The current ringgit range is hovering around RM4.20 to RM4.40 per US dollar for 2H17 and this may bode well for export-oriented stocks. — Reuters photo
KUCHING: Retailers are advised to pick stocks with export-oriented catalysts and look out for e-commerce stocks as potential pick up in e-commerce acceptance throughout 2017.
According to the research arm of Hong Leong Investment Bank Bhd (HLIB Research), with the tapering off of buying euphoria in the second quarter of 2017 (2Q17) coupled with expectation of a lackluster economic outlook for 3Q17, retailers should pick stocks with export-oriented catalyst and lookout for e-commerce stocks as potential pick up in e-commerce acceptance throughout this year.
“Also, we prefer stocks with defensive attributes, coupled with earnings visibility and stable dividend payment in order to sail through a potential volatile 3Q17,” HLIB Research said.
HLIB Research believed the current ringgit range would be hovering around RM4.20 to RM4.40 per US dollar for the second half of 2017 (2H17) and this may bode well for export-oriented stocks such as Heveaboard Bhd and JCY International Bhd.
“Meanwhile, gloves and plastic packaging industries also benefit from weak ringgit, coupled with the recent fall in raw material prices such as latex, butadiene and plastic resins,” it said.
Under this theme, the research arm has selected Comfort Gloves Bhd and Thong Guan Industries Bhd.
HLIB Research highlighted that on the recent development of e-commerce, the rising implementation of e-payment gateways such as AliPay within the retail shops such as 7-Eleven Malaysia Holdings Bhd and Genting-related merchants could open up a new way of spending behavior among consumers and materialise the e-commerce trend moving forwards.
The research arm noted that moreover, with the launch of Alibaba’s regional distribution hub in Malaysia by Jack Ma, coupled with increasing its stake of another US$1 billion in Lazada to expand its Southeast Asian journey, it may open up more opportunities within the Southeast Asia (SEA) region.
“For exposure under e-commerce, GHL Systems Bhd would be a direct beneficiary,” it said.
With the potential extension of profit taking activities and a volatile 3Q17, HLIB Research would like to focus on stocks with solid fundamentals such as steady earnings and net cash with stable dividend yield.
Under this defensive space, it liked Engtex, CSC Steel, Protasco and Gadang.
“Meanwhile, Tex-cycle is defensive with its recurring business model within the waste management industry,” the research arm said.