4Q17 reporting uneventful so far, says AmBank Research

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KUALA LUMPUR (Feb 26): AmBank Group Research said that at about midway through the 4Q17 reporting season (40% of its stock universe having reported), corporate earnings have thus far been relatively uneventful, with 15%, 66% and 19% beating, meeting and missing house projections respectively.

In a strategy note today, AmBank group head of research and chief economist Anthony Dass said this compares with 18%, 51% and 31% for "above", "within" and "below" respectively in 3Q17.

He said against the market consensus, the numbers have thus far been equally unremarkable with "above", "within" and "below" at 15%, 45% and 40% respectively, as compared with 14%, 43% and 43% in 3Q17.

"Thus far, only one FBM KLCI Index-linked heavyweight has surprised to the upside, namely Axiata Group Bhd thanks to higher revenues and margins from its Sri Lankan operations.

"We have raised Axiata's FY18-19F earnings by 6-10% to reflect this. In the meantime, while Petronas Chemicals Group Bhd and MISC Bhd met our forecasts, we have moderated earnings projections to reflect a higher effective tax rate for the former, and lower tanker rates for the latter," said Dass.

Moving forward, Dass said that after factoring in the earnings changes thus far, his FBM KLCI earnings growth forecast for 2017F has been revised to 4.2% (from 3.8%), while 2018F has been adjusted to 7% (from 8.2%).

"The lower 2018F FBM KLCI earnings growth is partially due to a higher base in FY17F.

"Meanwhile, in terms of earnings growth forecasts of 'all sectors' — a broader but slightly more volatile earnings gauge encompassing the entire universe of our stock coverage — the numbers for 2017F and 2018F have been adjusted to 1.7% and 11.9%, from 2.2% and 17.6% previously," he said.