KUALA LUMPUR (May 5): RHB Banking Group managing director and chief executive officer Datuk Khairussaleh Ramli said today many companies including small market capitalisation (small-cap) ones have managed to be ahead of the curve despite the Covid-19 pandemic-driven economic backdrop by being in the right sectors and nimbler than larger companies.

Khairussaleh said these factors allow small-cap firms "to be more adaptable in managing the increasingly fluid and at times volatile business environment, [hence] returning positive value to investors”.

He was speaking today at the virtual launch of the “RHB Small Cap Top 20 Jewels, 2021 Edition”, which features new small-cap stock ideas for investors to consider.

RHB Banking Group quoted Khairussaleh as saying in a statement in conjunction with the launch that the past year has seen volatile equity markets following the impact of the Covid-19 pandemic.

The technology, industrial products and services sectors continue to dominate the market, thanks to the inelastic underlying demand and strong investor interest amid the prevailing low interest rate environment, according to him.

"Overall, the [Bursa Malaysia] small cap index has been encouraging — generating returns of 10.7% year-to-date as compared to the 9.9% in 2020, and we see this buoyant trend continuing,” he said.

At the virtual launch, RHB Banking Group via RHB Investment Bank unveiled the group’s small cap top 20 jewels including Aemulus Holdings Bhd, KESM Industries Bhd, KKB Engineering Bhd, Spritzer Bhd, Star Media Group Bhd and Uzma Bhd.

In the statement, RHB Banking Group said the 20 companies have a market capitalisation limit of less than US$1 billion (about RM4.12 billion) and that they cover seven different industry segments. 

"Selection of these jewels take into consideration factors including the companies’ liquidity spread and size, managements’ track record, industry fundamentals, earnings growth potential, the long-term sustainability of the industry and their commitment to environmental, social, and governance (ESG) principles.

"All 20 companies featured in this year’s book are outside RHB Research’s existing coverage portfolio, as it seeks to uncover even more under-researched gems. The median trailing P/E (price-to-earnings ratio) and ROE (return on equity) of these 2021 jewels were 21.9 times and 4.8% with an average market capitalisation of RM437 million. 

"The biggest sector representation includes industrial products and services, and consumer,” RHB Banking Group said.