Core profits across sectors in Malaysia surged by 20.4% year-on-year (YoY) in the second quarter of 2024, contributing to a 20.6% growth in the first half of the year.
According to Maybank Investment Bank (Maybank), this marks the fifth consecutive quarter of YoY growth, with notable contributions from the banking, utilities, plantation, gaming, property, oil and gas, and aviation sectors.
The report, which analysed earnings within the research universe, revealed that over 50% of companies met expectations. However, the earnings misses-to-beats ratio rose to 1.4x, indicating an uptick in surprises compared to previous quarters. While 54% of the reported earnings were in line with forecasts, 27% fell short, and 19% exceeded expectations.
Noteworthy outperformers, according to Maybank included Leong Hup, Bumi Armada, Sarawak Oil Palms, AirAsia X, and Tenaga, while notable disappointments came from Sime Darby, Nestle, Press Metal, SP Setia, and SAM Engineering.
Despite the challenges, the growth estimates for 2024 remain intact at 14.5% for core earnings within the universe, with a slight revision of 0.4% for 2025. The Kuala Lumpur Composite Index (KLCI) is projected to grow by 12.1% in 2024, down from previous estimates, due to revised earnings projections for 2023.
In response to the strong performance, Maybank said that analysts have raised the year-end KLCI target from 1,680 to 1,720, reflecting the ongoing optimism for domestic growth amid external uncertainties.
A preliminary target of 1,840 has also been introduced for 2025. Key upcoming events, such as the 2025 Budget announcement on 18 October and the signing of the JS-SEZ in November, are anticipated to shape market dynamics.
Sector weights remain unchanged, with a focus on outperforming sectors such as banking, construction, consumer goods, gaming, oil and gas, renewable energy, technology (including EMS and software), and aviation.
The refreshed top buy list features YTL Power, Westports, IJM, KPJ, ITMAX, and CMS, while top picks in banking include AMMB and CIMB. In real estate, SD Guthrie and YTL Power are highlighted, while IJM and CMS lead in construction.
