NVDA
NVIDIA
-- 149.430 TSLA
Tesla
-- 411.050 FUBO
FuboTV
-- 5.060 PLTR
Palantir
-- 75.920 AMD
Advanced Micro Devices
-- 129.550 
Assets and regular income support bullish valuation premium of industry stocks.
(Kuala Lumpur, 3rd news) Following a strong performance in 2024, research by UOB Kay Hian predicts that industrial stocks with a solid asset base and recurring income are expected to attract investors' interest with excellent profit quality, further driving up valuation premiums.
In today's report, UOB Kay Hian Research pointed out that over the past five years, many developers have gradually diversified their businesses to enhance stable sources of income in response to the industry market's downturn over the past decade.
In particular, analysts are bullish on developers with strong asset bases, good capital management, and clear liquidity strategies.
"Given that these companies have better profitability quality and higher stability in the future, their valuations should be further reassessed."
Analysts point out that companies with continuously growing recurring revenue businesses and investment asset portfolios with potential cash-out opportunities should receive investor attention.
The report even uses Double V as a benchmark. $SUNWAY (5211.MY)$ In the 2023 fiscal year, Double V Industry's investments and contributions from the medical care sector accounted for nearly 50% of profits. The potential listing of the medical care sector has further boosted the stock price, reaching a valuation of 35 times earnings.
"We believe that compared to cyclical industrial development businesses, the value of underlying assets is a key factor supporting valuations."
Therefore, analysts recommend investors to pay attention to companies with similar development trajectories, such as Senami Industry, $SIMEPROP (5288.MY)$ Mars Group $MAHSING (8583.MY)$ and Gold Harvest Group. $MATRIX (5236.MY)$ 。
Some participants have been able to monetize their existing basement and assets that generate income through development.
Looking back, the industrial sector has seen a strong rebound in the past 18 months, mainly reflected in the significant appreciation of large developers. In 2024, the average total return on investment of the top 20 market cap developers reached 57%, while companies ranked 21 to 40 were at 16%.
The valuation of large industrial stocks may remain high in the future, while some small high-quality developers are expected to catch up.
Analysts emphasize that small developers with strong sales capabilities, healthy balance sheets, strategically located basements, and involvement in niche markets may catch up with the valuation of large peers this year.
The industrial sector provides impetus.
Some aggressive developers have also started industrial development projects. We believe that stable sales and profit performance will be key drivers of stock price appreciation.
Analysts expect that the booming industrial sector will continue to drive the strong performance of the CSI 300 High Beta sector.
"Southeast Asia remains the best location for global trade, the trade shift caused by Trump's administration is expected to boost Foreign Direct Investment (FDI), which will benefit industrial developers."
In addition to land transactions and industrial development, this will also provide strategic opportunities for developers to accumulate industrial assets in the mid-term.
In summary, analysts maintain a 'Shareholding' rating for the industry, with top stock picks including Sime Darby Industrial, Masteel and UEM Sunrise. $UEMS (5148.MY)$ 。
Source: Nanyang Siang Pau
Disclaimer: This content is for reference and education purposes only and does not constitute any specific investment, investment strategy, or endorsement. Readers should bear any risks and responsibilities arising from reliance on this content. Before making any investment decisions, it is essential to conduct independent investigations and assessments and consult professionals when necessary. The author and relevant participants are not responsible for any losses or damages arising from the use of or reliance on the information contained in this article.
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