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I extract the below ( see bottom of the post after the comments) from report by LSL. I post this in the talk section as I know there are quite few member here who pointed out this fact before. Your views are welcome.
Yes, some companies have reported decreasing earnings over the quarters. ( also YoY). There is a lag in the remarkable earning potential people expected across the board. I have to agree. Also we still have some high market capitalization companies ( check the top 20 list) which trades at high PE ( needs correction on them) inflating the overall market PE.
So unlike in 2009-2010, if one invests blindly, the losses can be substantial.[ So be careful. I want to highlight this so atleast some people will stop to think before they invest in companies blindly. But can we say all companies are bad? My opinion is NO.
Before we come a conclusion whether the whole of CSE is suffering and is going down the drain, please take the look at my post below.
http://forum.srilankaequity.com/t13740-on-the-occasion-of-my-2000th-post
I strongly think we need to be balanced in our analysis and approach. Else we might miss opportunities. Note we are not investing in the whole market. We invest in selected companies.
Comment over. Article begins...
Healthcare top performer posting near 100% growth while investment companies, leisure, Telcos lose out
Although aggregate earnings of listed companies during the September 2011 quarter have improved by 14.4% Year on Year (YoY), the growth pace of earnings have slowed down when compared to the previous quarter where earnings have improved by a sharp 36% YoY, a recent research report has showed. According to the Quarterly Earnings Review published by Lanka Securities Research (LSL taking into account 218 companies (representing 81% of the CSE universe), on Quarter on Quarter (QoQ) basis, the earnings in September 2011 quarter have decreased by 15% in comparison to the mere 7% QoQ drop seen in 2Q of 2011.
Five of the eleven sectors witnessed a drop in earnings. Profit leaders for the quarter were healthcare (+99.6% YoY), consumer discretionary (+83.4%YoY), consumer staples (+52%YoY) and financial services (+52% YoY). The worst performers were investment companies (-77% YoY) and plantations (-44% YoY), the report identified.
It is noted that the revenue recorded a growth of 21.5% YoY during the quarter, slightly higher by 8% than the previous quarter figures.
Investment holding was the only sector to record revenue de-growth. Apart from financial services and utilities, rest of the sectors posted double digit growth in top line, the report highlighted adding that on the other hand, operating profit (excluding non-recurring items) slipped 11.5% QoQ basis while recording a marginal growth of 5% YoY from September 2010.
However, the report said that earnings for the first nine months of 2011 improved by 37% YoY to Rs. 138 billion where a 21.5% increase was seen in the sales while the operating profit rose by 23% YoY.
Meanwhile, LSL has projected an earnings growth rate of 12.3%YoY for 4Q2011 where overall rupee level earnings for the index are projected to increase by Rs. 6.0bn in 4Q2011 in relation to 4Q2010.
At the sector level, financial services, consumer staples, and industrials are predicted to be the largest contributor to the rupeelevel earnings growth. On revenue side, the aggregate revenue is expected to reach Rs. 46.1bn (+17.2%YoY), the report noted.
(An extract from the report is reproduced on page 2)[b]
Yes, some companies have reported decreasing earnings over the quarters. ( also YoY). There is a lag in the remarkable earning potential people expected across the board. I have to agree. Also we still have some high market capitalization companies ( check the top 20 list) which trades at high PE ( needs correction on them) inflating the overall market PE.
So unlike in 2009-2010, if one invests blindly, the losses can be substantial.[ So be careful. I want to highlight this so atleast some people will stop to think before they invest in companies blindly. But can we say all companies are bad? My opinion is NO.
Before we come a conclusion whether the whole of CSE is suffering and is going down the drain, please take the look at my post below.
http://forum.srilankaequity.com/t13740-on-the-occasion-of-my-2000th-post
I strongly think we need to be balanced in our analysis and approach. Else we might miss opportunities. Note we are not investing in the whole market. We invest in selected companies.
Comment over. Article begins...
Healthcare top performer posting near 100% growth while investment companies, leisure, Telcos lose out
Although aggregate earnings of listed companies during the September 2011 quarter have improved by 14.4% Year on Year (YoY), the growth pace of earnings have slowed down when compared to the previous quarter where earnings have improved by a sharp 36% YoY, a recent research report has showed. According to the Quarterly Earnings Review published by Lanka Securities Research (LSL taking into account 218 companies (representing 81% of the CSE universe), on Quarter on Quarter (QoQ) basis, the earnings in September 2011 quarter have decreased by 15% in comparison to the mere 7% QoQ drop seen in 2Q of 2011.
Five of the eleven sectors witnessed a drop in earnings. Profit leaders for the quarter were healthcare (+99.6% YoY), consumer discretionary (+83.4%YoY), consumer staples (+52%YoY) and financial services (+52% YoY). The worst performers were investment companies (-77% YoY) and plantations (-44% YoY), the report identified.
It is noted that the revenue recorded a growth of 21.5% YoY during the quarter, slightly higher by 8% than the previous quarter figures.
Investment holding was the only sector to record revenue de-growth. Apart from financial services and utilities, rest of the sectors posted double digit growth in top line, the report highlighted adding that on the other hand, operating profit (excluding non-recurring items) slipped 11.5% QoQ basis while recording a marginal growth of 5% YoY from September 2010.
However, the report said that earnings for the first nine months of 2011 improved by 37% YoY to Rs. 138 billion where a 21.5% increase was seen in the sales while the operating profit rose by 23% YoY.
Meanwhile, LSL has projected an earnings growth rate of 12.3%YoY for 4Q2011 where overall rupee level earnings for the index are projected to increase by Rs. 6.0bn in 4Q2011 in relation to 4Q2010.
At the sector level, financial services, consumer staples, and industrials are predicted to be the largest contributor to the rupeelevel earnings growth. On revenue side, the aggregate revenue is expected to reach Rs. 46.1bn (+17.2%YoY), the report noted.
(An extract from the report is reproduced on page 2)[b]
