MIDCAP-Hock Seng, Uchi Tech seen as contrarian stocks in Malaysia

Hock Seng Lee, Uchi Technologies and Pos Malaysia could be seen as potential bets for contrarian investors in Malaysia, a screening of Thomson Reuters StarMine data shows.

Contrarian investing focuses on stocks that are out of favour and trade lower relative to their fundamentals.

The three Malaysian stocks are trading at more than 20 percent discount to their 52-week highs. They have an Analysts Revision Model score of less than 40, implying analysts' sentiment on these stocks is weaker than about 60 percent of companies in Malaysia.

However, the companies' Earnings Quality score is more than 90, indicating strong profits and a faster growth than their peers in 2012. The companies also are debt-free and keep more than 10 percent of their sales as profits.

While contractor Hock Seng Lee and national postal company Pos Malaysia trade at a discount of more than 20 percent to their peers in terms of price to earnings ratio, technology company Uchi Tech trades at a huge discount of 60 percent.

The data is based on companies covered by at least three analysts and have an Earnings Quality score of more than 90.

For a graphic: r.reuters.com/xur85s

CONTEXT:

Analyst revision model (ARM) measures the ranking of a stock relative to its peers based on changes in analyst sentiment. This model provides a 1-100 percentile ranking of stocks and gives additional weight to analysts who have been most accurate in the past.

A high EQ score signals strong earnings sustainability over the next 12 months based on a company's past operating performance. (Reporting by Patturaja Murugaboopathy; Editing by Saumyadeb Chakrabarty)