Strategy � KLCI (NEUTRAL, maintain)
- 2Q15: 18th quarter of earnings downgrade
While corporate earnings jumped by 2.3% yoy and
8.9% qoq, corporate earnings forecasts were downgraded, for the 18th
consecutive quarter. Our 2015E market earnings growth which started off at a
promising 8.8% now stands at 2.4% and is approaching the 2014 growth figure
of 0.6%. Amidst disappointing corporate earnings, market sentiment on the
KLCI remains poor. Without any imminent re-rating catalyst, sharp capital
outflows in the near term may push the KLCI below our 2015 year-end target of
1,600 (based on 14.7x 2016E earnings). Maintain Neutral.
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