1Q11 results round-up – Analysts’ expectations brought down to earth (CIMB)

The 1Q11 results season threw up some negative surprises. The earnings revision ratio (upgrades/downgrades) deteriorated from 0.8x to only 0.6x and CY11 EPS was cut by 3%. The disappointing results season and this year’s three black swan events go a long way to explaining why the KLCI is relatively unchanged YTD. We continue to OVERWEIGHT Malaysia as we believe that the KLCI will perform better in 2H as it rides on positive newsflow on the country’s transformation programmes, particularly the ETP, and potentially better earnings seasons once the execution of Entry Point Projects spills over to corporate earnings. Our end-2011 KLCI target remains at 1,700 points, based on an unchanged P/E target of 14.5x.