KUALA LUMPUR (Dec 5): CIMB IB Research said Malaysian corporate earnings revision ratio remained weak in 3Q at 0.29x.
In a note Dec 4, the research house said this led it to downgrade its KLCI earnings growth forecasts to 4% for 2018F (vs. 5% previously) and 4% for 2019F (vs. 8% previously).
“We fine-tune our end-2018 KLCI target to 1,704 (from 1,684) and introduce our 2019 KLCI target of 1,674 points (based on 15.4x P/E).
“3Q18 market earnings for stocks under our coverage fell 5.9% year-on-year (2Q18: +5% y-o-y) due to lower earnings from the agribusiness, aviation and telco sectors,” it said.
The research house said corporate earnings for 9M18 fell 2% as profit margins were impacted by lower commodity prices, provisions, weaker profit margins, and delays in contracts for some companies.
“We maintain our top three picks. Corporate earnings delivery remains one of the key concerns for the Malaysian market,” it said.