PETALING JAYA: After an overall in-line third quarter (3Q25) results season, Malaysia’s corporate earnings are expected to improve quarter-on-quarter (q-o-q) in 4Q25, with analysts projecting steady earnings growth.
Looking further ahead, analysts remain constructive going into 2026, supported by steady corporate guidance, a firmer macro outlook and selective sector tailwinds.
MBSB Research noted that the FBM KLCI’s aggregate 3Q25 earnings of RM17.4bil was up 0.7% q-o-q, but down 7.4% year-on-year (y-o-y) due to last year’s high base.
Within its coverage, 19% of stocks beat expectations, 22% missed and 59% came in line.
Although the performance was largely in line with expectations, the research house trimmed its 2025 aggregate earnings estimate by 0.2% to RM66.9bil but raised its 2026 projection by 1.2% to RM70.8bil.
When asked if the slight 2025 cut signals a softer 4Q25, MBSB Research head of research Imran Yusof said “potentially.”
“Q-o-q, we are expecting growth, but y-o-y will be down because last year was an exceptional year for earnings,” he told StarBiz.
“But when you take it on the aggregate level, it was only a minor downgrade (for 2025). It’s not that much. Still, it’s within our expectations.”
On the financial year ending Dec 31, 2026 (FY26), Imran explained that the upgrade is supported by corporate guidance and macro assumptions.
“One driver is company guidance.
“On the macro side, if there’s no downside to our gross domestic product expectation – currently expected to be around 4.3% next year – earnings should come in as expected.
“Certain sectors like transport, real estate investment trusts (REITs) and consumers are likely to benefit from Visit Malaysia Year 2026. Construction earnings remain supported by ongoing data centre and infrastructure projects,” he said.
“As long as these expectations continue, we expect growth to be there for next year.”
In view of this, MBSB Research remains sanguine on the local equity market, underpinned by a positive macro outlook and inexpensive price-to-earnings (PE) valuation.
The research house maintained its 2025 FBM KLCI target at 1,650 points, based on a 2025 PE of 15.3 times.
Meanwhile, Hong Leong Investment Bank (HLIB) Research said the 3Q25 results season was another resilient corporate reporting cycle.
Of the 112 stocks under its coverage, 24% beat estimates, 47% came in line, and 29% missed.
HLIB Research noted that recent market softness could present a buying opportunity.
“The FBM KLCI continues to lag regional peers (like Indonesia and Singapore) by two to five percentage points over the past two months, amid muted foreign interest, with RM3.9bil outflow during the period and RM19.9bil outflow year-to-date, leaving shareholding at a low of 19%,” it said.
“Yet, valuation signals remain compelling across multiple fronts.”
The research house expects the anticipated US Federal Reserve easing cycle to narrow the US Federal Funds Rate and Malaysia’s overnight policy rate (OPR) spread, supporting the potential resurgence of foreign inflows and ringgit strength.
Post 3Q25 results, HLIB Research now projects the FBM KLCI’s 2025 and 2026 core earnings growth at 2.6% and 7.6%, respectively.
“For 2025, profit expansion comes primarily from plantation and oil and gas, while for 2026, it will be buoyed by banks, chemicals and telcos,” it said.
HLIB Research has maintained its 2025 KLCI target at 1,660 points, based on a 14.6 times PE.
RHB Research described the 3Q25 results as “relatively decent”, with corporate earnings broadly in line.
“Markets navigated past the corporate earnings for the quarter ended September without any major concerns emerging and we consider the results to be broadly in line,” it said.
“Forward guidance was generally optimistic and supportive of our constructive base case view for equities in 2026.”
The research house noted that banks cited improved clarity on tariffs driving a pick-up in loan applications, alongside a strong deal pipeline, few warning signals on asset quality and capital management opportunities.
“Consumer confidence remained stable, helped by fiscal initiatives, the OPR cut and stronger ringgit,” it added.
Looking ahead, RHB Research said it remains “constructive” on the equity market for 2026, underpinned by a resilient global and domestic macroeconomic outlook, improved clarity on tariffs, easing US-China trade tensions, and the anticipated commencement of US rate cuts.
“Malaysia’s commitment to reforms, growth initiatives that support steady consumption patterns and stable domestic politics (also provide a positive backdrop),” it said.
RHB Research added that domestic liquidity remains strong, offering solid downside support.
It noted that key risks include a weaker-than-expected US economy and a correction in artificial intelligence-driven US financial markets, which could affect investor sentiment.
“We recommend investors remain nimble, focusing on laggards and seeking opportunities to accumulate favoured stocks on weakness,” it said, adding that it remains overweight on banks, energy, consumer, healthcare, property, basic materials, construction, REITs and technology.
Meanwhile, TA Research noted the 3Q25 reporting season offered a “welcome reprieve”.
For the FBM KLCI component stocks, the research firm forecasts earnings growth of 3.3% in 2025 and 6.3% in 2026, outperforming Bloomberg consensus estimates of 1% and 7.3%, respectively.
“Key drivers for 2026 are expected to be banking, property, gaming and power and utilities,” it said.
TA Research has maintained its end-2025 FBM KLCI target at 1,660 points, based on a 2026 PE multiple of 14.5 times.
“We see scope for valuation multiple expansion following a potential easing in US interest rates next week and improved risk appetite after this results season – the first to deliver earnings upgrades after three consecutive quarters of downgrades,” it said.
