By ALIFAH ZAINUDDIN
A Majority of the almost 1,000 listed firms on the local bourse reported better profits and earnings year-on-year for the first three months of 2017, while companies which had wallowed in losses had significantly reduced their deficits.
A random check on 20 firms that announced their first-quarter of 2017 (1Q17) results showed 18 companies posted higher profits, while the ones that incurred losses had narrowed their figures with higher earnings.
Companies in banking, finance, plantation, manufacturing, construction, infrastructure, services and property delivered improved results, but a majority of the oil and gas (O&G) firms continued to bleed.
The performers benefitted from the country’s stronger exports, improved commodity prices and ongoing rationalisation exercises. Lenders made less provision for bad debts. Palm oil planters reaped a higher average crude palm oil price of RM3,100 for 1Q17, compared to RM2,250 during the previous corresponding quarter.
Electronics and manufacturing sectors enjoyed higher exports, while construction business rose on the award of various infrastructure projects by the government.
The Kuala Lumpur Composite Index — which tracked the performance of Bursa Malaysia — advanced from 1,626 points 12 months ago to a 52-week high of 1,787.54 points. The index closed yesterday at 1,763.11 points.
The tech sector was the biggest gainer, with a 54% upsurge year-to-date. The Bursa Malaysia Financial Index rose 15.62% this year, while other indexes like the property index is up 12.59%, plantation 7.5% and construction 18.94%, according to data from the Financial Times.
“It was a strong performance in the 1Q after 2016. We can say that the markets came back with a vengeance and investors were somewhat impatient as they have stayed away from the market for a long time.
“That attracted droves of investors into the stock market,” said Inter-Pacific Research Sdn Bhd head of research Pong Teng Siew.
He said the low base in the corresponding quarter in 2016 helped 1Q17 to see major improvements across all sectors.
The O&G sector was fairly flat despite global oil prices trading at a higher average of US$55 (RM235.24) per barrel over the first three months this year, compared to US$35 per barrel during the same quarter last year.
Pong, however, said the 1Q results “did not live up to expectations”.
“We are seeing a pullback, especially in the small-and mid-cap indexes and this is attributed to disappointments in corporate exercises and earnings. The expectations were ahead of profits,” he said.
“I think investors are slowly coming to grips with the real situation, which is not as rosy as it seems.
“Some companies did show jumps in profit, but if you look at quarter-on-quarter results, it turned out to be lower,” Pong said, adding that expectations ran wild in the 1Q with stock prices doubling and tripling over the period.
“What we’re seeing in the last couple of days is as if the emperor is found to have no clothes on, so there is a bit of disappointment especially with the small-cap, mid-cap and ACE Market.
“The 1Q results are not sustainable. They have gone a little bit overboard, expectations were running wild and disappointments are now settling in.
“Moving forward, investors should have more realistic expectations brought back to ground levels,” he said.