KUALA LUMPUR (Sept 5): Hong Leong Investment Bank (HLIB) Research said during the second quarter of 2022 (2Q22) results season, 52% came in within house expectations, with 26% below and 22% above, while 49% were within consensus estimates, with 21% below and 30% above.

In a strategy note on Monday (Sept 5), the research house said that sequentially the ratio of percentage results above/below was unchanged at 0.87 times.

It said positive results surprises came from those related to discretionary spending — auto, brewers and consumer discretionary — while disappointments stemmed from construction, transport and to a lesser extent, gloves, property and REITs (office).

“Aggregate core earnings for our coverage universe declined -11% YoY (year-on-year) — while most reported earnings recovery, this was more than offset by the cliff dive in glove earnings and Sapura Energy Bhd.

“We now project CY22/23 (calendar year 2022/2023) KLCI core earnings growth of -7.5%/+7.7%.

“With the earnings adjustments, our KLCI target is revised down to 1,560 (from 1,610) based on an unchanged 15.6 times PE (-1SD to 5-year mean) tagged to mid-CY23 EPS (earnings per share).

“We maintain most of our top picks — Tenaga Nasional Bhd, Kuala Lumpur Kepong Bhd, RHB Bank Bhd, Sunway Bhd, Dagang NeXchange Bhd, Bumi Armada Bhd, Kobay Bhd, Evergreen Fibrepoint Bhd and Focus Point Bhd. However, we drop Press Metal Aluminium Holdings Bhd, Dialog Group Bhd (both experienced results shortfall) and Affin Bank Bhd (share price +12.9% since we included in our top picks in July). These are replaced with Malaysia Airports Holdings Bhd, BIMB Holdings Bhd and Dayang Enterprise Bhd,” it said.