This article first appeared in The Edge Financial Daily on March 12, 2020

KUALA LUMPUR: The uncertainty sweeping the equity market from the Covid-19 outbreak to plunging energy prices caused by geopolitical tensions to the country’s political crisis has led several big companies to shed billions from their market capitalisations, reducing these market darlings to penny stocks.

A list of Bursa Malaysia-listed companies that are trading below 20 sen per share, generated using Bloomberg data and sorted by market capitalisation (cap), shows that the top 10 counters are mostly notable companies, with oil and gas (O&G) players Sapura Energy Bhd and Velesto Energy Bhd topping the list.

On Monday, O&G counters posted one of their worst weeks following the collapse of talks between Saudi Arabia and Russia as the latter disagreed to further production cuts to stabilise prices following the upcoming lapse of the current supply agreement at the end of this month.

Crude oil prices dropped to historical lows, dragging down several notable Malaysian O&G companies, especially those with upstream exposure.

Year to date (YTD), Sapura Energy’s share price has dropped 57% to close at 11.5 sen yesterday, bringing a market cap of RM1.84 billion. It has lost RM2.5 billion in value in that time.

YTD, shares in Velesto have fallen 51% to settle at 18.5 sen yesterday while Bumi Armada Bhd’s share price has dropped 66% to end the day at 18 sen. Velesto and Bumi Armada have lost RM6.32 billion and RM2.06 billion of their values respectively YTD.

Besides O&G counters, other notable companies in the top 10 of the list of stocks below 20 sen per share were logistics player GD Express Carrier Bhd (down 30% at 19 sen YTD), property developer Berjaya Land Bhd (down 18% at 15.5 sen YTD), as well as low-cost carrier AirAsia X Bhd (down 48% at eight sen YTD).

Meanwhile, UEM Sunrise Bhd was the largest cap stock among counters priced at between 20 sen and 50 sen. The property developer’s shares traded at a 52-week high of RM1.02 in April last year, but its share price has since been on a downward trend amid the ongoing soft property market.

Analysts are still positive on UEM Sunrise, according to data compiled by Bloomberg. Of the 13 analysts covering the counter, six have “buy” calls, with target prices (TPs) ranging from 62 sen to 92 sen, while seven recommend “hold”. There are no “sell” calls on the stock.

PublicInvest Research, which has an “outperform” call on UEM Sunrise with a TP of 90 sen, said while property earnings will remain muted in the near term, the company could continue to unlock land value by either land sales or via joint ventures, given its low holding costs.

Several companies under tycoon Tan Sri Vincent Tan’s Berjaya Group are also listed among companies priced between 20 sen and 50 sen, namely Berjaya Corp Bhd (BCorp) and Berjaya Assets Bhd (BAssets), which are trading at 23 sen and 30 sen respectively.

Tan has taken the opportunity to mop up more shares in BCorp, raising his direct interest in the group from 1.38 billion shares at the start of the year to 1.19 billion shares as at March 9, representing a 23.04% stake.

He has also been accumulating shares in BAssets, raising his direct stake to 840.2 million shares or 32.84% as at March 10, from 839.7 million shares or 32.82% at the start of the year.

Other notable companies on the list include TA Global Bhd (down 1.96% at 25 sen YTD), Boustead Plantations Bhd (down 43.1% at 43.5 sen YTD), Hibiscus Petroleum Bhd (down 53.7% at 43.5 sen YTD), Eastern & Oriental Bhd (down 24.8% at 47 sen YTD) and LBS Bina Group Bhd (down 13.1% at 43 sen YTD).

Meanwhile, big companies that are currently trading between 50 sen and RM1 include YTL Corp Bhd and YTL Power International Bhd. YTL Corp shares have declined from its 52-week high of RM1.25 to close at 82 sen yesterday, down 16.3% YTD, while YTL Power has fallen 16.2% since the start of the year to close at 64.5 sen.

Other companies include IOI Properties Group Bhd (down 20.6% at 98.5 sen YTD), Malaysia Building Society Bhd (down 12% at 73 sen YTD), Malaysian Resources Corp Bhd (down 25.3% at 54.5 sen YTD) and AirAsia Group Bhd (down 42.9% at 97 sen YTD).