Thursday 28 Mar 2024
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KUALA LUMPUR (Nov 16): RHB Investment Bank Bhd said on Tuesday (Nov 16) tissue paper maker NTPM Holdings Bhd, car distributor Tan Chong Motor Holdings Bhd and logistics company Tasco Bhd are potential inclusions in the Securities Commission Malaysia’s (SC) Islamic or Shariah-compliant securities list as these companies' cash-to-total assets ratio and debt-to-total assets ratio have fallen below the 33% permissible threshold criteria. 

Meanwhile, oil and gas support services provider Yinson Holdings Bhd and glove maker Rubberex Corp (M) Bhd are at risk of dropping out from the SC’s list for failing to completely meet the 33% threshold criteria for both the cash-to-total assets ratio and debt-to-total assets ratio, according to RHB analyst Alexander Chia.

"We expect the SC to publish a new Shariah-compliant securities list on Nov 26 (2021),” Chia said.

"While NTPM’s nominal debt levels exceed 33%, we understand this includes an Islamic debt component. Stripping this out brings its debt ratio to below 33% of total assets.

“[On Yinson and Rubberex,] after screening the financial metrics of the Shariah-compliant stocks under our coverage, we flag two stocks — Yinson and Rubberex — which have failed to meet the financial ratios requirement. Enquiries made with their respective managements do not indicate that there are any significant components of Shariah-compliant cash or debt to mitigate this risk [of dropping out from the SC’s list],” he said.

Chia also wrote about RHB’s view on investment strategy for 2022 as investors weigh Malaysia’s Budget 2022 proposals.

Clarity on prospects for 2023 will only become apparent in the latter part of 2022, according to him.

"In the meantime, the tone of Budget 2022 suggests that policy and regulatory risks will remain elevated for some time.

"The investment strategy in 2022 will centre around astute stock picking, nibbling value, and cyclical names on weakness, with core holdings in growth, defensive, and high-yielding stocks,” he said.

Edited ByChong Jin Hun
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