Underachievers continue to trump overachievers in 3Q17, says CIMB Research

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KUALA LUMPUR (Dec 5): CIMB IB Research said among the 128 companies that it actively covers, 16% reported results that were above expectations in 3Q17 versus 9% in 2Q17.

In a strategy note Dec 4, the research house said the number of companies with results that were below expectations rose from 35% in 2Q17 to 37% in 3Q17.

It said the earnings revision ratio improved from 0.26x in 2Q17 to 0.43x in 3Q17, the highest ratio since 4Q16.

“However, earnings growth momentum slowed in 3Q17 to 1.1% vs. 2.2% in 2Q17.

“This is slower than the country’s 3Q17 GDP growth of 6.2% due to weaker sales growth and profit margin experienced by some of the corporates,” it said.

CIMB Research projects EPS growth of 6.5% for 2017F and 5.7% for 2018F.

“We maintain our end-2017 KLCI target at 1,790 and end-2018 at 1,920. Our revised top three picks are Axiata Group Bhd, Dialog Group Bhd (replacing Gamuda Bhd), and Tenaga Nasional Bhd,” it said.