KUALA LUMPUR (Dec 3): Corporate earnings in the third quarter ended Sept 30 (3Q20) are perceived to be a critical barometer of the domestic economy, among other indicators.

A random check, according to Bloomberg data, among 100 largest public-listed companies (PLCs) by market capitalisation (cap) on Bursa Malaysia revealed that more than half — 53 companies — have achieved higher profits than a year ago despite the harsh economic conditions brought by the Covid-19 pandemic. Meanwhile, 40 companies managed to remain in the black albeit showing lower profits.

There are 21 companies out of the 53 that achieved more than 50% y-o-y jump in their net profits [see chart], of which 11 of them saw triple-digit growth in earnings. Besides the big four glove makers — Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Bhd — the star performers are Mega First Corp Bhd, whose quarterly net profit jumped 512% y-o-y, Yinson Holdings Bhd (144%) and Bursa Malaysia Bhd (+159% y-o-y).

The plantation companies fared well in 3Q20 too, thanks to the rebound on crude palm oil prices. Genting Plantations Bhd’s quarterly profit leaped 241.8% y-o-y, Sarawak Oil Palms Bhd (138.8%), IOI Corp Bhd (86.5%) and United Plantations Bhd (58.3%). Meanwhile, both Sime Darby Plantation Bhd and FGV Holdings Bhd have turned profitable.  

Another sector that was deemed the darling of investors comprise the semiconductor-related firms. This sector too has seen significant improvements in both q-o-q and y-o-y earnings performance.

Eight out of the 10 semiconductor-related companies among the top 100 firms saw double-digit growth in earnings. VS Industry Bhd returned to the black this quarter while SKP Resources Bhd saw 339.15% q-o-q growth in 3Q20. Inari Amertron Bhd (+97.53% q-o-q), Unisem (M) Bhd (+49.47% q-o-q) and Greatech Technology Bhd (+31.73% q-o-q) all saw more than 30% q-o-q growth in net profit.

On a yearly basis, Unisem managed to report a profitable quarter compared to a loss-making 3Q19. Interestingly, half of these 10 companies saw more than 50% y-o-y growth. Vitrox Corp Bhd grew 114.45% y-o-y, followed by UWC Bhd (+85.11% y-o-y), Greatech (+79.7% y-o-y), SKP Resources (+76.9% y-o-y) and Malaysian Pacific Industries Bhd (+50.32% y-o-y).

Only seven companies were loss-making in 3Q20. The seven companies are in sectors that were worst hit by the pandemic, namely AirAsia Group Bhd, Genting Malaysia Bhd, Malaysia Airports Holdings Bhd and Genting Bhd as well as three companies that are property and construction-related — Sime Darby Property Bhd, S P Setia Bhd and Gamuda Bhd.

While these seven counters have all seen poorer performance on a year-on-year basis, three companies — AirAsia, Genting and Genting Malaysia — reported narrower net losses against their respective immediate preceding quarter (2Q20).

Among the top 100 companies, 73 companies saw their 3Q20 earnings rebound from 2Q20 which was hit badly by the Movement Control Order.

On the flip side, there are 26 companies that reported poorer earnings performance compared with the immediate preceding quarter.

In terms of q-o-q performance, IJM Corp Bhd led the pack with 7,730% q-o-q growth in net profit to RM99.52 million, from RM1.27 million. This was followed by Petronas Dagangan Bhd (+5,959% q-o-q), Sunway Construction Bhd (+996% q-o-q), UOA Development Bhd (+801% q-o-q) and FGV Holdings Bhd (+566% q-o-q).

The big four glove makers have also reported more than double earnings growth on a quarterly basis — Top Glove Corp Bhd (+238.5% q-o-q), Kossan Rubber Industries Bhd (+166.1% q-o-q), Hartalega Holdings Bhd (+148.02% q-o-q) and Supermax Corp Bhd (+97.6% q-o-q).

While asset quality has been a concern to the banks given the strong economic headwinds, nonetheless half of the banks have achieved better sequential performance. Some see this as a saving grace that the country’s banking system is resilient, a critical factor that is needed for the domestic economy to bounce back.

Malayan Banking Bhd (Maybank) was the only lender that saw its net profit double or up 107.32% q-o-q in net profit for 3Q20. The banking group also declared an interim dividend of 13.5 sen per share during the quarter.

Other than Maybank, BIMB was the only other bank that declared a dividend of 12.6 sen per share in the quarter.

However, on a y-o-y basis, it is down 2.32% — still considered a commendable achievement.

RHB Bank Bhd (+55.3% q-o-q), Public Bank Bhd (+39.03% q-o-q) and Hong Leong Bank Bhd (+28.01% q-o-q) achieved solid double-digit growth for 3Q20 as most of them made large loan loss provisions in the preceding quarter in preparation to withstand the headwinds.

Among others, AMMB Holdings Bhd saw the biggest drop by 35.01% q-o-q in 3Q20, followed by CIMB Group Holdings Bhd (-29.82% q-o-q), Affin Bank Bhd (-27.72% q-o-q), BIMB Holdings Bhd (-11.25% q-o-q) and Alliance Bank Malaysia Bhd (-0.35% q-o-q).