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Our alternative bunch. The 6 stocks listed below are all buy calls and our FVs are based on a 12-month
outlook. They are:
AirAsia (BUY, FV: RM4.34) – Asia‟s largest Low Cost Carrier will benefit from falling jet fuel prices in
line with oil prices. Although overall air travel should suffer in a recession, the drop in corporate and
personal incomes will likely see more business and leisure travelers downtrade from full service to low
cost carriers. We believe AirAsia‟s lowest operating cost advantage will see it increasing its market
share.
KPJ Healthcare (BUY, FV: RM5.37) – Malaysia‟s largest private hospital chain will continue to see
good business in the healthcare industry despite a possible global downturn. While some may argue for
a downtrade from private to public healthcare, the disparity between the two in Malaysia is quite large
and there will more likely be downtrading among patients seeking private healthcare in Singapore to
patients seeking healthcare locally.
Media Chinese (BUY, FV: RM1.70) – Malaysia‟s largest Chinese newspaper publisher should continue
to see sustained demand for its Chinese newspapers, which in any case are cheaper reading materials
than magazines. The fall in commodity prices should also bring down the price of newsprint, which is the
major cost item.
QL Resources (BUY, FV: RM3.81) – Malaysia‟s second largest producer of chicken eggs and South
East Asia‟s largest producer of fish paste (surimi) would likely see demand for its products rise as
consumers downtrade to cheaper food products during an economic downturn. While its expansion
plans in Indonesia and Vietnam may slow down, domestic profits would be enough to sustain the
company.
SEG International (BUY, FV: RM2.23) – Malaysia‟s largest private education provider with 23,000
students will likely benefit from a possible recession and stronger US Dollar as overseas education
becomes less affordable, thus making its domestic courses more attractive.
Supermax (BUY, FV: RM5.90) – The world‟s second largest rubber glove producer has been suffering
from high latex prices, which in turn has been somewhat driven by oil prices. With latex as its biggest
cost item, the fall in oil price in the event of a recession will allow margins to rebound as demand for
healthcare related rubber gloves remains resilient.
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