05 Apr 2021 / 09:31 H.
PETALING JAYA: Although corporate earnings for Q4’20 delivered better-than-expected results, CGS-CIMB has cautioned on potential earnings risks in the second half of the year due to concerns over political stability.
It lowered its end-2021 FBM KLCI target to 1,699 points from 1,759 points to reflect the potential risks, as it price the market at 1.0 standard deviation discount to mean P/E.
Of the 130 companies that the research house tracked during this latest results season, the ratio of companies that posted Q4’20 results above its expectation rose to 40% against 35% reported in the previous quarter while the number of underperformers fell to 25% from 31% reported previously.
PLASTIC packaging companies came under the spotlight last year as demand for plastic packaging-related products soared, spurred on by the change in consumption patterns of consumers across the globe as a result of the Covid-19 pandemic.
However, the recent meteoric rise in the price of resin a crucial material in plastic manufacturing could halt the good run that plastic packaging manufacturers have enjoyed so far.
While raw material prices are definitely a concern, some point to the weaker US dollar, which could take a toll on these manufacturers as they derive a large portion of their revenue from overseas markets.