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Malaysia 1Q25 Results: Softer Earnings Amid High Base, KLCI Target Reaffirmed at 1,680

Rakuten Trade Revises Margin Financing Rates Downward to Support Active Investors, Broad market sentiment

Malaysia’s 1Q25 corporate earnings softened, with 61% of 92 stocks meeting expectations, 28% falling short, and 11% exceeding. Key sectors like Auto and Petrochemicals underperformed, while core earnings dipped 4.3% qoq, says CGSI.

1Q25 Results Roundup

Of 92 stocks under coverage, 61% met our expectations, 28% fell below, and 11% exceeded. Compared to Bloomberg consensus, 47% were in line, 41% below, and 12% above. Disparities arose in Construction, Financials, Oil & Gas, and Tech, with consensus seeing more misses.

Sequentially Softer Against Expectations
Positive surprises dropped sharply from 22% in 4Q24 to 11% in 1Q25, while negative surprises held steady at 28%. The positive-to-negative surprise ratio fell from 0.74x to 0.38x, mirroring a milder decline in Bloomberg consensus (0.52x to 0.3x).

Key Misses

Auto, Gloves, Petrochemicals (posting losses), and Telco underperformed our estimates. Tech saw 75% miss Bloomberg consensus but only 38% against our revised forecasts. No sectors outperformed expectations.

Modest Decline in Core Earnings

Core earnings for our coverage universe fell 4.3% qoq and 5.9% yoy, driven by a high base (10% 2-year CAGR post-pandemic) and Petrochemical losses. Excluding Petrochemicals, declines were milder at 2.6% qoq and 3% yoy. KLCI earnings dipped 1.7% qoq but were flat yoy.

Strong High Conviction List Performance

Our 14-stock High Conviction list grew core earnings 11.2% qoq and 14.4% yoy. Three stocks (Hong Leong Bank, Malayan Cement, SD Guthrie) beat expectations, 11 met, and none disappointed.

Reaffirm KLCI Target at 1,680 Points

“We project KLCI earnings growth of 5.3% (2025F) and 7.2% (2026F), down from 9.0%/7.3%. Our end-2025 KLCI target of 1,680 points implies a 15.1x P/E, 0.5 s.d. below the 5-year mean. We expect a 2H25 market upside from narrowing US-Malaysia rate differentials and easing trade tensions. Low foreign shareholding (19.2%) limits downside risks.”

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