KUALA LUMPUR (Aug 20): CIMB Securities has raised its KLCI earnings and year-end targets slightly higher, as the index constituents have largely bucked the trend of weaker-than-expected second quarter so far.
In its latest research note, CIMB lifted KLCI’s FY2025 earnings growth forecast to 4.4% from 3.4%, as well as its year-end target to 1,567 points from 1,560, lifted by better-than-expected performance by SD Guthrie Bhd (KL:SDG) and AMMB Holdings Bhd (KL:AMBANK).
SD Guthrie outperformed on firmer palm kernel prices, while AMMB delivered stronger results on lower credit costs. Upgrades to both offset softness in Petronas Chemicals Bhd (KL:PCHEM) which turned to red on weaker plant utilisation, while CelcomDigi Bhd (KL:CDB) missed expectations due to higher operating costs and tax charges, prompting forecast downgrades.
As at June 18, the KLCI yielded beat-to-miss ratio of 1.0 , compared with compares 0.30 across CIMB's total coverage so far.
The subdued 2Q2025 saw 46% of 28 companies that reported between June 1 and Aug 18 fall short of expectations as costs and lower demand dragged, though this marked a modest improvement from 0.24 in 1Q2025.
"The weakness was broad-based,” it said, citing underperformance across the automotive, glove, technology, consumer, oil and gas, telecommunications, and banking sectors.
Key earnings headwinds included soft average selling prices (ASPs), elevated operating costs, start-up losses, and lower plant utilisation, it said.
Broadly, technology names struggled. CTOS Digital Bhd (KL:CTOS), Unisem (M) Bhd (KL:UNISEM), and VS Industry Bhd (KL:VS) all missed expectations, with VS Industry’s core net profit plunging 42% year-on-year due to weaker sales, high labour costs in Malaysia, and start-up expenses in the Philippines.
Financials also came under pressure. RCE Capital Bhd (KL:RCECAP) saw earnings contract on higher impairment provisions, LPI Capital Bhd (KL:LPI) reported a spike in claims from a one-off case, and Affin Bank Bhd (KL:AFFIN) was weighed down by softer net interest and non-interest income.
Consumer names Fraser & Neave Holdings Bhd (KL:F&N) and MyNews Holdings Bhd (KL:MYNEWS) disappointed, dragged by losses from new ventures and elevated operating expenses. Bermaz Auto Bhd (KL:BAUTO) underperformed due to softer sales volumes and lower contributions from associates.