• Corporate Malaysia delivered a disappointing set of 2Q 2017 results (Exhibit 1) – with 11% beating and 57% meeting our projections, with 32% coming in below. This compares with 12%, 63% and 25% for "above", "within" and "below" respectively in 1Q 2017.

• Against the market consensus, the numbers were equally uninspiring with "above", "within" and "below" at 6%, 54% and 40% respectively, as compared with 13%, 54% and 33% in 1Q 2017.

• A number of FBM KLCI Index-linked heavyweights fell short of expectations; they were Tenaga (lumpy deferred tax expenses and higher-than-expected repair and maintenance costs), Digi (lower service revenue growth guidance, from flat to a low-to-mid single-digit decline), HLFG (tax deductions disallowed) and Genting Malaysia (higher operating cost, particularly staff cost, on the opening of new attractions at Resorts World, Genting).

• While Maybank met our expectations, we trimmed our forecasts to reflect our revised assumptions of higher credit cost and operating expenses.

FBM KLCI 2017 earnings growth lowered to 4.3% from 7.2%

• After factoring the earnings changes, we tweak our FBM KLCI earnings growth forecasts for 2017F and 2018F down to 4.3% and 8.7% (Exhibit 2) respectively, from 7.2% and 8.9% previously.

• Meanwhile, in terms of earnings growth forecasts of "all sectors" – a broader but slightly more volatile earnings gauge encompassing the entire universe of our stock coverage – the numbers for 2017F and 2018F have been adjusted to 6.4% and 15.1% respectively, from 10.8% and 13.2% previously.

Source: AmInvest Research - 6 Sept 2017