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WITH the verdict a foregone conclusion, investors and analysts are stifling languid yawns in the spectators' gallery as far as the latest earnings are concerned.
Pleasing few and surprising no one, the half-year earnings of 402 listed firms with comparable figures yesterday stood at $10.4 billion for the period ended June 30 - a 50.3 per cent decrease year-on-year.
'This is not surprising. Things turned bad only in Q3 2008, compared to Q2 2008 which was still stable,' said Goh Mou Lih, head of research at Westcomb Securities.
The 294 companies with second-quarter earnings, doomed to be benchmarked against a stellar Q2 a year ago, also failed to impress on the witness stand with a combined $5.3 billion in profits - a 34.8 per cent drop year-on-year.
While profitable companies outnumbered lossmakers 227 to 67 for Q2, 44 companies slipped from black to red, while only 14 companies managed it the other way around.
For the first half of the year, 282 companies were in the black compared to 121 companies in the red. Seventy-six companies saw net incomes turning into net losses compared to the 20 that went in the opposite direction.
Keppel Corporation's record quarterly profit of $317.3 million excluding exceptional items drew mixed reactions from analysts. DBS Group Research analyst Chong Wee Lee, for instance, highlights a higher book value and the higher selling price of Keppel Bay projects.
AmResearch's Alex Goh, however, is downgrading Keppel from a 'buy' to a 'hold'. 'Assuming new orders of $4 billion in FY2009, the rate of depletion will continue to reduce Keppel's current order book from $8 billion to $6.3 billion. This will be Keppel's lowest order book over the past four years,' Mr Goh wrote in a report earlier this week.
Bank earnings, the second quarter's bellwether of performance, gained the approval of analysts for their quarter-on-quarter showing.
AmFraser's Winston Lum pronounced the banking sector's earning to be 'above expectations' in a report earlier in the week, citing all three local banks' double-digit growth in net profit, quarter-on-quarter.
DBS's non-performing loan (NPL) ratio, however, drew comment. 'While all three banks reported higher NPL ratios, OCBC and UOB reported a gradual rise of only 30 basis points in their NPL ratios during Q2 2009. However, DBS's NPL ratio increased 80 basis points to 2.8 per cent in Q2 2009, mainly from exposures to shipping and corporates and institutions in the Middle East,' said Mr Lum.
OCBC will be the bank to watch for higher provisions in H2, given its relatively low H1 provisions, he added.
In property, developers displayed a spectrum of outcomes. Allgreen Properties finished the first half on a high note with a 52 per cent increase in net profit to $52.7 million. City Developments and Keppel Land saw a 32.4 per cent and 15.8 per cent dip in first-half net profits, respectively.
Despite the companies' varying fortunes, the outlook for the second half is a sunnier one for the sector. 'We believe new benchmark prices for mass-market and mid-market projects have helped buying sentiment on a relative basis, and expect the entry of more foreigners to further hike interest and prices here over the next 6-9 months,' said DMG & Partners Securities analyst Brandon Lee.
The electronics sector, however, drew fire from analysts in this round of cross-examination.
'Electronics firms are not doing well this quarter. They appear to be lagging the easing of credit flows,' said Westcomb's Mr Goh.
STATS ChipPAC posted a 90 per cent dive in profits year-on-year in Q2 last month, while Chartered Semiconductor Manufacturing reported a net loss of US$42 million.
The third quarter, however, could bring seasonal cheer for Chartered. 'Wafer shipments are expected to improve 16 per cent quarter-on-quarter on seasonal demand and new product introductions by several customers,' said CIMB-GK Research analyst Jonathan Ng.
While the jury is still out on whether recovery will kick in during H2, analysts like Lee Kok Joo from Phillip Securities will be keeping an eye on US consumer spending. 'When there is a pick-up in consumer spending, we can be sure that the economy has recovered,' he said.
'For the second half, quarter- on-quarter momentum will still be there. It should be better than the first half.'
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