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PETALING JAYA: The recently launched MY Value Up programme by Bursa Malaysia and the Securities Commission (SC) has received positive reactions from industry players.
One of the key objectives of the programme is to foster a more dynamic corporate landscape through a shared commitment between Bursa and the SC – with a focus on the growth stories of public-listed companies and their medium- to long-term strategies.
The regulator’s decision follows the success of Japan and South Korea, which have also embarked on stock market reforms.
According to Kenanga Research, local stocks are ripe for improvement, given the relatively large number of companies trading below book value or holding excess cash.
It opined that if the programme is executed effectively, the goal of enhancing Malaysia’s presence in the MSCI Malaysia Index could be within reach.
“SC sees that there is possibility to gain 0.3 to 0.4 percentage points on the MSCI share, from a current base of a meagre 1.2% representation in the MSCI index.
“This would be significant given that in total US$21 trillion in assets under management are benchmarked against MSCI Equities Indices,” Kenanga Research said.
It added that companies with a better understanding of what drives shareholder value can be more proactive in seizing opportunities to create value.
“In a nutshell, we think MY Value Up will usher a move away from a pure earnings and revenue focus towards profitability in capital, as we have seen in the South Korea and Japan examples,” it said.
At the moment, the programme adopts a voluntary approach, although mandatory adoption is being considered by 2028.
“We concur with this approach as a mandatory roll-out may create another box-ticking exercise. It is crucial to have the right blend of incentives for voluntary adoption,” the research house said.
Among the companies that Kenanga believes could benefit from the initiative are S P Setia Bhd, IJM Corp Bhd, Genting Malaysia Bhd and Yinson Holdings Bhd.
MBSB Research opined that many local companies are fundamentally sound, but market recognition often lags behind.
This is because investors increasingly expect not only strong financial performance, but also clearer strategies, stronger governance, disciplined capital allocation and credible execution.
“We understand that a key rationale for the programme is the persistent valuation gap faced by many Malaysian public-listed groups. A significant number of listed companies continue to trade at discounts relative to regional and global peers despite reasonable profitability and healthy balance sheets in many cases,” it noted.
MBSB Research said the programme is, overall, more of a strategic playbook.
“We expect a signalling effect before a fundamentals effect.
“However, we expect this to be more at a later period when public-listed groups start disclosing their Value Up programmes.”
Its top picks include YTL Power International Bhd, Ranhill Utilities Bhd and Tenaga Nasional Bhd.
Disclaimer
The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile. The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, Bond and Sukuk Information Platform Sdn Bhd (“the Company”) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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