Malaysia corporate earnings turnaround seen but 'don’t pop the champagne corks yet'

Corporate earnings appear to be bottoming out

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KUALA LUMPUR (March 4): Malaysian corporate earnings showed signs of improvement in the fourth quarter of 2016 (4Q2016) as more Bursa Malaysia-listed companies reported better numbers compared to a year earlier, The Edge Malaysia business and investment weekly (Edge Weekly) reported. 

Citing The Edge's research data, Edge Weekly, in its latest March 6 - 12 issue reported that of the 808 companies, which announced their financials for the quarter ended November and December 2016, 440 companies reported stronger earnings versus 368, which did not. 

"A steady rise in the cost of living, a weak ringgit and a gloomy economic outlook have forced Malaysians to cut back on their spending and keep their money for a rainy day.

"However, the latest corporate reporting season has offered some hope of better days ahead. Still, don’t pop the champagne corks yet," Edge Weekly said.

Quoting Areca Capital Sdn Bhd CEO Danny Wong Teck Meng, Edge Weekly reported that the perceived corporate earnings turnaround might not lead to an immediate sentiment change.

“It was bad in the past three years. We were in a bearish and cautious mood, so the turnaround in mood may not be felt immediately.

“(But) I’m optimistic about the outlook for corporate earnings because the cost structure has become leaner. So, margins will improve even if revenue remains stagnant. There is also the low base effect,” Wong told Edge Weekly.

For a better understanding on Malaysian corporate financials, kindly pick up and read the latest Edge Weekly issue.