The Magic Number 18

Some major cap constituents of FBMKLCI  have been reporting lower earnings such as Hong Leong Bank, Sime Darby and Telekom Malaysia. The rest of constituents will be reporting their results before end Feb 2016. The declining earnings of FBMKLCI constituents may push  FBMKLCI’s price earnings ratio (P/E) towards the 18.0 times mark, which will be the highest P/E in the past 10 years (excluding the 2008-2009 financial crisis period)

As of 24 Feb 2016, FBMKLCI is trading at P/E of 17.37x which is relatively higher than its historical median P/E of 16.3x . It has never breached P/E of 18.0x in 10 years (excluding 2008-2009). If FBMKLCI ever breaches the 18.0 times mark, FBMKLCI’s P/E may potentially revert to its median of 16.3x (equivalent to a potential downside reversal of approximately 10.4%)

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It would be interesting to see how large cap FBMKLCI constituents such as Maybank, RHB Cap, CIMB, AmBank as well as Tenaga Nasional would fare when they report their latest quarterly results.

Extract of some recent news affecting FBMKLCI constituents:

CIMB Indonesia – FY15 operating income grew 3.6% underpinned by a 6.5% year-on-year (“Y-o-Y”) improvement in Net Interest Income (“NII”) premised upon a sound pricing structure, but partially offset by a 8.6% Yo-Y decline in non-interest income in line with the weaker treasury market activity. FY15 net profit was lower due to a 54.7% Y-o-Y increase in provision expenses. CIMB Niaga’s Loan Loss Coverage (“LLC”) increased to 111.53% as at 31 December 2015 from 88.78% a year before.

Malaysia’s Sime Darby Hit by Commodity Prices; 2nd-Quarter Profit Down 37.5%

24 Feb 2016 13:25

DJ Malaysia’s Sime Darby Hit by Commodity Prices; 2nd-Quarter Profit Down 37.5%

 
   By Yantoultra Ngui 
 

KUALA LUMPUR, Malaysia–Malaysia’s Sime Darby Bhd. (4197.KU), the world’s largest palm oil planter by land size, said Wednesday net profit for its second-quarter ended December dropped 37.5%, hit by lower crude-palm-oil prices and a downturn in the mining sector.

The conglomerate, which also sells cars and runs hospitals, said lower fresh fruit bunch production has also weighed on its plantation business. Slowing growth in China has continued to affect its industrial division, it said.

“We are halfway through the earnings reporting period and the numbers reflect the challenging business environment that the group operates in,” said Chief Executive Mohd Bakke Salleh in a statement.

Headwinds notwithstanding, Sime Darby’s motor and property divisions performed better during the quarter on higher luxury-car sales and an increased contribution from the development of a university hub in the southern state of Johor.

Net profit declined to 273.29 million ringgit ($65 million) from 437.39 million ringgit in the year-ago period. Revenue inched up to 11.8 billion ringgit versus 10.7 billion ringgit.

Sime Darby has been exploring ways to shore up its balance sheet and reduce financial leverage after it took on debt to purchase New Britain Palm Oil Ltd., which owns plantations in Papua New Guinea, for around six billion ringgit last year. The conglomerate’s earlier plans to raise funds, including by listing its automotive business, were put on hold because of weak market conditions.

Shares of Sime Darby ended the day’s early session 2.89% lower before the earnings announcement, underperforming the local stock benchmark index’s 0.57% drop.

KUALA LUMPUR (NewsRise) — Hong Leong Financial Group, the financial business enterprise of Malaysian tycoon Quek Leng Chan, said Wednesday its net profit plunged nearly 38% in the fiscal second quarter due to one-off expense arising from employment severance payments.

   Net profit for the three months ended December 31 totalled 263.4 million ringgit ($62.7 million) compared with 423.8 million ringgit during the same quarter last year, the company said in an exchange filing. For its first six months, net profit declined 20% to 650.3 million ringgit from 816.0 million ringgit during the same period last year.

4Q profit falls 12% on year, loss-making wireless unit drags

KUALA LUMPUR (NewsRise) — Malaysia’s state-owned fixed-line operator Telekom Malaysia said Wednesday net profit fell 12% from a year earlier in the final quarter of 2015 due to losses at its wireless unit and guided for higher capital expenditure this year.
Net profit for the three months ended December 31 totalled 192.4 million ringgit ($45.5 million) compared with 218.3 million ringgit during the same quarter last year, Telekom Malaysia said in an exchange filing. Quarterly revenue however rose 0.6% to 3.18 billion ringgit from 3.16 billion ringgit.

 

 

 

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Author: Ken Utau

Data Scientist, Markets Analyst and Food Lover

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