Sunday, 23 February 2020

THEY SAY GOT GOVERNMENT STIMULUS? HERE ARE THE STOCKS TO WATCH !

"Saya kena sabar..." Source

We have not been able to find a coronavirus cure for people yet. But for disrupted economies? The cure - seemingly - is to spend, spend, and spend some more.

On 27 February 2020, the Government is expected to announce a fiscal stimulus package. It's the same thing that a happy marriage requires: stable fiscals and some stimulus from time to time. 

There are estimates that put this package at at RM8 billion on the low end, and RM15 billion on the high side. You should know what this whole thing is about : combating disruptions caused by the coronavirus outbreak. 

Hotels have slashed prices after 95,000 bookings canceled. People are in danger of losing jobs. Nobody's flying. Former and future Prime Ministers are evidently in distress. The solution is at hand. 

Our package may not be as well endowed as those of Singapore's or China's, but let's hope the market thinks it's big enough. 

Because if it does... ! Some stocks stand a chance of rallying. And as observers of stocks, we have a list of those that are most likely to benefit from this stimulus.  

Similar to out Budget 2020 Watchlist, we'll use our patented three-star grading system again.

* - "Can watch lah if bored"
** - "Can get the heart rate up abit only"
*** - "Uncle says you need to watch this"

AIRASIA***
AAX **
AIRPORT***
BRAHIMS**
AEON*
BJFOOD**
BONIA*
GENM***
GENTING**
OWG**
PARLO**
GETS*
KTB*
WARISAN*


This plan is intended to help businesses that are directly affected by the outbreak, especially the retail, tourism, and aviation sectors, says our MITI Deputy Minister. 

Our current assumptions:

1) No direct aid for manufacturers (at least in the first round), as the impact of the coronavirus on the supply chain (for anyone that has China exposure) has yet to be quantified. We do foresee this to be a problem, but the impact will be assessed later.

2) The focus of this rescue plan is on the services industry, hence we are not highlighting any construction or infrastructure plays. You know them already; you don't need us to tell you to loom at EKOVEST and the gang. There will be newsflow on mega projects and such, but that's a different story.

3) We think Bank Negara will cut rates in March due to current exceptional circumstances. This has ramifications on all sorts of things, but we won't mention the affected names here, so as not to muddle the main angle.


More details on the stocks mentioned below.



AVIATION

AIRASIA, AAX - Main (or only) aviation proxies on Bursa Malaysia. There is clear intent to get people to fly again. Domestic routes, deep discounts, special packages... there are many ways to encourage it. Some concrete tourism initiatives (backed by Government funding, most importantly) will help achieve this.

AIRPORT - The first, possibly biggest, direct beneficiary of any stimulus measures related to the tourism industry. It's Visit Malaysia 2020 and you gotta get visitors to come somehow.

BRAHIMS - Airline catering business. Cheap entry price for the stock, which has seen some up-and-down turbulence lately.




RETAIL

AEON - Direct mall proxy, to benefit from recovery in consumption sentiment, possibly through a stimulus measure or two.

BJFOOD - Direct F&B proxy, with concentration of key brands and franchises in tourist heavy locations. Tourists flock to Starbucks for safety; it's just human nature.

BONIA - Direct retail proxy. It's been hit hard by the virus already; any measures to encourage tourists to visit Malaysia would reinvigorate sales.



LEISURE  & HOSPITALITY

GENM & GENTING - Suffering from cancellation of all tour bookings from China this month, as well as Singapore's entry ban for Chinese visitors and foreigners with recent travel history to China.
GENM and GENTING could really do with some major moves to get visitor inflows from other countries.
 
OWG - Proxy for Genting (F&B operations) and Penang tourism (The TOP in Komtar).

PARLO - Tour and tourist services company. It's in penny stock territory, hence any positive tourism policy announcements may be enough to move the needle for these guys.
 


TRANSPORTATION

GETS & KTB - Bus companies as public transportation proxy. They are not very profitable, but they do attract multitudes of budget conscious travellers.

WARISAN - Under the radar and often ignored car rental and holiday tours company.

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