4 Malaysia Stocks trading at their 52-week Lows

July 27, 2023

What? These Malaysian stocks are trading at 52-week lows? The year so far has been volatile. The U.S. market was hit by a wave of A.I. mania while the Federal Reserve is saying that inflation remains high and more interest rate hikes are incoming. Meanwhile, the Malaysian market is down since the beginning of the year as China's (Malaysia's biggest trading partner) economic growth momentum seems to have been weaker than expected. As a result, some Malaysian stocks have been trading at their 52-week lows. This could make them attractive to invest provided they also exhibit strong financial performance and business outlook. Here are 4 Malaysian companies that could fit these criteria...

#1 Hong Seng Consolidated

Hong Seng Consolidated (HS) is trading for R$0.090 (as of 17 July 2023) close to its 52-week low of R$0.085. HS manufactures gloves, provides supply chain management services for the medical and healthcare fields and is a financial service provider. Healthcare services is its biggest segment at 79% of revenue in 2022, followed by gloves (19%) and financial services (2%). Revenue rose sharply during the pandemic, from only R$4.4 million in 2020 to R$198 million in 2022. Meanwhile, it also turned to a profit of R$102 million compared to a loss of R$7 million over the same period. HS's share price has been declining continuously since July 2022 of last year when it traded for R$0.596. This makes sense considering that the demand for gloves and healthcare services peaked in 2021 and 2022, and is normalising to pre-pandemic levels. Despite the normalising market demand for gloves and healthcare services related to Covid-19, some of these strengths of HS could make you consider investing:
  1. Expansion into general healthcare services While most of its healthcare services revenue was derived from PCR tests for Covid-19, HS is expanding into the general healthcare screening markets such as heart disease, cancer, respiratory disease, and diabetes.
  2. Diagnostic lab market projected to grow at a strong rate TechSci Research projects that the Malaysian laboratory market will expand by a CAGR of 7.9% from 2023 until 2027.
  3. Highly scalable business Profit margin improved to 51.6% in 2022 from 40.1% in 2021, with revenue growing by 35% between the two years.
In terms of valuation, HS is valued at a price-to-earnings ratio of 4.5 times compared to the industry's average of 19 times.

#2 Media Chinese International

Media Chinese International's (MCI) share price is trading at R$0.155, close to its 52-week low of R$0.150. MCI is a Chinese media group, which is a merger of Ming Pao, Sin Chew, and Nanyang Press and produces media content (newspapers, magazines, books, digital media) for Southeast Asia, Greater China (Taiwan and Hong Kong), and North America. Southeast Asia remains the biggest revenue contributor at 56% in 2022, followed by Greater China (31%) and North America (6%). MCI's revenue stream has been steadily improving to R$590 million in 2022 (Mar 2022 to Mar 2023), after declining by 52% to R$483 million in 2021 (Mar 2020 to Mar 2021) due to the pandemic. However, MCI continued to make losses of R$3.9 million in 2022. Hence, the share price has been declining from R$0.170 at the beginning of the year. However, other factors could help you to evaluate MCI's position in the market:
  1. Leading media company in the Chinese language market in Malaysia Its flagship brands such as Sin Chew, Nanyang, China Press and Guang Ming enjoy dominant readerships in the Chinese market in Malaysia.
  2. Diversification efforts to expand beyond Southeast Asia MCI has expanded beyond the borders of Southeast Asia into Greater China and North America. The Greater China segment has turned into profitability with profit margin improving from -1.3% in 2022 to +0.7% in 2023. However, the North American segment's profit margin declined further from -7.2% to -46.1% over the same period.
MCI is valued at a price-to-book ratio of 0.3 times, much lower than the industry's average of 0.8 times.

#3 Borneo Oil

Borneo Oil (BO) is trading for R$0.155 ( as of 17 July 2023) near the 52-week low of R$0.150. BO primarily holds the Sugarbun fast-food franchise and is also involved in the businesses of property investment & management, and resources & sustainable energy. The food & franchise segment contributes the most to BO's revenue in 2022 at 55%, followed by property investments (25%) and resources & energy (21%). In terms of financial performance, BO's revenue has recovered to its pre-pandemic level (2019) of R$87 million in 2022. BO finally returned to cash flow positive for its operations, generating R$27 million in 2022 compared to a loss of R$27 million in 2021. Meanwhile, the share price of BO has declined by 40% since the beginning of the year but could be worth taking a look at for the following reasons:
  1. Continued Strong Growth in its Non-Core Segments It's property investment and resources & energy segments' revenue have grown by 253% and 128% respectively in 2022, providing a more diversified revenue base for investors.
  2. Strong Position in East Malaysia BO's reputation and branding are primarily focused in East Malaysia where they are on par with most international fast food chains such as McDonalds and KFC.
  3. Low Valuations BO is trading at a price-to-book valuation of 0.2 times, much lower when compared to the sector's average of 1.4 times.

#4 HubLine

HubLine (Hub) is trading for R$0.040, close to its 52-week low of R$0.035. Hub mainly provides dry bulk shipping logistics services and serves transportation routes to Cambodia, Indonesia, the Philippines, Thailand, Malaysia and Vietnam. Other than that, it also operates small-scale aviation services in Malaysia and an aviation academy. Shipping services still encompass a majority of Hub's revenue in 2022 at 63% followed by its aviation services and academy (37%). Hub's revenue grew at a strong rate during the pandemic, from R$124 million in 2019 to R$228 million in 2022. Demand for shipping was driven mostly by increased freight rates and demand for transportation services. However, Hub's profitability has declined to a 4.9% profit margin in 2022 from 12.7% in 2021. Hub's share price has been pretty much unchanged since the beginning of the year, but if you are interested in investing in it, these are the main factors that you should look at:
  1. Expanding Revenue Base The purchase of Layang-Layang Aerospace in 2018 allowed HubLine to expand its revenue base to air transport services in East Malaysia. This segment has grown by 73% in 2022 to R$84 million.
  2. Potential Recovery in Global Trade in 2024 The World Bank projects that global growth will rise to 2.4% in 2024 from 2.1% in 2023, with potential improvements for global shipping activities.
In terms of valuation, Hub is trading at a price-to-book ratio of 1.0 times compared to the sector's average of 1.4 times.

Conclusion

Opportunities are everywhere and it is up to us to find them. While stocks that are trading at their 52-week lows indicate investors' pessimism about them, there are several that have been oversold and could potentially offer attractive investment opportunities. You can use the information and facts here to help you make a more informed decision!