Weak second-quarter earnings reported by Bursa Malaysia-listed companies are not surprising, according to analysts, as the three-month period coincided with disruptions to the economy attributed to the Covid-19 pandemic and the containment measures.
PIVB Research listed sectors most vulnerable to “economic standstills” such as banks, property, real estate investment trusts, airlines and gaming as the standouts. PIVB Research elaborated that the market appears to be still underpinned by expectations at this juncture, such as a V-shaped recovery in earnings and in economic growth.
“For stocks, we retain our preference for smaller-capitalised names with strong growth stories, near-term challenges notwithstanding, namely Johore Tin, Magni-Tech Industries, Mega First, Sarawak Plantations, Serba Dinamik, SKP Resources, Chin Hin Group and D&O Green Technologies,” it said. The research house revealed that its key takeaways for the results season were the improving earnings revision ratio attributed to higher overachievers in the quarter, the 56% year-on-year decline in corporate earnings due to the movement control order, and interim dividends were mostly below expectation for banks.