BEST SMALL-CAP COMPANY
MYEG
Businesses that leverage technology to carve out a niche for themselves are likely to be at the forefront of success. One company to have done so is My E.G. Services (MYEG).
MYEG focuses on improving the Malaysian government’s internal operations and services to consumers via the establishment of electronic platforms. The success of its online transactional services systems, for example, has spurred the company to expand its operations and undertake more government projects.
One of MYEG’s latest plans is to look at the commissioning of a multi-million ringgit deal to roll out a customs service tax monitoring (CSTM) system as early as 2014. It is targeted to link close to 100,000 sales terminals from about 20,000 restaurants and entertainment outlets throughout the country.
Additionally, it is presently working with a local bank to launch a mobile payment system called iPayEasy that is compatible with the CSTM system. The new services are expected to spur its top line growth, believe analysts.
“MYEG has a business model that is secure and they’ve got a new business projects that will propel the group to another level,” says a Kuala Lumpur-based equity research analyst. “Over time they will gain more market share because the services they provide are convenient and cost efficient.”
The company’s shares have performed spectacularly this year, rising from MYR0.79 at the beginning of January to MYR1.91 on August 3, up by more than 140%.
BEST MEDIUM-CAP COMAPANY
Gamuda
Emerging markets tend to require investment in better infrastructure, and parties that can help supply it are likely to thrive. Gamuda is one such corporate.
The infrastructure company has secured one of the largest transportation projects in Malaysia – the Mass Rapid Transit (MRT) project. The scheme is part of the nation’s Economic Transformation Programme, an initiative by the government to turn Malaysia into a high income economy by 2020.
Gamuda and 50% joint-venture partner MMC stand to benefit from the MRT plan because they were awarded the contract to design and construct the underground works of the rail project. The two received the contract because of their extensive tunneling technology and local expertise.
“They have come up with unique projects and have even appeared on Discovery Channel for their world-renown Smart Tunnel,” says a Kuala Lumpur-based equity analyst at a foreign bank. “They are in the project development of the single largest project in Malaysia – the MRT. They deserve the good fortune because of their foresight in engineering capabilities.”
Experts expect a stronger performance in the current quarter due to Gamuda’s MYR1.2 billion in unbilled sales and its ongoing work on the MRT, which could double the company’s outstanding order book of MYR3.9 billion.
CIMB is one believer in the company’s prospects. It raised its target price on shares of Gamuda from MYR5.60 to MYR5.77 on June 28.
BEST LARGE CAP COMPANY
CIMB
Last year Malayan Banking (Maybank) beat arch-rival CIMB to take Asiamoney’s best large cap company award. This year the latter is back to reclaim its title.
CIMB did so by expanding its network way ahead of schedule, both through organic growth and several acquisitions. In the case of the former it has managed to grow its business in Southeast Asia, notably in Singapore and Cambodia.
This expansion helped lift its return over equity (ROE) from a single-digit growth rate to 16%. CIMB forecasts that by 2015 half of its profits will come from outside Malaysia.
The bank’s improved earnings generation is largely being derived from its venture into new markets, coupled with synergies it reaped by integrating its recently-acquired Royal Bank of Scotland (RBS) Asian investment banking operations into its Asean (Association of Southeast Asian Nation) platform.
“CIMB has the best Asean footprint among regional banks,” says a Singapore-based equity analyst. “With more entry barriers and regulatory tightening on bank licences being granted, we believe CIMB’s existing footprint in Asean becomes a more valuable attribute. While Singapore banks claim to have regional operations, their positioning in Indonesia and Thailand is not comparable to that of CIMB.”
Because of all these factors, CIMB has managed to deliver another sterling performance. It boasted a record MYR4.35 billion in net profit for the year 2012, a 7.8% year-on-year growth.
BEST EXECUTIVE
Nazir Razak, chief executive, CIMB
Ask any analyst and investor about leading Malaysian executives and Nazir Razak’s name is bound to crop up.
The chief executive of CIMB may be the brother of Malaysia’s incumbent prime minister, but he has earned a reputation as a smart leader and crafty investment banker over 20-plus years of banking experience, while constructing the nation’s most international-minded banking organisation.
“He knows how to balance between delegating responsibilities to the management and conveying his leadership and vision of the group,” says a Kuala Lumpur-based equity research analyst.
Razak is not shy about staking his claim to regional primacy. CIMB expects its US$140 million acquisition of RBS’ Asian equity and investment banking assets early 2012 to break even by end-2013. This allows the group to expand its footprint throughout Asia, eventually building a banking empire in the region.
The RBS deal covered the cash equities businesses in Australia, China, Hong Kong, India and Taiwan, plus the sales desks in the UK and the US.
Additionally, CIMB has the most extensive branch network across Southeast Asia, possessing 1,200 branches stretching from Chiang Rai in north Thailand to Bali in Indonesia, minus the Philippines and Laos.
Clearly, Razak’s growing regional clout is winning him admirers among clients and rivals. Analysts say he is one to watch and CIMB the most likely Asian bank to become a true regional rainmaker.