyEG, giving it a total of 1.09 billion shares or 30.12 per cent stake in the company.
KUB Malaysia Bhd is another diversified government-linked company which has seen some action, where its allure has decreased over the last few years due to staid earnings, but the stock continues to garner some interest.
The KUB Malaysia’s stock is 52.17 per cent owned by Anchorscape Sdn Bhd. At its last price of 44 sen, it is up 5 sen or 12.82 per cent on a year-to-date basis. For the nine months to Sept 30, 2017, its net profit increased to RM17.16 million from RM15 million previously. Also, the revenue jumped to RM415.2 million from RM364.45 million.
Furthermore, the company underwent massive kitchen-sinking and restructuring exercise in 2016 and is focusing on strengthening and expanding its three core businesses including energy, plantations, as well as information and communications technology.
In January this year, KUB completed the acquisition of a brownfield oil palm plantation land in Kinabatangan, Sabah, from Kwantas Corp Bhd for RM100.45 million. The land is expected to contribute 31 per cent to the group’s agriculture arm revenue and about 3% to the group.
News has also been circulating that KUB’s iconic A&W Restaurant along Lorong Sultan, Petaling Jaya, has been approved for a new development, meaning that the famous fast-food site will be demolished to make way for the upcoming development.
While most construction companies are perceived to have some sort of political link, perhaps the most distinct among them would be George Kent (M) Bhd. This stock has been on a non-stop upward trajectory.
For 2017, the stock was up 76.38 per cent, whilst for 2018, on a year-to-date basis, George Kent continues to rise on contract wins and is now up 12.25 per cent or 43 sen.
RHB Research has revised its earnings forecast on George Kent on a higher contract win possibility.
The research house said it has upgraded George Kent’s order book replenishment assumptions to RM5.5bil this year, which would almost double the group’s order book to RM11.3 billiom from RM5.8 billion currently.
This month, George Kent announced that it has joined forces with four foreign companies to form a consortium to bid for the Kuala Lumpur-Singapore high-speed rail project.
The construction company also said it would collaborate with Siemens, Alstom, Ferrovie Dello Stato Italiane, and the PORR group to form an engineering, procurement and construction, and operations and maintenance consortium to bid for the asset company tender of the project.
Another well-connected political counter is Cahya Mata Sarawak Bhd (CMS). It is one of the key local participants in Sarawak Corridor of Renewable Energy development and the RM1.36 billion Pan-Borneo Highway project, in addition to its existing businesses with the state government.
On a year-to-date basis, the stock is up 9.49 per cent or 37 sen at its last price of RM4.27.
CMS is involved in cement manufacturing, construction, road maintenance and property development, among others.
Recently, CMS’ cash position experienced a growth of 1,096.9 per cent to a net cash position of RM161.09 million.
The sudden jump in net cash was primarily because of the proceeds from its RM500 million Islamic medium-term notes. The five-year notes mark CMS’s first sukuk issuance.