Tuesday, 3 May 2016

Poor earnings growth for Bursa listed companies (3)

Article in The Star: "Bleak corporate earnings ahead".

An interesting sentence based on a note by UOBKayHian Research:

"Corporate earnings growth, which has derailed from gross domestic product (GDP) growth over the past three years, is just making a meek mid-single-digit growth recovery in 2016 ....."

The first part, corporate earnings have derailed from GDP growth over the past three years: exactly, that is what I have written about before.

The big question is: Why? I have no answer to that, except to note that I trust the audited annual numbers of the Top 30 companies listed on Bursa much more than the official GDP numbers.

Another issue is, which research house actually predicted three years of earnings decline for the Top 30 companies? My guess: not one.

The second part of the above sentence, "a meek mid-single-digit growth recovery in 2016".

That is a quite remarkable forecast, despite the current difficult environment, UOBKayHian expects a positive growth in earnings.

I don't agree with that, the numbers I have seen so far (mostly based on one quarter of earnings) are again a few percent lower than the 2015 numbers, which would imply a fourth straight year of declining earnings.

And finally: "It is no surprise that the FBM KLCI companies are viewed as the bellwether of economic growth".

Well, those are exactly the companies I have measured in my postings, and they have not been the bellwethers in the last three years at all, more in the contrary.

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