Levitt’s picks in Malaysia

Malaysia Airports Holdings Bhd (MAHB), which Robert Levitt believes will benefit from the increase in tourist arrivals, gained 68% from its 52-month low of RM3.44 exactly a year ago to RM5.79 last Friday, its one-year high.

There were 10 buy calls on the stock out of 11 analysts polled by Bloomberg. MAHB is currently trading at a consensus estimated price-earnings ratio of 16.98 times.

The airport operator had posted a net profit of RM132.11 million in the first half of FY2010 ending Dec 31, 14% lower from RM153 million in the same period last year, as the adoption of FRS139 accounting standard beginning from this financial year led to larger losses from associate companies.

Earlier this year, MAHB won a bid to build, operate, modernise and expand the Maldives’ main airport, the Male International Airport, via its GMR-MAHB consortium. With the project, it has four overseas airports in its portfolio.

Other aviation stocks on Levitt’s list — Malaysian Airline System Bhd (MAS) and AirAsia Bhd have year-to-date risen 8% and 58.7% respectively.

MAS’ share price last Friday rose six sen to close at RM2.39 but AirAsia shed six sen to close at RM2.19.

Nineteen analysts polled by Bloomberg have mixed ratings with six recommending buys, eight holds, and five sells, on MAS. As for AirAsia, 22 analysts polled by Bloomberg have recommended buy calls on the stock while two each have rated holds and sells.

With regards to glove players that Levitt invests in — Top Glove Corp Bhd, Supermax Corp Bhd, Latexx Partners Bhd and Hartalega Holdings Bhd, all four stocks rose by more than 20 sen last Friday.

Top Glove was up 22 sen to close at RM5.35, Supermax added 24 sen to RM4.03, Latexx went up 26 sen to RM2.70 and Hartalega climbed 22 sen to RM4.92.

Top Glove, the largest rubber glove manufacturer in the world, was recently downgraded by RHB Research to “underperform” from “market-perform” based on the weaker earnings outlook.

The research house said on Sept 28 that it had cut its target price-earnings ratio to 12.5 times from 15 times and lowered the fair value to RM5.30 (from RM6.90). Top Glove is expected to announce its full-year results on Wednesday.

Of the 19 analysts tracking Top Glove polled by Bloomberg, six called a buy, five holds and eight sells. The stock is trading at a consensus estimated price-earnings ratio of 12.68 times and has risen 6.94% year-to-date.

Levitt’s favourite retail stock, Parkson Holdings Bhd, rose three sen to close at RM5.85 last Friday. The stock had traded at a 52-week high of RM6.20 on Jan 11, 2010 after hitting a low of RM4.91 on Oct 6, 2009.

The stock has added only 10.17% year-to-date and is currently trading at a consensus estimated price-earnings ratio of 16.76 times. There were nine buy calls and three holds from recommendations by 12 analysts on Parkson.

This article appeared in The Edge Financial Daily, October 4, 2010.