CIMB IB Research cuts end-2018 KLCI target to 1,767

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KUALA LUMPUR (June 4): CIMB IB Research has cut its end-2018 KLCI target to 1,767 (based on 15.4x P/E) from 1,820 points previously and said 2018 is off to a weak start as corporate earnings revision ratio deteriorates to 0.31x in 1Q18 after two consecutive quarters of gains (4Q17: 0.68x and 3Q17: 0.43x).

In a strategy note today, the research house said earnings growth momentum slowed to 3% year-on-year in 1Q18 from 11% in 4Q17.

“This led us to downgrade our KLCI earnings by 3% for FY18F, resulting in slower KLCI earnings growth of 5% for FY18F (vs. 8% previously) and 8% for FY19.

“In line with this, we cut our end-2018 KLCI target to 1,767 (based on 15.4x P/E).

“Genting Bhd joins Dialog Group Bhd and Westports Holdings Bhd as our top three picks for Malaysia,” it said.