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Published: Tuesday December 4, 2012 MYT 9:00:00 AM
KUALA LUMPUR: CIMB Equities Research described the November corporate results season as another big letdown, making it the 10th straight results season that disappointed.
"Not only did the revision ratio deteriorate to below 0.5 times, FY12/13 earnings per share (EPS) also suffered considerable cuts. This brings down 2012/13 EPS growth to single-digits.
"We maintain our Neutral call but lower the end-2013 KLCI target from 1,730 to 1,670 based on an unchanged price-to-earnings target of 13.3 times," it said.
CIMB Research said that general election risks remain the key overhang. Its preference remains for defensive high-yielding stocks, including those from the brewery, REIT and utilities sectors.
The research house said the November results season was uglier than expected as the earnings revision ratio deteriorated from 0.52 times in August to only 0.48 times. Only 12% of the stocks in its coverage universe beat expectations, slightly lower than 13% during the August season.
It said a similar 25% came in below expectations, while 63% met expectations (previous 62%). The Q3 results were worrying in that both the revision ratio and EPS forecasts have again headed lower. Underachievers outnumbered overachievers for the 10th straight quarter.
"A dozen sectors disappointed (11 previously), while three (two previously) beat expectations. The big caps which saw EPS cuts this time around included PChem, Sime, Maxis, MSM, MISC and Axiata," it said.
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