PETALING JAYA: Most companies have fallen short of expectations in their earnings reports for the second quarter (2Q25) reporting season thus far, says CIMB Research.
But despite this, there was still a slight improvement compared with 1Q25.
The research house noted that out of the 28 companies under its coverage that reported results between Jun 1 and Aug 18, only 14% beat expectations while 46% fell short.
This implies a beat-to-miss ratio of 0.30 compared with 0.24 in 1Q25.
“Weakness was broad-based, with underperformers in the automotive, gloves, technology, consumer, oil and gas, telco and banking sectors, mainly due to soft average selling prices, higher costs, start-up losses, and lower plant utilisation,” the research house said.
Among FBM KLCI constituents, eight of the 30 constituents or 26% have reported results, with 25% (SD Guthrie Bhd
and AMMB Holdings Bhd) beating expectations and 25% (Petronas Chemicals Group Bhd and CelcomDigi Bhd) underperformed.
Compared with the broader market under its coverage, this resulted in a better beat-to-miss ratio of one versus 0.3, CIMB Research noted.
The research house also noted its earnings revisions have had minimal impact thus far on its FBM KLCI earnings forecasts.
“Overall, the 2Q25 results season to date has been disappointing, with a high proportion of underperformers. The earnings misses were largely driven by weaker-than-expected revenue resulting from soft prices, higher operating costs, start-up losses from new ventures, and lower plant utilisation due to operational disruptions,” it said.
“However, earnings-forecast downgrades for PETRONAS Chemicals and CelcomDigi were more than offset by upgrades for SD Guthrie and AMMB. On balance, our preliminary estimates point to higher KLCI earnings growth of 4.4% (up from 3.4%) this year and a seven-point lift in our target to 1,567 points,” it added.
In the broader market for the technology and electronics manufacturing services (EMS) sector, CIMB Research said that, of the four companies under its coverage that have reported, three – CTOS Digital Bhd, Unisem (M) Bhd and VS Industry Bhd have reported results that were below expectations.
For the oil and gas sector, PETRONAS Chemicals posted a set of 2Q results which came in below both its and consensus expectations, with the key variance stemming from weaker-than-expected plant utilisation.
Meanwhile, weakness was seen in the automotive, consumer and rubber gloves sectors for stocks under its coverage, the research house said.
