Bursa Malaysia

RHB Research has named its 12 regional environmental, social and corporate governance (ESG) stock picks for 2023, four of which are listed on Bursa ...

RHB analyst Lee Meng Horng forecast Samaiden to achieve an ROE of 19.9% for FY2023, and 20.7% for FY2024, versus 17.7% in FY2022, driven by higher net margins stemming from a decline in photovoltaic module cost, as well as the group’s earnings growth. At the noon break, shares in Samaiden were unchanged at 86.5 sen, giving the group a market capitalisation of RM331.07 million. “Press Metal’s PT Bintan Phase 2 is currently 84% completed. RHB analyst Jeffrey Tan projects TIME dotCom to post an ROE of 13.5% for FY2022, and 16% for FY2023, from 12% in FY2021, supported by stronger earnings growth from continued expansion of its fibre footprint, higher utilisation of data centres, and increased cloud offerings demand. RHB said solar engineering, procurement, construction and commissioning contractor Samaiden is equipped with an ESG score of 3.2, as it ensures compliance with environmental laws and regulations, has built a conducive work environment, and adopted the majority of best practices of the Malaysian Code on Corporate Governance. Shares in SunCon were unchanged at RM1.65 at Tuesday’s noon break, giving the company a market capitalisation of RM2.13 billion. The RHB analyst has pegged SunCon to have a net debt of 0.3 times in FY2023, noting that following SunCon’s completion of its integrated precast hub in Pulau Punggol in late 2022, the research house does not expect the company to fork out any major capital expenditure over the next few years. According to RHB, internet service provider TIME dotCom has an ESG score of three, backed by its key role in advancing the government’s affordable and quality broadband connectivity aspirations, with 50% of its board members being independent, and its fibre optic cables requiring little maintenance with little emission risks, though this is offset by its data centre business’ energy consumption. RHB said construction outfit SunCon holds an ESG score of 3.2, underpinned by the RM8.8 million worth of rooftop solar panels lining the roofs of its plants to reduce carbon emissions, coupled with a lower injury rate due to safety and health initiatives, and 62.5% of its board being independent members. The research firm forecast a commendable ROE of 36.6% for the financial year ending Dec 31, 2023 (FY2023), and 29.9% for FY2024, compared with 33.6% in FY2022, as it expects the company’s earnings growth to remain intact, backed by growing demand for aluminium. According to RHB, aluminium refiner Press Metal has an ESG score of 3.44, given that its carbon footprint ranks among the best in the global aluminium industry, with zero recorded workplace injuries and fatalities for two consecutive years, and a good level of transparency afforded by its reporting framework. RHB noted that the stock picks selected by its analysts are based on the following criteria: a return-on-equity (ROE) of 15% or above, 2023 net debt or shareholder funds of less than 0.7 times, a higher year-on-year margin in 2023 versus 2022, trading below respective industry average multiples, and having an ESG score above their country medians.