The index of 30’s top companies on Bursa registered negative sequential growth at 6.9 per cent quarter on quarter (q-o-q) but positive y-o-y at 154.2 per cent due to low-base effect from the stricter MCO back in 2Q last year. — Bernama photo
KUCHING (September 2): The aggregate reported earnings of FBM KLCI 30 constituents tapered vis-à-vis the preceding quarter to RM18.9 billion in the second quarter of 2021 (2Q21).
The index of 30’s top companies on Bursa registered negative sequential growth at 6.9 per cent quarter on quarter (q-o-q) but positive year-on-year (y-o-y) at 154.2 per cent due to low-base effect from the stricter movement control order (MCO) back in 2Q last year.
Analysts with MIDF Amanah Investment Bank Bhd (MIDF Research) said the aggregate reported earnings figure required some adjustments in order for the sequential and on-year growth numbers to reflect a fairer picture of the benchmark’s earnings performance.
“In this regard, the aggregate normalised 2Q21 earnings of FBM KLCI 30 constituents after adjusting for non-operational items came in at RM19.8 billion,” it said in its notes.
“The aggregate normalised quarterly earnings was the highest ever for its second consecutive record quarter in 2Q21, mainly due to stellar performances notably by industrial, plantation and healthcare counters.
“After neutralising the non-operational items, the aggregate normalised growth in 2QCY21 improved both sequentially at 2.1 per cent q-o-q as well as y-o-y at 171.6 per cent y-o-y.”
MIDF Research highlighted that the adjusted sequential performance in 2Q21 remained on positive growth trajectory in spite of the imposition of MCO 3.0 beginning in June this year.
“It is also notable that the adjusted on-year performance in 2Q21 continued to rise in comparison to 70.6 per cent y-o-y growth recorded during the preceding quarter principally due to low-base effect from the stricter MCO 1.0 in 2Q20.”
As for AmInvestment Bank Bhd (AmInvestment Bank), it maintained its end-2021 FBM KLCI target of 1,695 points based on 16 times its 2021 earnings projection.
This comes as the firm was optimistic that the world at large will enter into the late stage of the pandemic in the coming months, with more countries attaining herd immunity against Covid-19.
“A synchronised global recovery is almost a foregone conclusion underpinned by the reopening of economies and international borders,” it said in its analysis.
“While the highly contagious Delta variant has brought about new waves of infections around the globe, the hospitalisation rate has been kept under control as vaccinated Covid-19 patients typically develop mild Covid-19 symptoms.
“This alleviates the risk of a collapse of the healthcare system.”
AmInvestment Bank maintained its base-case assumption that Malaysia will reach herd immunity against Covid-19 before the year is out.
The research firm also took comfort of a relatively calmer political landscape following the swearing in of the new prime minister Datuk Seri Ismail Sabri Yaakob last month.
“However, we believe it will be challenging for the new leadership to roll out long-term policyinitiatives as its priority is to significantly bring down new Covid-19 infections to enable a more lasting reopening of the economy,” it said.
“Once that is achieved, parliament is poised for a dissolution to pave the way for the 15th general election.”