Earnings Look Compelling yet Facing a Challenging Macro Factors
Key Takeaways
• Earnings in 1H22 look compelling. From 47 companies (LQ45+MNCS Universe) that already reported their financial performance mostly above consensus estimate (45%), 21% in-line and 34% below.
• Cumulative earnings grew by +72% YoY implying 56% FY22E run rate including tech, whilst, excluding tech, net profit rose by +61% YoY with 53% run rate for FY22E in 1H22.
• Foreign inflows start to come to both govt bond and equity. Earnings figure has become positive catalyst for JCI valuation yielding >9% YTD. JCI sectoral movement was dragged up by energy, industrial and transportation & logistics reflecting current condition of high commodity prices.
• Albeit having a compelling earnings figure, financials & property sectors underperformed, which we believe to offer interesting opportunity to buy at a discount valuation for tactical purpose.
• Looking ahead, government fuel price policy adjustment may have two implication for stock investors as it increase inflation outlook. First it may hinder GDP & EPS growth through interest rate channel, second it may cause JCI de-rating through risk free rate channel.
