Without new additions, FBM KLCI constituents' earnings down 3.3pct in 2023?

KUALA LUMPUR: Earnings per share (EPS) of Bursa Malaysia's top 30 companies is estimated to have grown 0.6 per cent year-on-year (YoY) in 2023 after the inclusion of YTL Corporation Bhd and YTL Power International Bhd as component stocks. 

Affin Hwang Capital said if there were no changes in component stocks, FBM  KLCI's EPS would have contracted 3.3 per cent YoY in 2023. 

There were more positive earnings surprises in the fourth quarter of 2023 (Q4 2023) results which led to earnings upgrades, the firm said.

"For our universe of stocks (103 stocks under coverage), there were more positive surprises in Q4 2023 results than disappointments (34 per cent versus 20 per cent). 

"For the FBM KLCI component companies under our coverage, more showed positive surprises than those that disappointed in Q4 2023. 

"Notable positive surprises among the component companies were Axiata Group Bhd, CelcomDigi Bhd, Genting Malaysia Bhd, Hong Leong Bank Bhd, MISC group, Nestle Malaysia, PPB Group Bhd, QL Resources Bhd, Sime Darby Bhd and YTL Power," it said in a note. 

Market earnings before interest, taxes, depreciation and amortisation (ebitda) was up five per cent YoY while core net profit rose 1.8 per cent YoY, registering positive growth in Q4 2023 after four consecutive quarters of yearly decline, mainly driven by revenue growth as profit margins remain stable. 

"However, this was insufficient to reverse the decline in 2023 market core net profit with aggregate contraction of 7.1 per cent YoY, mainly dragged by consumer,  oil and gas, plantation, telco and utilities.

"The market core earnings contraction was higher than our 5.1 per cent forecast. 

"We are bullish on market earnings outlook with 13.7 per cent YoY growth in 2024 for our universe of stocks," it said. 

Of the companies under its coverage, Affin Hwang said 32 per cent of the total saw earnings upgrades, while 47 per cent were unchanged and 21 per cent saw earnings cuts. 

It maintained an "Overweight" call on the Malaysian market with an unchanged target of 1,600. 

It also upgraded the target price for Gamuda Holdings Bhd to RM5.80 from RM5.22 previously and keep stock as a top market Buy. 

The firm had "Overweight" calls for construction, healthcare and property sectors.

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