This article first appeared in Capital, The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

THE 19th edition of The Edge Best Call Awards received an overwhelming number of submissions, with 135 nominations coming in for 96 stocks covered by analysts with 17 research outfits.

This is 93% of the total submissions we received for 2022 and 2023 put together. We received 73 nominations for 54 stocks covered by 15 houses last year and 73 recommendations for 53 stocks from 13 research houses in 2022.

As many as 45 calls were longlisted, with more than half making the shortlist. However, we decided to select only 10 winning calls that we thought stood out more, on the balance. We did not name more winners this year because we only saw four calls as clear winners in the first elimination round.

Hong Leong Investment Bank Research analyst Tan Kai Shuen’s coverage of OSK Holdings Bhd (KL:OSK), a winner in 2023, for example, was among the picks that made the shortlist again this year but was dropped from the final selection since the call was recognised last year.

We take the opportunity here to answer some of the questions asked about our selection criteria.

Do we prefer small caps over large caps? The short answer is no. In fact, stocks with less than RM500 million in market capitalisation face greater scrutiny.

Having said that, it is much harder for one’s calls to stand out for well-covered stocks with large market capitalisation. We also understand it is much harder for a big cap to move, say, 50 sen.

“Buy” calls on some glove stocks were among those shortlisted as gains were enviable. However, we asked ourselves whether we are comfortable with the price-earnings multiples those stocks were trading at. 

We prefer clear “buy” or “sell” calls to “hold”, especially if they are contrarian. If any company bans you from briefings for calling a “sell” based on sound analysis, please email [email protected].

For some years now, we no longer send invitations to heads of research (HoRs) seeking submissions as we may not be immediately aware of personnel changes. It is also our way of prioritising our readers as advertisements welcoming submissions are published in The Edge as well as our sister publication The CEO Morning Brief for at least three weeks before the submissions deadline. We ask for your understanding for not acknowledging receipt due to manpower and time constraints.

We appreciate the handful of research houses that choose to compile submissions in easy-to-consider formats. Thank you for your interest. We will be welcoming submissions again from November 2025.

In no particular order, here are the winners for 2024, selected based on submissions and publicly available data.

Congratulations to all winners. To the unsung stock pickers, keep up the good work! May you unearth even brighter gems and make better calls in 2025. Happy New Year!

When Ivy Ng, CIMB Investment Bank’s head of research and a leading plantations analyst, took over coverage of SD Guthrie Bhd (KL:SDG) on March 12, 2024, alongside analyst Lim Yue Jia, only three of the 17 analysts tracking the stock had a “buy” recommendation on one of the world’s largest producers of certified sustainable palm oil. It was known as Sime Darby Plantation prior to its rebranding in May 2024 that pays homage to its origin 200 years ago, by adopting the name of the founder of the trading house Guthrie & Co in Singapore in 1821.

Even though the previous analyst had maintained a “buy” call since Feb 19, 2021, we took into consideration the fact that consensus was neutral during the timing of the reinitiation as well as CIMB’s analysis of crude palm oil (CPO) prices and the plantation industry.

In a March 7 note following the 35th Palm and Lauric Oils Outlook Conference (POC), Ng highlighted the potential of better CPO prices towards the later part of the year and highlighted SD Guthrie (then known as Sime Darby Plantation) as among its key picks, with a target price of RM5.30. Investors who agreed with them that it was “time to accumulate” the stock in March, when prices were nearer to RM4 apiece, would have enjoyed a gain of more than 20% in eight months when the share price hit as high as RM5.15 in mid-November. That is a decent gain for a stock with a market capitalisation of more than RM34 billion.

Macquarie Research’s former analyst Gan Huan Wen may have started coverage on 99 Speed Mart Retail Holdings Bhd (KL:99SMART) a day later than three others on Sept 10, 2024. Yet, his 24-page initiation report was the clear front runner among the “buy” calls of the four research houses nominated for this award.

Not only did Gan start coverage with the highest target price at RM2.50 for the minimart chain, he also noted a bull case potential of the stock reaching as high as RM3.10, owing to a low free float of just 17% on the back of strong investor interest and favourable market tailwinds.

Tipping the scale in its favour was the analysis on a rerating catalyst from 99 Speed Mart’s potential inclusion into the bellwether FBM KLCI in the semi-annual review in December, just three months after the stock’s debut.

Noting the added price catalyst from the inclusion into the index, Gan wrote: “In recent years, we note that index inclusion resulted in a 5% share price increase in the 90 days leading up to the announcement of its index inclusion (presumably from investor buying ahead of inclusion) and 13% in the 90 days after its index inclusion.”

On Dec 6, the day of the announcement of its inclusion into the FBM KLCI alongside Gamuda Bhd (KL:GAMUDA) effective Dec 23, 99 Speed Mart’s share price closed as high as RM2.61, reflecting a nearly 60% gain from its Sept 9 listing share price of RM1.65.

This marks a back-to-back win for Gan, who stood out in 2023 for rightly going against the grain in calling a “sell” for Mr D.I.Y. Group (M) Bhd (KL:MRDIY) with a target price that was a third below those of consensus. He was also among the winners in 2020 when he was with Hong Leong Investment Bank Research.

It must not have been easy to call a “sell” on a consumer stalwart like Nestlé (M) Bhd (KL:NESTLE), with many household names such as Milo, Maggi and Nescafe in its product portfolio. With hindsight, we know that such a call would have been even better if made on May 20 this year — when the shares were trading at more than RM128 each.

Yet, the downgrade was bravely against consensus, with at least eight others maintaining a “hold” and two still having “buy” calls.

Investors who paid attention and took profit when Affin Hwang Investment Bank Research analyst Low Jing Yuan and Hong Leong Investment Bank (HLIB) Research analyst Syifaa’ Mahsuri Ismail cut their recommendation to “sell” from “hold”, following the release of the company’s 1H2024 earnings, would have had the opportunity to exit at a much better price than other investors who held on until Nestlé halved its quarterly dividend to 35 sen per share in 3Q2024 from 70 sen in 2Q2024.

Both analysts told clients of lower-than-expected profit margins after numbers came in at only a third of consensus expectations. In downgrading Nestlé to “sell” from “hold”, with a target price of RM110.80, when the stock price was at RM122, Affin Hwang’s Low attributed the weak earnings to higher raw material prices, with cocoa prices up 94% and coffee beans rising 55%, and noted higher marketing expenses amid subdued consumer sentiment.

HLIB’s Syifaa’ told clients that softening domestic sales, following the boost during the festive season in the previous quarter, may possibly have been due to “boycott effect” even as cost pressures hit the bottom line. In her July 25 note, she said Nestlé’s high valuations “now seem harder to justify in view of its earnings decline”.

“Additionally, we reckon the boycott sentiment, coupled with the cost pressure, will continue to put a strain on its earnings moving forward,” Syifaa wrote as she slashed her target price from RM122.50 to RM101.

In late August this year, Nestlé’s stock price closed below the RM100 mark for the first time in more than six years (since January 2018) and remained below that level at the time of writing.

Since October, two more analysts have called “sell” on Nestlé. Both HLIB’s Syifaa’ and Affin Hwang’s Low have maintained their “sell” recommendations on the company, with a target price of RM80 and RM90 respectively. 

When starting coverage on smart city solutions specialist ITMAX System Bhd (KL:ITMAX) upon its debut on the Main Market on Dec 12, 2022, Hong Leong Investment Bank Research’s Tan J Young told clients the stock was worth at least RM1.70 apiece, 59% more than its IPO price of RM1.07.

According to Bloomberg data, his was among the earliest active coverage on the stock that began its current upward trend from mid-September 2023. Investors who accumulated the stock last year and remained invested would have been in a good position to profit from the strong upward trend this year.

If measured from its recent peak of RM3.735 on Oct 10, 2024, ITMAX’s share price would have gained 110.5% from the start of the year. Much of that gain remains intact at the time of writing.

Tan now covers the stock alongside Syifaa’ Mahsuri Ismail. Since Nov 26, they have had a target price of RM4.71 for ITMAX, the highest among three houses, according to Bloomberg data at the time of writing. The target price is pegged at an FY2026 price-earnings multiple of 45 times.

“We opine that ITMAX deserves premium valuation as it has a unique direct exposure to the AI theme, especially at the application level. We believe this home-grown smart city integrated system and solutions provider is a compelling case, given its multiyear growth potential on the back of solid order and tender books,” they wrote in a Nov 26 note, adding that its unbilled order book of RM1.47 billion “will be recognised progressively up to May 2039” and that its tender book was between RM300 million and RM400 million as at 3Q2024. It remains to be seen if they will continue to be proven correct.

A special mention goes to Maybank Investment Bank’s Desmond Chng, who started coverage on ITMAX on June 20, 2023, with a “buy” call and target price of RM1.71.

Being financial journalists, we did ask ourselves whether Kenanga Investment Bank Research analyst Lim Sin Kiat’s “do not accept the bid” recommendation helped reduce the acceptance rate of the mandatory general offer (MGO) for Icon Offshore Bhd (KL:ICON) by Liannex Maritime Sdn Bhd that intended to keep the company listed.

We also took note of the fact that Lim had started coverage on Icon on March 13, 2024, with an “outperform” call and a target price of 80 sen — barely a fortnight ahead of Liannex’s buyout offer on March 27 that prompted the change to an unconventional “do not accept the bid” recommendation, without changing his target price.

Yet, there is no denying the fact that Icon shareholders who agreed with Lim’s analysis that the 63.5 sen buyout offer in March 2024 was below the company’s fair value and decided not to accept the offer would have been sitting on much higher value as the stock price surged to as high as RM1.31 on Sept 6, 2024, and continues to remain above the buyout offer price at the time of writing.

Moreover, at the time Lim started coverage on Icon with an “outperform” call, only one other research house was actively tracking the stock with a “hold” recommendation and target price of 71 sen. Another research house had a “non-rated” call, which we generally see as potentially informative but lacking actual conviction. Despite the stock price coming off its peak, Icon’s market capitalisation was still about RM630 million.

We also recognise Lim’s coverage of another relatively small-cap stock, Keyfield International Bhd (KL:KEYFIELD), which debuted on the Main Market at 90 sen apiece on April 22 this year.

While The Edge Best Call Awards usually drops recent initial public offerings (IPOs) from the running when shortlisting, we made an exception with Keyfield because of the strong share price performance post-listing. Counting from its peak of RM2.732 on Aug 16, the stock price would have increased 215% from the (dividend-adjusted) IPO price of 86.8 sen in just four months. Gains from the IPO remain substantial even though the share price has come off its high.

As at Dec 6, Lim continues to have an “outperform” recommendation on Keyfield with his target price of RM3.18 maintained since Aug 16, reflecting a decent upside potential from current levels. It remains to be seen if he will continue to be proven right.

It is worth noting that Lim is the first and only analyst actively tracking Keyfield since the IPO, which was managed by M&A Securities and Maybank Investment Bank. On Sept 20, 2024, another research house started coverage on Keyfield with a “buy” recommendation and an even higher target price of RM3.25, according to Bloomberg data.

Being among the better performing initial public offerings (IPOs) this year, we expected greater coverage of KJTS Group Bhd (KL:KJTS) since its share price had more than doubled since its debut on the ACE Market on Jan 25 this year.

Closing as high as 85 sen on Dec 23, KJTS’ share price has gained 215% from its IPO price of 27 sen (26.8 sen adjusted). When starting coverage with a “buy” on KJTS, which serves customers in Singapore, Malaysia and Thailand, CIMB Investment Bank Research’s Walter Aw told clients that the leading provider of cooling energy systems is a “key proxy to the energy efficiency theme”.

“Driven by its strong focus on energy efficiency, we project a robust three-year core net profit compound annual growth rate (CAGR) of 49.9%, with a substantial share of its earnings from its recurrent revenue stream. It is also expected to benefit from Malaysia’s National Energy Transition Roadmap (NETR) and capitalise on the rapid expansion of data centres, a thriving industry in Malaysia,” Aw wrote when ascribing a target price of 78 sen on KJTS when the stock was trading at 47.5 sen.

Since Nov 26, Aw has raised his target price to 98 sen, telling clients that “tailwinds remain intact” for the stock following the 3Q2024 earnings briefing. This was backed by a robust existing order book of RM300 million, potential new contract wins across all three business segments (cooling energy, cleaning services and facilities management) as well as higher project recognition from newly secured cooling energy management services, he said.

He is the only analyst currently covering the stock, according to Bloomberg data.

The judges’ verdict on this call was initially split, given that Maybank Investment Bank Research’s Jeremie Yap had “inherited” the “sell” recommendation on Lotte Chemical Titan Holding Bhd (KL:LCTITAN) in October 2023 from his colleague Anand Pathmakanthan. The consensus also leaned towards “sell” when Yap took over the coverage, with two other research houses having “sell” calls compared to one “buy” and one “sell” recommendation previously.

What tipped the balance was Yap’s target price of 84 sen, the only one below RM1 at that point and significantly lower than his colleague’s target price of RM1.01, according to Bloomberg data. We took the view that investors would have had a chance to exit at a better price back then.

Yap has increased his target price to 91 sen since Nov 7 this year but continues to maintain a “sell” call on the stock. In his Nov 7 note following the release of the company’s 3Q2024 earnings, he told clients to “avoid the petrochemical sector for now”. “Currently, LCTITAN is making gross losses per unit sales. In our view, LCTITAN faces a double whammy [as] we do not foresee polymer prices improving any time soon and [it continues to see] margin squeeze from sustained elevated naphtha prices.”

A notable mention goes to CGS International’s analyst Raymond Yap who, according to Bloomberg data, changed his recommendation on the stock to “reduce” with a target price of RM1.87 on July 28, 2022, and continues to maintain that call with a target price of 86 sen, the lowest among the five analysts covering the company.

UOB Kay Hian Research’s Jack Goh was not the first to discover RGB International Bhd (KL:RGB) as an interesting stock to keep an eye on. He “inherited” coverage in November 2023 from his former head of research Vincent Khoo, who had upgraded the stock to a “buy” with a target price of 35 sen on Oct 20, 2023, when the stock was trading around 26 sen.

RGB is rather small, with a market capitalisation of about RM611 million following a 51% gain year to date.

However, we chose to recognise the continued active coverage of a potentially interesting stock, with RGB being a company that manufactures, refurbishes and services casino equipment as well as amusement and electronic gaming machines. At the time of writing, Goh was the only analyst actively tracking the stock, according to Bloomberg data.

When maintaining a “buy” call on RGB with a target price of 46 sen (seven times 2024 earnings) on Jan 24 this year, Goh told clients that the stock was “a proxy to the Asean jurisdiction’s booming gaming scene and exponential growth” and that the company was “set to chart record-high earnings in 2023 to 2025 [with] key growth drivers arising from the Philippines’ mushrooming new integrated resorts, friendly legislation such as higher slot capacity quotas, and supportive remote gaming policies”.

In his Jan 24 note, Goh also told clients that RGB was trading at a steep bargain valuation of only 4.6 times FY2024 earnings and 1.2 times book value, with its RM246 million 2024 net cash being around 54% of its market capitalisation at the time. “Blue-sky target price is as high as 65 sen, based on 10 times 2024 earnings,” he added.

Investors who bought the stock back then would have enjoyed a 73% gain over five months as the stock reached 47 sen on July 1 this year. Even though the share price has since given up some of its gains, it is still up 51% year to date. Goh still has a “buy” call on RGB, with a target price of 66 sen. 

Investors who bought into Hong Leong Industries Bhd (KL:HLIND) when Kenanga Investment Bank Research analyst Wan Mustaqim Wan Ab Aziz initiated coverage on it with a “buy” recommendation on June 27, 2023, would have been handsomely rewarded, with the stock up more than 60% in 2024.

Some might disagree with this selection, given that Hong Leong Industries’ largest shareholder controls close to 75% of the stock with a market capitalisation of only RM4.5 billion after seeing strong gains in 2024.

However, just as The Edge selected the coverage of this stock as a winner in 2016, we believe the coverage of this counter deserves a spot this year as we see the company that assembles and distributes motorcycles and spare parts on top of marketing semiconductor devices and electronic components as potentially interesting.

We agree that Hong Leong Industries is a strong proxy to the booming gig economy, given the critical role of motorised two-wheelers in executing online delivery transactions and its association with the strong Yamaha motorcycle brand in Malaysia.

Wan Mustaqim expects users of motorcycles, being likely the bottom 40% or middle 40% of income earners, to be spared the impact of the impending RON95 subsidy rationalisation from the middle of 2025. He also notes the company’s RM1.9 billion net cash war chest that potentially can be deployed for earnings-accretive acquisitions.

In the meantime, it is paying decent dividends — winning the recommendation of more brownie points and a spot on our top 10 list.

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