PETALING JAYA: The recently concluded first quarter of calendar year 2026 (1QCY26) earnings season can likely help reinforce confidence in the outlook for Malaysian equities as investors look ahead to the rest of the year.
According to MBSB Research, the earnings performance which is generally inline with its forecasts, coupled with resilient economic growth and positive corporate earnings prospects, should continue to support market sentiment.
It added that further equity market upside this year is also likely to be underpinned by relatively inexpensive valuations.
“The market would remain largely sanguine against the backdrop of continued resilient gross domestic product growth as well as positive earnings growth in 2026.
“Moreover, further equity market upside this year shall also be supported by relatively inexpensive valuations,” it said.
The research house maintained its year-end target for the FBM KLCI at 1,800 points, based on a 2026 price-earnings ratio of 15.6 times.
It also retained its targets of 13,100 points for the FTSE Bursa Malaysia Emas Syariah Index and 18,900 points for the FTSE Bursa Malaysia Top 70 Index.
MBSB Research noted that the aggregate normalised earnings of the FBM KLCI’s 30 constituent stocks came in at RM18.9bil in the first quarter calendar year 2026, representing quarter-on-quarter growth of 2.1% and year-on-year growth of 10.5%.
The stronger performance was driven largely by improvements among industrial products and services, telecommunications and media, consumer-related companies and healthcare counters, it said.
This is offset by weaker earnings from financial services and utilities players, it noted.
Within MBSB Research’s coverage universe, 71% of companies delivered results that met expectations, while 11% exceeded forecasts and 18% fell short.
The firm made 28 upward target price revisions compared with 17 downward adjustments, alongside 12 recommendation upgrades and four downgrades.
Following the earnings review, MBSB Research raised its aggregate financial year 2026 earnings forecast for FBM KLCI constituents under coverage by 1.8% to RM71.4bil.
The revision was driven mainly by stronger outlooks for healthcare, transport and logistics, telecommunications and media, and plantation companies.
Among key outperformers during the quarter were healthcare operator IHH Healthcare Bhd
, Axiata Group Bhd and MISC Bhd, MBSB Research said.
Meanwhile, PPB Group Bhd was the sole notable underperformer among the FBM KLCI constituents under its coverage.
Moving forward, MBSB Research’s baseline scenario assumes that the Middle East ceasefire remains intact despite lingering tensions, with no major escalation that could severely disrupt global supply chains.
However, it cautioned that a more severe and prolonged disruption to global energy and trade flows could trigger inflationary pressures and tighter financial conditions, which may necessitate a review of its earnings forecasts and market targets.
“Overall, the recently concluded 1QCY26 earnings season was largely on target.
“Hence the minor positive tweak of 0.2% to aggregate FY26 forecast earnings.”
