KUALA LUMPUR: The banking sector was a key bright spot, while the technology sector disappointed for the second quarter of financial year 2024 (2QFY24) earnings tally which was largely robust.
CIMB Securities said four out of five banks reported better-than-expected earnings.
Out of the 73 companies that released their 2Q results up until Aug 28, 2024, CIMB Securities said 23 per cent beat expectations, while 25 per cent below and 52 per cent in line with expectations.
According to the firm, Maybank, RHB Bank, AmBank, and Public Bank exceeded expectations.
It has raised the earnings forecasts for banks across the board during the 2Q earnings season to reflect lower cost of funds projections.
"Following our recent upgrade of bank earnings across the board, there could be upside potential to our KLCI earnings forecasts," it said in a research note today.
CIMB Securities maintained the end-2024 KLCI target of 1,728 points, based on a target price-to-earnings ratio (P/E) of 16 times, which is one standard deviation above its five-year mean P/E.
"We will be reviewing our KLCI valuation model post-results season to reflect the higher bank earnings, which will likely be positive for overall earnings growth," it said.
Meanwhile, all the technology companies under the firm's coverage posted results that were below expectations.
It said that the sector was the key disappointment so far with companies such as Inari, MPI, Unisem and Vitrox posted weaker results due to lower-than-expected utilization rate and profit margins.
"The slower-than-expected earnings recovery from the technology sector, coupled with the stronger ringgit, has partially contributed to the recent correction in the technology index," it added.