This article first appeared in Capital, The Edge Malaysia Weekly on December 8, 2025 - December 14, 2025

MALAYSIA’s third-quarter corporate results delivered a steady and resilient showing, with most companies meeting expectations and large-cap names anchoring the performance.

BIMB Securities’ coverage universe posted core net profit of RM9.45 billion in 3QCY2025 compared with RM9.7 billion over the same period last year. Earnings improved 6.7% quarter on quarter (q-o-q), signalling a recovery momentum into the fourth quarter amid better clarity over US reciprocal tariffs.

“In terms of outcomes versus house forecasts, 64% were in line with expectations, 20% beat and 16% missed — a beat-to-miss ratio of 1.23 times. Those numbers point to a broadly constructive season where misses were outweighed by in-line and better-than-expected results,” BIMB Securities Sdn Bhd director of Research Redza Rahman tells The Edge.

“Key trends that stood out during the quarter in review included domestic demand and front-loading, which drove sequential improvement, while headwinds from macro policy and foreign exchange (forex) saw a stronger ringgit and the higher sales and service tax (SST) introduced on July 1 lifted effective tax rates and clipped headline earnings, especially for export-intensive sectors.

“Meanwhile, we also saw balance-sheet strength and cash generation, in which free cash flow jumped to RM6.6 billion, with a free cash flow over trailing 12-month revenue ratio of 4.6%, and net gearing remaining conservative at 41.4%. All this is evidence that corporates are generating cash and de-risking.” 

While many domestic-oriented names held up, he adds, export-sensitive or margin-stretched pockets in the market, such as some healthcare, automotive and rubber gloves, lagged.

“The industrial, property, REITs (real estate investment trusts) and logistics sectors remained relatively stable,” he observes.

In terms of banks, AMMB Holdings Bhd (KL:AMBANK) and Malayan Banking Bhd (KL:MAYBANK) beat expectations, owing to lower-than-expected net provisions and impairments as well as resilient fund-based income generation, says CIMB Securities.

In a Nov 27 note, CIMB Securities says that, of the top 30 KLCI constituents, 19, or 63%, had reported so far, with 32% (six companies) beating its expectations and 16% (three companies) falling short.

This yielded a beat-to-miss ratio of 2.0, significantly stronger than the 1.0 ratio for the research house’s broader coverage universe, indicating that large-cap names were delivering more resilient and better-than-expected results.

The bigger q-o-q earnings expansion was driven mainly by SD Guthrie Bhd (KL:SDG), IHH Healthcare Bhd (KL:IHH), Fraser & Neave Holdings Bhd (KL:F&N), Sunway Bhd (KL:SUNWAY) and Telekom Malaysia Bhd (KL:TM) (see table).

CIMB Securities notes that SD Guthrie and KL Kepong exceeded expectations on better-than-expected plantation contributions, owing to higher average selling prices of its palm products.

Meanwhile, Petronas Chemicals, faced weaker olefins and derivatives segment margins and joint-venture losses, while CelcomDigi and IHH Healthcare saw higher-than-expected costs. All three companies reported weaker-than-expected earnings.

“Sectors showing a higher ratio of beats include banking and plantation, while the auto, healthcare, rubber glove and technology sectors registered a higher proportion of misses,” CIMB Securitities notes.

BIMB Securities is maintaining its year-end FBM KLCI target at 1,614 points. It says the 3Q earnings season did not warrant a revision because corporate results were broadly resilient, and that expectations for the fourth quarter remain cautiously constructive, anchored by domestic momentum from data-centre construction, industrial-park development and spillover demand. It indicates a slight upside for the FBM KLCI 2026 target based on higher earnings revision for CY2026.

Similarly, Kenanga Research is keeping its 1,640-point year-end target for the FBM KLCI, given that the majority of sectors has inched up higher over the past three months.

UOB Kay Hian, which is also maintaining its year-end FBM KLCI target at 1,640 points, notes that year-end window dressing may lift its target, as the index has historically delivered attractive returns during the last two weeks of December.

“We expect 2026 to be a good year for Malaysian equities, fuelled primarily by pre-general election domestic liquidity, the ringgit’s appreciation, corporate earnings growth recovery and externally, cooling tensions over global trade and geopolitics amid a dovish US monetary policy,” says UOB Kay Hian in a Dec 2 strategy note, adding that its market assessment does not depend on its expectations for sustained foreign equity inflows.

So far this year, the FBM KLCI is down 21.26 points, or 1.3%, as it closed at 1,621.07 points last Thursday.

BIMB’s Redza observes that the oil and gas sector swung into a major positive, with players’ core profit rising sharply to contribute 8.8% of universe earnings this quarter after a large year-on-year (y-o-y) jump. “This was one of the most pronounced sector moves,” he observes.

Kenanga Research noted, however, that Petronas Chemicals Group Bhd’s (KL:PCHEM) results were a dampener on account of its sustained significant losses from Pengerang Petrochemical Complex and higher joint-venture losses (with BASF).

“Outside of that, delivery of results was generally benign after earnings had been recalibrated earlier — oil and gas names generally delivered a respectable quarter. The extent of decline for daily charter rates of OSVs (offshore supply vessels), which have declined 10% to 15% from levels in 2024, will are also likely to be protected by lack of supply,” the research house said.

For the property segment, the outperformance stemmed from players such as Sime Darby Property Bhd (KL:SIMEPROP) (“outperform”; target price: RM1.97), which returned better margins from a higher industrial mix, as well as players such as Sunway Construction Group Bhd (KL:SUNCON) and Kimlun Corp Bhd (KL:KIMLUN). Kenanga Research has an “outperform” call and target prices of RM6.50 and RM1.51 on the respective counters.

Food and beverage players in the consumer segment grew 37.5% y-o-y, reflecting firmer domestic consumption dynamics and margin resilience in selected names. The improvement in tourist arrivals was helpful.

In the consumer sector, numerous consumer staples recorded y-o-y topline growth, supported by government cash aid and new product launches. Beneficiaries were 99 Speed Mart Retail Holdings Bhd (KL:99SMART), Nestlé (Malaysia) Bhd (KL:NESTLE) and Farm Fresh Bhd (KL:FFB). Meanwhile, F&N underperformed because of softer export demand amid geopolitical tensions between Thailand and Cambodia.

“We observe that businesses have generally been able to meet earnings expectations with broadening margins y-o-y, despite cost pressures such as SST expansion. Among those that missed results on revenue and margin were Power Root Bhd (KL:PWROOT); AEON Co (M) Bhd (KL:AEON) missed on margins,” notes CIMB Securities, which has “outperform” calls on both counters with target prices of RM1.12 and RM1.40 respectively.

Analysts are watching for recovering prices of polysilicon, the main raw material used to produce solar wafers and panels, as well as the impending expiry of the value-added tax rebate of 13% in China, which has been subsidising exports by keeping Chinese solar panels cheaper globally.

“This is mitigated by a potentially more moderate solar panel installation outlook in China, after the policy-induced rush to implement installation in China in mid-2025,” says Kenanga Research, whose solar pick is Solarvest Holdings Bhd (KL:SLVEST) (“outperform”; target price: RM3.45).

Kenanga Research has also been “overweight” on technology in areas “more leveraged to the front end”, such as engineering services providers Kelington Group Bhd (KL:KGB) and UWC Bhd (KL:UWC), on which the research house has an “outperform” call and target prices of RM6.15 and RM3.82, respectively.

The research house has the same call on Malaysian Pacific Industries Bhd (KL:MPI), with a target price of RM31.70, saying the outsourced semiconductor packaging and testing services provider enjoyed a favourable product mix and improved margin, unlike others.

“The technology sector still contributed the bulk of the misses. The key issue seems to be lower-than-expected revenue, which dulled operating leverage,” notes Kenanga Research.

“[We] expect selective upside in domestic-oriented construction, industrial and plantation names. They are best positioned [to benefit] from infrastructure and data centre projects as well as strong earnings from planters after the European Union officially acknowledged the Malaysian Sustainable Palm Oil (MSPO) certification [in September] as a credible and inclusive sustainability standard,” says BIMB’s Redza, cautioning that pockets of weakness for rubber gloves due to overcapacity and competition from China may persist.

Redza notes that telcos, especially Telekom Malaysia, may see a mid-term benefit from higher wholesale data revenues as new data centres start operating.

He adds that forecasts for FY2025/26 have been tweaked only slightly, and that BIMB still expects growth of about 10% in CY2026 across the companies it tracks, leaving room for further gains if the current momentum continues. 

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