PETALING JAYA: First-quarter 2022 (1Q22) corporate earnings of local companies were “not very exciting” but came in largely within expectations amid an economy that is still at the beginning of its recovery stage.

       Fortress Capital Asset Management Sdn Bhd CEO Thomas Yong said the FBM KLCI component companies, in particular, reported results that were largely in line with estimates, with earnings mostly affected by the “Cukai Makmur” or the prosperity tax.

       “The banking sector reported lower earnings on a year-on-year comparison basis, affected by the prosperity tax, but it is expected to benefit from the expansion of net interest margins, going forward, as Bank Negara continues to raise interest rates,” Yong told StarBiz.

       He said although plantation companies reported strong earnings growth during the quarter under review, the results were mostly within market expectations as crude palm oil (CPO) prices have been trading on the high side.

       “However, the sector could not benefit fully as it was facing a labour shortage,” he added.

       The economy re-opening themed sectors, meanwhile, reported mixed results, Yong said.

       “Brewery and some retail companies reported better-than-expected earnings while tourism-related stocks reported results that were in line with, and for some, below market expectations.

       “However, we expect these companies to perform better in the subsequent quarters as the country’s borders have been opened with less stringent standard operating procedures since May 2022.”

       Former investment banker turned private investor Ian Yoong Kah Yin noted that most banks “fared fairly well” in the first quarter, with many outperforming because of lower provisions.

       “The plantation sector’s earnings outperformed or were, at least, in line with market expectations. Plantation companies in general recorded good results with CPO prices peaking at RM8,000 per tonne in March 2022,” Yoong told StarBiz. He noted that rubber glove manufacturers reported “horrific” numbers.

       “This was definitely not surprising with the average selling prices of nitrile gloves collapsing to US$25 (RM109.73) in March 2022 from about US$80 (RM351.15) in March 2021.”

       Yoong also said oil and gas service providers reported “lukewarm” results as capital expenditure (capex) increased 12% on a year-on-year basis in 1Q22 to RM7.4bil.

       “Overall capital expenditure in 1Q22 was about 17% of total estimated capex of RM40bil for 2022. This is close to the quantum in 2019.”

       Oil and gas refiners, meanwhile, reported mixed results, he said.

       For pure manufacturers, their profits were impacted by higher raw material costs while the technology sector produced results that were generally below expectations.

       “This could be explained by supply chain problems as a result of political tensions among other reasons,” Yoong said.