Time to buy is now

TheStar Sat, Jun 15, 2019 11:00am - 4 years View Original


AFTER the end of the fourth quarter 2018 results season three months ago and due to the poor set of results, we entered into earnings recession, which is defined as back-to-back negative earnings growth for the two consecutive quarters measured on a year-on-year (y-o-y) basis.

As we had just completed the first quarter 2019 earnings season, has corporate Malaysia’s earnings improved or worsen?

The only good news is that based on the data reported by 10 brokers covering Bursa Malaysia listed companies, earnings growth has turned positive on a quarter-on-quarter (q-o-q) basis as the first quarter 2019 earnings expanded by 7.4%, reversing the fourth quarter 2018 and third quarter 2018 q-o-q contraction of 7.2% and 6.1%, respectively.

Now the bad news. Firstly, Malaysian corporates are still bleeding, as earnings contraction measured on a y-o-y basis fell by 8.3%. Nevertheless, the negative growth in earnings has been reduced compared with the larger 15.3% y-o-y contraction in the fourth quarter 2018, but still much worse than the pullback we saw in the third quarter 2018 when earnings dropped by 7.8% y-o-y.

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