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4Q14 corporate results: The worst in several years

With 93 out of 95 stocks under our coverage (76% of the total market capitalization of the index) having already reported 4Q14 earnings, it is safe to say that last quarter had been one of the worst result seasons in the past few years for the Indonesian stock market.  

More than 50% or 48 stocks booked 4Q14 performances which were below our expectations, suggesting a worse-than-expected economic downturn for Indonesia. In aggregate, operating profit growth for our basket of stocks only reached 1.8% y-y (exhibit 1), a deceleration when compared to the 8.1% y-y growth reported in 4Q13.

On the bottom line, 4Q14 net profit growth of -3.2% y-y also deteriorated versus 4Q13’s level of 0.7%, mainly dragged down by sectors listed in exhibit 4, all of which we rate as UNDERWEIGHT, with the exception of Poultry. We rate Poultry as NEUTRAL, as it is currently undergoing improvement in 1Q15 on the back of higher DOC (+100% to around IDR3,500/DOC in 1Q15 versus 4Q14) and broiler prices (+35% to around IDR17,500/kg over the same period).

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