Softlogic Stockbrokers keeps market earnings growth forecast steady at 11%-13%

Despite challenging times for corporate earnings up to June, Softlogic Stockbrokers is retaining its market earnings growth forecast steady at 11% to 13% for the current financial year.

“We believe the overall market earnings are likely show a slow and gradual recovery with consumer demand for manufacturing and bank credit likely to record a gradual uptrend. We hold our market earnings growth target for Dec 2013E/Mar 2014E steady at 11%-13%. Amidst challenges in the economy, expected rise in interest rates and negative market sentiment, market returns are likely to be marginal in the short term and may show an uptrend towards medium to long term,” Softlogic Stockbrokers said, having analysed results released by 275 listed companies.

“The slowness in the economy will continue to partially affect company earnings amidst lower consumer demand,” the broking firm said, adding that banking earnings are likely to rebound with the currency depreciation leading to exchange gains.

Telecom, Food & Beverage and Trading sector earnings are likely to be adversely affected with the currency depreciation while most companies with foreign debt are expected to record exchange losses. Diversified sector is likely to benefit amidst dollar income and overseas investments.

As per its review, market earnings encountered a marginal growth up by 3% YoY to 34.4 billion while it dipped 33% QoQ to Rs. 51.3 billion analysing 275 companies that have released June quarter results.
Power & Energy, Investment Trusts and Trading sectors underscored earnings growth amidst dormant performance in Banking and Finance and Diversified sectors contrary to Softlogic Stockbrokers’ view.

http://www.ft.lk/2013/09/09/softlogic-stockbrokers-keeps-market-earnings-growth-forecast-steady-at-11-13/