Maybank Ib Raises Fbm Klci Year-end Target To 1,680

KUALA LUMPUR, June 6 (Bernama) -- Maybank Investment Bank Bhd (Maybank IB) has raised its FTSE Bursa Malaysia KLCI (FBM KLCI) year-end target to 1,680 points from 1,610, on optimism of earnings growth, global interest rate cuts, the Johor-Singapore Special Economic Zone (JSSEZ) and the ringgit’s strength. 

Maybank IB said the core earnings of its research universe expanded year-on-year (y-o-y) for the fourth sequential quarter on strong momentum with double-digit growth.

It said core profits of the first quarter of 2024 (1Q 2024) rose 20.1 per cent y-o-y, contributed by almost all sectors - except Petronas Chemicals and the technology sector, which posted lower earnings.

Quarter-on-quarter (q-o-q) core profit was also higher by 13.5 per cent - the drags were plantation, consumer, property and technology sectors which delivered weaker q-o-q earnings.

“Our 2024 coverage core earnings estimates are consequently uplifted by 2.5 per cent and by 3.2 per cent for 2025. We now estimate higher 15.6 per cent core earnings growth for our universe and 12.9 per cent for the FBM KLCI in 2024, while for 2025, we now estimate 10.5 per cent growth for our universe and 9.5 per cent for FBM KLCI.

“We expect all sectors to deliver higher earnings with the exception of media. We also expect gloves and aviation to return to the black,” it said in a note.

Maybank IB noted that the FBM KLCI has had a good run in the first five months of 2024 and is one of the best performing markets in the region.

“In terms of fund flow, foreign investors were still generally net sellers totaling RM0.76 billion in January-May but against regional peers, the net sell on Malaysia equities has been the lowest.

“Besides subsidy rationalisation and wage reforms, rising foreign direct investment/domestic direct investment momentum provides the backdrop for sustainable economic growth,” it added. 

It said after a record year in 2023 in approved investments totalling RM329.5 billion (23 per cent growth), the target is another high in 2024 amid new commitments from tech-giants like Microsoft and Google.

“As for corporate earnings, the strong delivery in 1Q 2024 (+20.1 per cent y-o-y) do imply that our revised 15.6 per cent growth forecast for 2024 is realistic.

“Our forecast implies earnings growth to continue in the sequential quarters but at a reduced pace mainly due to the base effect,” it said. 

However, the investment bank reiterated cautiousness on the external environment.

“A ‘higher-for-longer’ US interest rates, widening of US-China geopolitical rivalry and Middle East instability are the key risks for Malaysian equities,” it said. 

Maybank IB has remained “overweight” on banks; construction; consumer; gaming; gloves; oil and gas; aviation; renewable energy and technology (software); and Petronas Chemicals.

“We have made changes to our top buy stock list, adding SD Guthrie, Sime Darby, Gamuda, Dialog, Top Glove, MYEG, AirAsia X and new coverage SAM Engineering & Equipment,” it said. 

-- BERNAMA