KUALA LUMPUR: Malaysia's listed firms conclude the July-September reporting season on solid footing, coming off a low earnings base last year and in tandem with the country's impressive economic growth of 14.2 per cent during the quarter.

Companies in the consumer space enjoyed brisk demand as the pandemic tailed off and life returned to normalcy.

Oil and gas players were buoyed by increased activities. But high inflation reverberating across the economy hurt companies with weak pricing power.

Kenanga Research team led by Joshua Ng said benchmark index FBM KLCI component stocks' results during the quarter were encouraging with 17 per cent, 45 per cent and 38 per cent beating, meeting and missing its projections.

This compared to 10 per cent, 52 per cent and 38 per cent respectively in the second quarter (Q2) of 2022.

"Against the market consensus, the numbers were relatively stable with 'above', 'within' and 'below' at 13 per cent, 50 per cent and 37 per cent veruss 13 per cent, 43 per cent and 43 per cent in Q2 2022, respectively," Ng said.

Following the results, Kenanga Research lowered its 2022 FBM KLCI earnings contraction projection slightly to 9.1 per cent from 9.3 per cent, while moderating 2023 growth to 10.1 per cent from 11.4 per cent largely to reflect weaker plantation earnings.

The firm kept the main index's end-2022 target of 1,500 points to reflect the inevitable valuation deflation across asset classes against a backdrop of an aggressive monetary tightening by major policy makers globally.

MIDF Research said the aggregate reported quarterly earnings of FBM KLCI 30 constituents improved vis-à-vis preceding quarter by 2.5 per cent as well as against corresponding quarter last year by 7.0 per cent to RM15.8 billion.

Within the firm's universe, 18 per cent of stocks under coverage reported higher than expected earnings.

Of the rest, 34 per cent  posted earnings that were lower than expected versus 48 per cent which came within expectations.

MIDF Research said target price changes involved 23 upward adjustments and 41 downward adjustments.

The firm also made 10 changes to its stock recommendations with 2 upgrades and eight downgrades.

Despite the strong quarterly showing, MIDF Research tweaked lower the aggregate FY2022 and FY2023 earnings estimate and forecast of the FBM KLCI constituents under its coverage by 0.9 per cent to RM64.8 billion and by 1.8 per cent to RM67.2 billion respectively.

They were mainly due to the recent lumpy cuts to forward earnings of Malayan Banking Bhd and Petronas Chemicals Group Bhd, said MIDF Research, which maintained its FBM KLCI end-2022 target at 1,550 points.

RHB Research analyst Alexander Chia deemed four sectors (banks, oil and gas, auto and property) to have exceed expectations from five in the June quarter, while seven sectors (plantation, media, construction, gaming, healthcare, rubber gloves and basic materials) missed (from five).

The utilities, telecoms and consumer sectors had performed in line, Chia said.

"Investors are already beginning to price in expectations that the pace of monetary tightening is close to peaking."

He added that that China's zero-Covid stance was increasingly unsustainable.

Chia raised earnings estimates of the 30 major stocks by 0.5 per cent for FY2022 but lowered it by 1.1 per cent for FY2023.