Sunway potential FBM KLCI constituent stock

KUALA LUMPUR: Sunway Bhd is seen to be a potential new entrant on the list of constituents of the FBM KLCI after rising to the 24th spot in terms of market capitalisation, possibly replacing AMMB Holdings Bhd, says MIDF Research.

The research firm said in its FBM KLCI Semi-Annual Review report that Sunway had seen a meteoric rise in its share price since Nov 20, 2023, the cutoff date of the previous semi-annual review of the FBM KLCI.

Sunway’s stock was trading at RM1.99 then, placing it in the 38th spot in terms of market capitalisation.

Since then, its share price has risen 76.9% to RM3.52 as of April 30, 2024, bumping it up to the 24th spot.

“While there is much that could happen until then, should it maintain its position or even drop to 25th, we believe that an inclusion in the barometer index is more-or-less guaranteed as it (complies) with both the free float and liquidity requirements,” said MIDF Research.

As of April 30, AMMB Holdings commanded a market capitalisation of RM13.89bil, ranking it 33rd. Ahead of it is MR DIY Group (M) Bhd in the 31st spot at RM14.74bil.

YTL Power International Bhd and YTL Corp Bhd were ranked 23rd and 24th, respectively, on Nov 20, 2023, leading to their inclusion during the December 2023 review.

Both counters have performed well to date, further cementing their positions in the FBM KLCI, placing them at the 10th and 13th spots respectively, the research house said.

MIDF Research said the reserve list of the FBM KLCI, which comprises the top five non-constituents, is expected to see a slight change, with the removal of Inari Amertron Bhd and the inclusion of AMMB Holdings.

It also estimated that all the top 40 shares met the free-float requirement of more than 15%.

“With the expected deletion of AMMB Holdings from the FBM KLCI, we estimate that the anchor sector Financial Services may see a weightage reduction from 41.30% currently to 39.61% after the review.

“The most significant change will come from the Industrial Products and Services sector, with a bump in weightage from 6.57% to 7.87% with Sunway’s inclusion,” said the research house.

Moving forward, MIDF Research has maintained its FBM KLCI target for 2024 at 1,665 points, or a price-earnings ratio of 14.6 times.

The research house believes it is still a waiting game for the US Federal Reserve to deliver an interest rate cut.

“Nevertheless, we are sanguine on Malaysia’s economic prospects, and we maintain our expectation of the earnings growth potential of corporate Malaysia which will be anchored by a recovery in external trade, upside in the construction sector and the improving outlook of the property sector,” it added. — BK