Asian companies hope for better prospects
04 Jan 2021
After a tumultuous 2020, a better outlook awaits Asian companies, on expectation of a recovery in the macro economy and corporate earnings.
There is a bright earnings outlook for 2021, and further boosting returns will be expectations of an earnings recovery in 2022.
Citigroup, Goldman Sachs and Nomura have pencilled in more than 20% earnings growth for Asian stocks.
While Citi analysts see prospects for profit growth to be strongest in South Korea, how would the prospects be for some of the listed companies in Malaysia?
A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.
They see risks such as a prolonged pandemic, rising commodity prices and shortage of containers hampering exports and imports, and have come up with some survival strategies.
International energy services group Serba Dinamik Holdings Bhd expects a 15% to 20% growth for next year and the subsequent two years, propelled by a sustainability and technology-based strategy.
“As sustainable elements are put in place, we expect the risks to be manageable,’’ said Serba Dinamik CEO Datuk Abdul Karim Abdullah.
Some of its strategies include planning a sustainable financial model to ensure the group has sufficient cash in hand, and strengthening its geographical presence to focus on more stable countries.
With the implementation of environment, social and governance elements, Serba Dinamik employs local workers in its move to create harmonious relationships, and help narrow the gap between rich and poor.
The company also aims for minimal damage to the environment to avoid protests from people around areas where jobs are carried out, and any summons from authorities.
In terms of governance, it will run its operations according to rules and regulations to avoid any disruptions in the implementation of services, or project delays.
For this year, industrial chemicals supplier Luxchem Corp Bhd which supplies raw materials to the glove industry, has set a higher growth target of 10% to 15%, compared with its previous targets of just 10%.
“Against the roll-out of the Covid-19 vaccine and expectations of market recovery, we foresee the glove industry will continue to grow,’’ said Luxchem CEO Tang Ying See.
There are risks involving, among other things, a shortage of containers, demand and supply of raw materials, fluctuations in foreign exchange and further lockdowns.
But Luxchem will stay focused on its main industries, expand its product range and also stay close to its customers while providing good technical support.
Noting current challenges such as worldwide container shortages and rising raw material prices, Scientex Bhd, a supplier of industrial and consumer packaging, believes these should normalise in the near term.
“We expect continued growth over the next few years based on the uptrend in demand for flexible packaging globally,’’ said Scientex chief operating officer (packaging business) Choo Seng Hong.
While accelerating the development of sustainable flexible packaging solutions, the next milestone in the group’s target to “double up every five years,” would be financial year 2023.
To mitigate issues related to timeliness of logistics and raw material prices, Scientex keeps close communication with its customers and suppliers to minimise potential disruptions.
To address environmental concerns on the use of plastic packaging, the company takes part in the circular plastic economy that emphasises on restoration and regeneration.
Having acquired 2,600 acres of new land, Scientex will accelerate the scale of affordable property launches, expanding beyond its stronghold in Johor and Melaka to the Klang Valley, Seremban, Ipoh and Penang.
“Demand for affordable homes is expected to be resilient, as the property division is also aligned to the group’s target to achieve a doubling of growth every five years,’’ said Scientex chief operating officer, property division, Datuk Alex Khaw Giet Thye.
Meanwhile, IHH Healthcare Bhd, Asia’s largest private healthcare group, is on track to double its return-on-equity in the next five years, by growing in a capital efficient manner.
“Despite facing the most significant crisis of our lifetime in Covid-19, IHH has remained resilient and is in a strong financial position,’’ said IHH managing director and CEO Dr Kelvin Loh.
As patients returned in strength since June, IHH had also created new revenue streams including Covid-19 related services, and improved its case mix that provides a consistent method of classifying patients while keeping tight cost controls.
IHH also stands ready to support governments in administering the vaccines once they are available in the markets it operates in.
Amid the pandemic, the group accelerated its move into telemedicine globally, and has completed its acquisition of Prince Court Medical Centre under its strategy to expand clusters in metro areas.
As companies increase or maintain their growth expectations, they stay nimble to cope with any sudden, unwelcome changes in the virus scene.
A random survey revealed that some are looking at a 10% to 20% earnings growth while others will stay on track to achieve their medium-term growth targets.
Source: The Star
