KUALA LUMPUR: The banking and oil and gas (O&G) firms are a key bright spot, while the technology and healthcare sectors are generally a disappointment in the latest quarterly reporting season.
Analysts said overall, listed companies' earnings for the second quarter (Q2) of financial year 2024 had been largely robust.
CIMB Securities said four out of five banks under its coverage had reported better-than-expected earnings.
Out of the 73 companies that released their Q2 results up until Aug 28, CIMB Securities said 23 per cent had beaten expectations, while 25 per cent below and 52 per cent in line with expectations.
RHB Bank Bhd, AmBank Group, Public Bank Bhd and Malayan Banking Bhd had exceeded expectations, it added.
CIMB Group Holdings Bhd, the country's second largest bank, only released its results on Friday.
CIMB Securities raised the earnings forecasts for banks across the board during the Q2 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 FBM KLCI earnings forecasts," it said today.
CIMB Securities maintained the end-2024 FBM 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 FBM 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 the sector was the key disappointment so far with companies such as Inari Amertron Bhd, Malaysian Pacific Industries Bhd, Unisem (M) Bhd and Vitrox Corp Bhd posted weaker results due to lower-than-expected utilisation 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," CIMB Securities said.
MIDF Research head of research Imran Yassin Md Yusof said the Q2 earnings for the companies under its coverage had shown a positive surprise, especially those in the O&G sector.
Healthcare and technology sectors were dissapointing, he added.
"Positive surprise came from upstream O&G sector, with three out four results above expectations which are Bumi Armada Bhd, Deleum Bhd and Malaysia Marine and Heavy Engineering Bhd, stemming from improved prospects."
Imran added that healthcare was mainly affected due to the glove sector which continues to face strong competition.
As for technology sector, he said the recovery of the outsourced semiconductor assembly and test players had been slower than expected.