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

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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KLCI Target Reaffirmed