One can often look at corporate earnings as a sort of measure to judge how well an economy is doing, among other indicators. With corporate earnings in the third quarter ending on 30 September 2020, we can finally have a general idea on how businesses are coping with the pandemic.
According to Bloomberg data, among 100 largest public-listed companies (PLCs) by market capitalisation (cap) on Bursa Malaysia revealed that about 53 companies have achieved higher profits than a year ago; all this despite the massive economic damage caused by the Covid-19 pandemic. This is slightly more than half of the top 100 Malaysian companies. On the other hand, despite showing lower profits, 40 companies have managed to remain in the black.
In total, there were about 21 companies out of 53 that managed to score more than a 50 percent year-on-year jump in their net profits, of which 11 of them saw triple-digit growth in earnings. Unsurprisingly, the big four glove makers, Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Bhd, can be found in this group; thanks to their continued production and contribution to the fight against the Covid-19 pandemic. Other notable winners this quarter include Mega First Corp Bhd, Yinson Holdings Bhd, and Bursa Malaysia Bhd, all of whom saw at least a 140 percent quarterly net profit boost year-on-year.
Plantation companies such as Genting Plantations Bhd, Sarawak Oil Palms Bhd and Sime Darby Plantation Bhd have also performed decently well this quarter, thanks in part to a rebound on crude palm oil prices.
A particular industry that has gained the attention of investors is comprised of semiconductor-related firms. This sector too has seen significant improvements in both year-on-year earnings performance.
Among the top 100 companies, 73 companies saw their Q3 2020 earnings rebound from Q2 2020 which was hit badly by the Movement Control Order.
On the other hand, there are 26 companies that reported poorer earnings performance compared with the immediate preceding quarter.
While this paints a more optimistic picture of the health of the Malaysian economy overall, there is still much more work to be done to ensure that a full recovery can be achieved.