KUALA LUMPUR (March 2): MIDF Amanah Investment Bank Bhd has maintained its projected end-2021 baseline target for the FBM KLCI at 1,700 points.
The upward revision in the aggregate forward earnings of FBM KLCI constituents (under its coverage) is almost entirely contributed by the healthcare sector, while the plantation sector is seen to provide marginal extra boost, it said in a note today.
"However, four sectors, namely consumer products and services, financial, telco and media, as well as utilities are expected to show lower earnings growth, while the forward expectations for the remaining three sectors — energy, industrial, as well as transport and logistics — are unchanged.
"With the rather mixed overall verdict, we maintain our FBM KLCI end-2021 baseline target at 1,700 points," MIDF said.
The research firm said the aggregate reported earnings of the FBM KLCI 30 constituents rebounded further to RM15.25 billion in the fourth quarter of calendar year 2020 (4QCY20).
It registered positive growth both sequentially at 14.5% quarter-on-quarter (q-o-q) and 21.4% year-on-year (y-o-y).
"On adjusted basis, the aggregate normalised earnings of FBM KLCI 30 constituents in 4QCY20 grew sequentially at 13.5% q-o-q and 21.6% y-o-y to RM15.38 billion — the highest since 2QCY17 — mainly due to stellar performances by healthcare (glove) counters which collectively posted 822.3% y-o-y earnings growth," it said.
As for stocks under MIDF's coverage, the percentage of companies (only 37% already announced their results) that registered earnings below the research house's expectations dropped to 21% in 4QCY20 compared with 23% in the prior quarter.
Conversely, the percentage of positive surprises increased to 37% in 4QCY20 from 22% in the prior quarter, it added.