KUALA LUMPUR (Sept 08): BIMB Securities Sdn Bhd has lowered its end-2014 FBM KLCI target to 1,900 points from 1,930 previously, following an unexpected lacklustre performance delivered by corporate Malaysia during the latest financial results season, for the quarter ended June 30, 2014 (2Q14).

The research firm has also tweaked its FBM KLCI earnings growth estimates for 2014 lower to reflect the dismal quarterly results, to a 3.9% growth for 2014 from 6.7% previously, and 10% for 2015 from 8.5% before.

In a report today, BIMB Securities head of research Kenny Yee said 2Q14 was another uninspiring results season from corporate Malaysia, as 42% of stocks under the research firm’s coverage came in below expectations.

“We had earlier expected at least a flattish quarter, but the actual figures were worse than anticipated. Though there were a high number of results that came within for the FBM KLCI, there were earnings warning galore for the constituents of FBM KLCI,” he said.

“Though the plantation sector is expected to post a low quarter attributed to the weak crude palm oil price, it was the oil and gas (O&G) sector that took us by surprise, with most coming in below our estimates.

“Higher start-up costs and margin squeeze were deemed as the main factors for the underperformance by the O&G players,” he added.

Yee noted that constituents of the FBM KLCI did not fare any better, thus prompting more downgrade to their estimates.

As a result, it was an across the board downgrade for the FBM KLCI with the consumer, telecommunications and gaming sectors experiencing hefty earnings cut.

“All said, corporate earnings had been consistently cut further, substantiating our belief that the market is running ahead of its fundamentals and reality does bite,” said Yee.