PICKINGS were better this year, with several stocks performing much better than expected — surprising even the analysts, some of whom were rewarded for choosing to retain a “buy” call against consensus.

After three straight years of annual declines at the FBM KLCI (something that has only happened once in the past four decades), the bellwether index — which rose by as much as 9.4% to 1,796.75 points on June 16 — closed at 1,746.63 points on Dec 20 — up 6.4% from the start of the year. The broader FBM Emas Index, meanwhile, was 9.76% higher year to date at 12,585.59 points last Wednesday.

The winners in the 12th edition of The Edge’s Best Call Awards for 2017 were selected from 90 recommendations for 66 stocks received from 16 research houses.

Last year, we received 86 nominations for 75 stocks from 14 outfits. Most nominations were from heads of research and the analysts themselves, others being fund managers and other analysts for their fellow colleagues.

The winners include those who rightly stuck their neck out by calling an outright “sell” (instead of just whispering it to clients) and were proved right. We were tempted to include more names as there were several other good calls but we decided to stop at 17 for 2017.

Like last year, we made some allowances for calls made in 2016 that proved right in 2017. This year’s list of 17 winners are our best-effort attempt to recognise good fundamental stock analysis and its importance in making investment decisions, based on submissions and publicly available data.

Feedback on the methodology and winners is welcome at [email protected] Feedback is also welcome on whether you would like The Edge to have a fund managers’ poll on their best analysts and recommendations.

With that, here are this year’s winners in no particular order. Congratulations to the winners. To the good stock pickers who slipped under our radar, keep up the good work. Merry Christmas and a Happy New Year!

RHB Research Institute former analyst Ng Sem Guan and analyst Muhammad Syafiq Mohd Salam’s call on Press Metal Aluminium Holdings Bhd

By the time Press Metal was included as an FBM KLCI constituent on Dec 18, the largest integrated aluminium producer in Southeast Asia already had a market capitalisation of close to RM20 billion. It may be hard to imagine that the stock just crossed RM1 billion market capitalisation barely five years ago, in early 2013. By end-2016, its market capitalisation had risen to nearly RM6 billion, double what it was the year before.

When RHB’s former analyst Ng Sem Guan started coverage in June 2013, the comparable (adjusted) share price was 39.7 sen. Four-and-a-half years on, the stock is up a whopping 1,154% to RM4.98 as at Dec 15. Total returns are six times higher, with Press Metal paying dividends every quarter for the past three years, up from twice a year before that, Bloomberg data shows. It also had a two-for-one stock split and 40% bonus issue in 2016. Ng was also acknowledged for his early “buy” call on Press Metal last year.

According to Bloomberg data, RHB’s Muhammad Syafiq Mohd Salam reiterated a “buy” recommendation when assuming coverage on Aug 17 this year. In a note dated Nov 1, he told clients that Press Metal’s size (RM16 billion marketcap) meant that it could be included as an index constituent, about a month before the inclusion was announced.

Press Metal, which ran 113% from the start of the year to RM3.32 on Aug 17, appreciated another 50% over four months to RM4.98 on Dec 15 — bringing total gains for the year to 213%.

At the time of writing, RHB still had a “buy” recommendation and its RM5.30 target price — the highest among four analysts tracking the stock — implying only 6.4% upside potential. Risks to his forecast include a sharply weaker greenback, lower aluminium prices and unexpected production disruptions.

A notable mention also goes to Kenanga Research’s Voon Yee Ping, who also rightly stuck with a “buy” recommendation this year despite the strong price gains. Two other houses had “neutral” calls from April and August when the stock was below RM3.50, Bloomberg data show.

It remains to be seen if Press Metal will provide reasons for further bullishness but the stock did reach RM5.47 intraday on Dec 4, although its highest close so far was RM5.184 on Nov 6.

Nomura Research’s Tushar Mohata’s call on Sunway Construction Group Bhd

In a nutshell, this is a winning call because the stock price ran shortly after an upgrade to “buy” from “hold”. But there’s more depth than that.

When Nomura Research’s Tushar Mohata upgraded Sunway Construction Group Bhd to “buy” on March 9 this year, the share price rose 45% within nine months to as high as RM2.41 on Dec 11, before retracing to RM2.38 on Dec 15. Before the upgrade, the stock price had largely been hovering between RM1.50 and RM1.60 for about a year.

His decision to upgrade Sunway Construction resulted from what he calls an “earnings-cash flow matrix” as well as “the law of diminishing returns” at a time when most construction companies were already sitting on record-sized order books. A high base means small and medium-sized project awards could mean very little incremental impact on future earnings and share price.

That came after he revisited Nomura’s investment thesis for the Malaysian construction sector. While net profit remains the best long-term predictor for stock price returns, he told clients that the cash conversion of reported earnings was becoming equally important due to rising gearing in a weak property market. The latter was the reason Tushar preferred pure-play Malaysian contractors like Sunway Construction to diversified contractors with exposure to property development.

According to him, Sunway Construction’s earnings “fairly accurately track its actual cash flows, reflective of its healthy margins and timely collection from customers”. That’s a better position than companies which may have good reported earnings but subpar conversion of it to operating cash flow due to reasons such as non-cash earnings stream and growing working capital, which leads to higher gearing (thus burdening the balance sheet).

A notable mention also goes to Macquarie Research’s Aiman Mohamad, who has had a “buy” call on Sunway Construction since at least March 2016, according to Bloomberg data. Both Nomura and Macquarie currently have the street’s most bullish target price of RM2.80.

Affin Hwang Capital Research’s Kevin Low’s call on Inari Amertron Bhd

Inari Amertron saw its stock price more than double this year. Affin Hwang’s Kevin Low, started coverage as early as April 23, 2013, when the comparable stock price was 16 sen.

He continues to like Inari, calling it a “preferred pick” for the local technology sector due to its “solid growth in the RF segment given new drivers, including the Osram IRIS IR chip, and its data server chip business from Broadcom”. Key downside risks to his recommendation include a slowdown in global demand for smart devices, rapid average sale price (ASP) erosion, loss of customer base and the introduction of new technologies that may render Inari’s products obsolete.

According to Bloomberg data, there is currently one “fully valued” call from DBS Vickers with a RM2.25 target price. Six analysts have “hold” or “neutral” calls on Inari while the remaining six (including Low) recommend as “buy”. Time will tell who will prove prescient this time next year.

This year, a notable mention also goes to Macquarie Research’s Anand Pathmakanthan, as clients would have benefited from his upgrade from “neutral” to “outperform” in January when the stock price was RM1.60. Similarly, RHB Research’s Kong Heng Siong upgraded his call to “buy” when the stock price was RM1.90 on March 22. Credit Suisse’s Danny Chan, who started coverage with an “outperform” call on July 11 when the stock was at RM2.13 apiece, also deserves a notable mention.

Affin Hwang Capital Research’s Kevin Low’s call on KESM Industries Bhd

When starting coverage on KESM Industries on Aug 15, 2016, Affin Hwang’s Kevin Low told clients the company was a good proxy for the stable and growing automotive semiconductor segment, going by growing demand for electronics for vehicles from safety to infotainment and autonomous vehicles. In just four months, the stock has gained 34% — making him a winner last year.

He continues his winning ways this year: at RM19.50 on Dec 15, KESM shares had doubled from the start of the year — and there’s still upside if Low’s RM21.80 target price is to be believed. In fact, KESM reached as high as RM20.50 intraday on Nov 23 before closing at RM20.40.

“We favour KESM for its exposure to the automotive space, an area we believe will continue to benefit from structural growth underpinned by increased semiconductor content in automobiles as well as growth in demand for hybrid and autonomous vehicles,” Low wrote in a Dec 18 note, reiterating his “buy” call.

In an earlier note dated Nov 24, he told clients that KESM’s revenue and earnings momentum “remained strong”, underpinned by aggressive capital expenditure into the automotive burn and test business. He also noted that 1QFY7/2018 net profit would have been stronger if not for higher effective tax rate of 15.5% versus 10.4% in 1QFY7/2017. Key downside risks include a loss of customers and a reduction in the outsourcing opportunities as customers increase their in-house burn-in and test function, he says.

Two other analysts have since started coverage on KESM this year, according to Bloomberg data. CIMB Research has an “add” rating and RM22 target price while Kenanga Research is going against consensus with an “underperform” call and RM18.40 target price, which is below open market prices. It would be interesting to see if Low will make it a hat trick next year.

KAF Seagroatt & Campbell Securities’ Mak Hoy Ken’s call on Econpile Holdings Bhd

Econpile Holdings shares have gained as much as 77.6% this year, closing at RM3.195 on Dec 4. Even measured from this year’s cut-off date of Dec 15, gains came to an enviable 73%.

In a Dec 29 note last year, KAF’s Mak Hoy Ken retained his “buy” call. He sees Econpile as the research house’s “top small-cap construction pick for its burgeoning order book, sustained job momentum and attractive margins”. The civil engineering contractor’s market capitalisation breached RM1 billion in late October 2016.

Back then, he also told clients that more strategic opportunities could stem from Econpile’s 60:40 tie-up with China Communications Construction Co (M) Sdn Bhd (CCCC) for a substructure and ancillary works package for SUKE highway, as it was a strong endorsement of Econpile’s position as a piling specialist in Malaysia.

At the time of writing, Mak’s target price of RM3.33 implies only 7% upside potential from RM3.11 on Dec 15. It remains to be seen just how much comfort should be drawn from his Oct 20 note, where he said Econpile’s earnings visibility “remains solid, backed by a healthy outstanding order book of RM1.2 billion or around 2.1 times its construction revenue”.

Meanwhile, Macquarie Research’s Aiman Mohamad, who started coverage with an “outperform” call on Feb 23 this year when the stock price was at RM2.07 apiece, also deserves a notable mention, with Econpile shares up 50.2% to RM3.11 apiece in about 10 months. Macquarie has a RM3.50 target price.

KAF Seagroatt & Campbell Securities’ Mak Hoy Ken’s call on Ann Joo Resources Bhd

With shares of Ann Joo Resources Bhd up 83% to RM3.80 as at Dec 15 this year, investors who bought the stock at the start of the year would be sitting on good portfolio gains. KAF’s Mak Hoy Ken maintained a “buy” on the stock with a higher target price of RM2.42 (from RM2.38) on Jan 5. The stock dipped to RM2.17 — its lowest this year — on Jan 3. At its peak, it closed as high as RM3.91 on Nov 9.

Back then, Ann Joo’s share price had just gained 224% in 2016 and there were doubts in the market on whether the stock would continue to perform, especially with the direction of international steel prices being mixed at best.

Mak was held to his belief that there was more upside to Ann Joo. Among other things, he argued that domestic steel prices would see support from provisional safeguard duties on imported bars and wire rods. With the counter trading at only eight to 10 times forward earnings multiples, he was convinced it was a cheaper alternative play to the Malaysian infrastructure supercycle. There is also a potential lift from a continued recovery in Chinese steel prices as capacity cuts in that country gathers pace. Chinese steel prices have been on a general upward trend this year as the country’s supply-side reforms took effect.

A notable mention goes to Maybank Investment Bank Research’s Lee Yen Ling, who upgraded her call for Ann Joo on Aug 16, 2016, when the stock price was at RM1.72.

At the time of writing, Maybank’s Lee has since downgraded her call to “hold” with a RM3.85 target price while KAF’s Mak continues to call a “buy” with a RM4.10 target price. Watch this space.

Kenanga Research’s Desmond Chong’s call on Malaysian Pacific Industries Bhd

It was almost as if he had a crystal ball. When Kenanga Research’s Desmond Chong upgraded his call on Malaysian Pacific Industries (MPI) from “market perform” to “buy” on Jan 27, the stock price ran up 79% from RM7.97 to RM14.291 on Oct 11.

Helping the gains were the better sales that MPI was seeing of its automotive electronics and power management chips as well as improved efficiency. He subsequently raised his target price three more times to as high as RM15.70 on Aug 18.

That’s not all. When Chong turned cautious on its outlook and downgraded MPI to “market perform” or a neutral stance on Nov 10, the stock price retraced 12% fromRM13.64 to RM12 on Dec 15.

In a Nov 10 note issued following a briefing, he highlighted the “mounting pressure on margins” coupled with a potential setback from a longer gestation period for its product rationalisation exercise.

A special mention also goes to KAF Seagroatt & Campbell Securities’ Shafiq Kadir and TA Securities’s Paul Yap, who earlier had “buy” calls that also proved right. Kenanga’s call got more points as MPI shares ran shortly after his upgrade compared with the two existing “buy” calls.

All three currently have “hold” calls on MPI, in line with consensus. At the time of writing, Affin Hwang Capital Research had the only “sell” on the stock, with a target price of RM12, according to Bloomberg data. Will he have the last laugh next year?

UOB Kay Hian Research’s Ridhwan Effendy’s call on Kerjaya Prospek Group Bhd

Investors who made money might recall that UOB Kay Hian’s retail research team started coverage on Kerjaya Prospek as far back as January 2016 when it was still called Fututech Bhd. The team called the stock “an upcoming mid-cap construction company” that would emerge as an end-to-end building contractor with RM2.7 billion order book after completing the acquisition of two privately-run construction companies.

At the time, the (adjusted) stock price was RM1.69. As at Dec 15, it had gained 134% to RM3.97, although that is off as high as RM4.08 on Nov 3. This year, alone, Kerjaya shares were up 83% at the time of writing.

On Jan 3, UOB’s Ridhwan Effendy told clients that 2017 would continue to be an eventful year for Kerjaya — which stands out as a potential capital management play — given its strong cash pile of RM107 million or 10% of its market capitalisation back then.

According to Bloomberg data at the time of writing, UOB is the only house still calling a “buy” on Kerjaya, while the remaining two houses with active coverage have “neutral” or “underperform”. The “underperform” call, made in early August when the share price was RM3.54, but the stock is at RM3.97 currently.

UOB upgraded the stock to “buy” again on Nov 23 with a higher target price of RM4.53 (from RM3.81) after raising its earnings estimates as well as order book win assumptions. Ridhwan continues to like Kerjaya for its superior margins, high order book cover, net cash of RM163 million (28.9 sen per share) and ability to clinch new contracts.

UOB Kay Hian Research’s Ridhwan Effendy’s call on Sunsuria Bhd

UOB Kay Hian was the first house to initiate coverage on Sunsuria nearly three years ago. At the time, the headline recommendation was “hold”, based on a 50% discount to its sum-of-parts valuation. 

Nonetheless, the research house told clients that it expected the company to take on a major asset acquisition strategy: “Investors with the risk appetite for small-caps should consider re-entering ahead of the announcement which is expected to be in 1Q2015,” it said in a brief note dated Feb 18, 2015.

That gives this submission an edge over others. Based on where the stock is today post the corporate developments, the equivalent (adjusted) stock price would be 86.8 sen. A simplistic measurement would show a 78.6% gain at its recent peak of RM1.55 on July 14, 2017.

UOB Kay Hian’s Ridhwan Effendy raised his target price to RM1.25 (from RM1) when reiterating a “buy” call on Jan 12 this year as he expected Sunsuria to enter a multi-year growth phase. Riding on the success of Xiamen University, Ridhwan expects its flagship Sunsuria City development to be a key driver for sales and earnings.

Sunsuria’s stock price took only about a month to reach the new target price and on Feb28, Ridhwan raised the target price to RM1.50 — which the stock hit on April 10 before retracing to RM1.40-levels.

On May 25, Ridhwan downgraded the stock to “hold” with an unchanged target price after the release of the company’s 2QFY2017 earnings, telling investors to “capitalise on their gains” as he believed its near-term potential had been reflected after a 42% year-to-date climb. 

At the time, the stock price was RM1.41 and the highest it went was a 9.9% rise to a recent high of RM1.55 on July 17 before retracing to RM1.34, about 5% lower than at the point of downgrade.

AmInvestment Bank Research’s Alex Goh’s call on Petronas Gas Bhd

AmInvestment Bank’s Alex Goh got it right when he cut Petronas Gas to “sell” from “hold” on Nov 18 with a RM16.65 target price while the stock was trading at RM20-levels.

From there, the price skidded 22% to as low as RM15.88 on Nov 30. The magnitude of the fall is considerably sharp, given that Petronas Gas is a big-cap counter with a market capitalisation of RM33.6 billion.

In fact, between Nov 18 last year and the recent low on Nov 30, it lost a whopping RM10.1 billion in market capitalisation.

When downgrading his call more than a year ago, Goh told clients about the chances of impending earnings erosion given the Energy Commission’s upcoming plan to implement incentive-based regulation (IBR) tariffs on the group’s gas transport tariff. That made it hard to justify the company’s valuation and share price of above RM20.

On Dec 5, Goh seemed to have also rightly upgraded Petronas Gas to a “hold” with a RM16.65 target price when the share price was at RM16.10. Closing at RM16.96 on Dec 21, the stock had gained 5.3%.

Meanwhile, it is worth noting that TA Securities’ analyst Kylie Chan also had a “sell” call on the stock, according to Bloomberg data, when many others on the street still said “hold”.

Inter-Pacific Securities Research’s Wong Ling Ling’s call on Uchi Technologies Bhd

2017 has been a spectacular year for Uchi Technology, as was Inter-Pacific Securities Research’s Wong Ling Ling’s “buy” call on the company.

The company’s share price had gained between 13% and 30% a year between 2012 and 2016 and this year was beginning to look that way as well until a sharp rally occurred from the middle of the year, barely a fortnight from the time she started coverage on the stock with a “buy” call.

Uchi’s performance likely surprised even her.

Only three analysts are actively tracking Uchi, according to Bloomberg data. When Wong started coverage on June 15, Uchi shares were at RM1.84 a share. From there, it rocketed 93% in just over five months to RM3.55 on Nov 29.

At RM3.45 on Dec 15, Uchi’s market capitalisation stood at RM1.57 billion compared with about RM800 million just six months earlier.

Wong’s “buy” recommendation was premised on the company’s stable earnings growth, unique business model, a minimum dividend payout ratio of 70% of profit after tax, very comfortable profit margins and a clientele comprised of industry market leaders. It would be interesting to see if Uchi, which specialises in the design of electronic control systems for a number of multinational companies that are global leaders in their respective industries, can continue to surprise on the upside next year.

Hong Leong Investment Bank Research’s Jeremy Goh’s call on George Kent (M) Bhd

This time last year, HLIB Research’s Jeremy Goh was the only analyst actively tracking George Kent, telling clients that the water meter-turned-engineering company had RM5.1 billion engineering order book and “can no longer be ignored”.

Today, he is one of three analysts calling a “buy” on the company he described as one with 68 sen per share net cash and a “key rail play with exposure to the LRT extensions”. His target price is currently RM3.90. Closing at RM3.62 on Dec 15, George Kent shares had gained 83% year to date, continuing its ascent from the year before.

In a Dec 7 note after the company’s third quarter earnings briefing, Goh noted that George Kent — which is the leader for water meters in Malaysia, with over a 50% market share — could see the opening of “a whole new market” for itself when it commercialises its automated meter reading (AMR) product, which allows remote reading of water meters. Selangor is expected to call tenders for AMR meters in two months for a pilot project while Johor and Penang are also looking to replace traditional meters, Goh said.

The company (via a joint venture with Siemens) is also preparing to put in a bid for the Kuala Lumpur-Singapore high-speed rail (HSR) asset company (AssetsCo) that will help develop key parts of the project. That may provide further catalysts for the stock next year.

UOB Kay Hian Research’s Kong Ho Meng’s call on Sapura Energy Bhd

When analysts rushed to revise their “buy” and “neutral” calls on Sapura Energy Bhd in early December, after a large quarterly net loss, UOB Kay Hian Research’s Kong Ho Meng stood out as he had had a “sell” call for close to six months.

The stock tumbled 20% in a single day on Dec 7, after the group announced a quarterly net loss of RM274.4 million for the third quarter ended Oct 31, a sharp contrast to a net profit of RM158 million the year before.

Looking back, we see that the share price had in fact been drifting lower since mid-June when the consensus view was that the oil 

and gas giant was in calmer waters as the recovery of global crude oil prices gathered steam.

Kong’s timely downgrade of his call from “neutral” to “sell” on June 20 would have saved clients from sizeable portfolio losses. From RM1.67, the stock price tumbled 53% to 78.5 sen at our award evaluation cut-off date of Dec 15. When The Edge went to print, the stock price had slid further to a record low of 71.5 sen on Dec 21.

A notable mention goes to Credit Suisse’s Danny Chan, who also went against the grain with a contrarian “sell” call since June, although he prematurely upped his recommendation to “neutral” while the counter was still heading south.

Affin Hwang Capital Research’s Ng Chi Hoong’s call on Jaks Resources Bhd

Jaks Resources is not well tracked by analysts, many of whom may feel the need to observe the company from the sidelines for the time being since its power generation project in Vietnam will only start contributing in 2020 and be a good source of recurring income.

The lack of coverage makes Affin Hwang Capital’s Ng Chi Hoong’s “buy” recommendation and analysis stand out even more. Those familiar with the company would know Jaks is undertaking a US$1.87 billion 1,200MW coal-fired thermal power plant project near Hai Duong, together with China Power Engineering Consulting Group Co Ltd (CPECC). Jaks holds a 30% stake in the joint venture and CPECC the remaining 70%.

In a Jan 4 note, Ng raised his target price for Jaks to RM2 (from RM1.60) following a review of its assets after the company said it was realigning its focus on Vietnam given the slowdown in the property market in Malaysia.

At the time, Jaks’ share price was at RM1.01. It took barely three months to jump 70% to reach RM1.72 on April 5 before retracing.

Following the strong rally, Ng downgraded his call to “hold” on May 25 when the price was RM1.58. When it skidded to RM1.38 on Oct 17, however, he saw reason to upgrade to “buy” again with RM1.75 target price. Jaks closed at RM1.50 as at Dec 20, up 48.5% from the time Ng reiterated his “buy” call with a higher target price.

A special mention goes to Affin’s Lim Yee Tang, who initiated coverage on Jaks before he moved to equity sales. Ng assumed coverage from November 2016.

Kenanga Research’s Raymond Choo’s call on Hartalega Holdings Bhd

At the start of 2017, Kenanga Investment Research’s Raymond Choo boldly recommended that clients buy Hartalega Holdings shares. He was the only one of 20 analysts tracking the stock to do so, according to Bloomberg data. In fact, there was as many as five “sell” calls.

The lack of enthusiasm may have stemmed from the fact that Hartalega shares were down 17% year on year in 2016 after gaining 72% y-o-y in 2015. A long-time favourite of investors, the leading nitrile glove maker sprang a surprise rebound this year, rising more than120%.

The stock moved from RM4.76 as at end-2016 to RM9.75 on Dec 15, our award evaluation cut-off date. As at Dec 20, the stock price reached RM11.40!

Investors who bought shares early this year would have Choo to thank. His contrarian stance stemmed from the conviction that Hartalega was capitalising on its new capacity from the NGC plant in Sepang on the back of robust demand and a slower-than-expected production ramp-up in the other rubber glove players.

He was convinced by Hartalega’s constant desire to move up the value chain by offering superior product innovation and automating its production processes. Hartalega’s recently announced first non-leaching antimicrobial nitrile examination glove is also expected to be a game changer in the rubber glove industry.

Inter-Pacific Securities’ David Lai Yoon Hui also deserves a notable mention for also having a “buy” for the most part, save for a blip in May.

MIDF Research’s Ng Bei Shan’s call on Superlon Holdings Bhd

At its peak, Superlon Holdings Bhd’s market capitalisation reached RM463.7 million when its share price rose to RM2.92 on Sept 18.

While some institutional investors may consider this small, the market cap is already more than double the RM202.47 million the company was valued at on Nov 22 last year — the day MIDF Research’s Ng Bei Shan initiated coverage on the maker of synthetic rubber insulators used mainly for heating, ventilation, air conditioning (HVAC) and refrigeration — which are important for high-rise buildings and industrial use. The recommendation was based on the prospects for its new warehouse, which would improve lead time and sales; market dominance; and its sturdy balance sheet (RM39.13 million net cash) that spelt dividend payments.

In fact, MIDF had been watching Superlon for some months, starting with a non-rated report in March 2016, when its market cap stood at RM159.6 million.

Measured from Nov 21, 2016, the share price appreciated as much as 137% to reach RM2.92 on Sept 11 this year. Part of the gains were thanks to a share split that the company had hoped would improve liquidity — a move that was rewarded with the entry of institutional investors, including the emergence of Kumpulan Wang Persaraan (Diperbadankan) as a substantial shareholder with a 10.49% stake.

Closing at RM2.15 on Dec 15, the counter had skidded 26% from its recent peak but it remains about 75% above the time MIDF started calling a “buy”. Ng, who had downgraded the stock to “neutral” on Sept 27, when her target price was nearly met and its 1QFY2018 earnings were hit by a spike in raw material price, upgraded her call again to “buy” on Dec 15 following the share price weakness. At the time of writing, its RM2.36 target price implies 9.8% upside potential from current levels. 

Affin Hwang Capital Research’s Tan Jian Yuan’s call on Serba Dinamik Holdings Bhd

If you had bought Serba Dinamik Holdings Bhd shares when Affin Hwang Research’s Tan Jian Yuan started coverage with a “buy” and RM2.40 target price, you would have seen your holdings rise 67.7% over seven months from RM1.76 to RM3.22 on Dec 15.

That’s if you did not get the initial public offering (IPO) shares for Serba Dinamik, which made a strong debut on the Main Market on Feb 8 this year and went on to become the year’s best-performing IPO with a gain of 119% as at Dec 15. Kenanga Investment Bank was the IPO lead manager.

When Tan started tracking Serba Dinamik about two months from its debut, the stock price had already appreciated 10% from its IPO price. Yet he was convinced that there was at least 45% more upside potential — and was proved right. At the time, Tan was upbeat on its growth potential, expecting strong maintenance activity growth and expansion of engineering, procurement, construction and contracting (EPCC) revenue to drive forward earnings. He also expected the group to pay out 25% to 30% of net profits in FY2017 to FY2019, translating into decent yields of3.3% to 5.2%, the initiation report read.

A notable mention goes to RHB Research Institute’s Wan Mohd Zahidi, who initiated coverage on May 8 with a RM2.78 target price when the stock price was at RM1.92, as well as Alliance DBS Research’s Inani Rozidin, who initiated coverage on May 16 this year with a RM2.90 target price when the stock was at RM2. Investors would also have made good money following their recommendations, despite the later initiation dates.

At the time of writing, Tan’s RM4 target price shows that he remains among the most bullish of all seven analysts calling a “buy” while RHB’s is the lowest at RM3.10