AmResearch says it has detected more severe downward guidance from management in its recent company visits
COMPANIES are lowering their financial expectations sharply for next year, analysts said, based on their company visits.
"Company visits are revealing more severe downward guidance from management," research house AmResearch said.
"To be sure, we have also detected more severe downward guidance from management on belated acceptance of the severity of the global economic slowdown in our recent company visits," it said in a market strategy report yesterday.
Property developer Gamuda, for example, is looking to cut its 2009 property pre-sale target of RM800 million by 40 per cent, it said.
And carmaker Tan Chong Motor Holdings, which reported a sterling third quarter performance this year, is looking to cut its production from two shifts back to one shift from December, to cope with an expected decline in vehicle sales.
Another property developer, IJM Land, will be scaling back its maiden pre-sales at The Light, its flagship RM4.5 billion mixed-development in Penang.
"Developments over the last few months have led companies to come to grips with reality. Everybody's become more cautious now," said Chris Eng, OSK Research's acting head of research.
Chipmakers Malaysian Pacific Industries and Unisem, in their recent meets with OSK and investors, were rather bearish in their guidance, he said.
And property developers are being very conservative, with many concentrating on the high-end or low-end markets and skipping the mid-market completely, he noted.
AmResearch noted that a rising US dollar, combined with elevated currency volatility in recent months, also poses a "significant" risk to earnings estimates.
"IOI is now guiding that the group expects to suffer additional foreign exchange losses of some RM180 million," it said.
AmResearch expects the profits of IOI, Tenaga Nasional, Telekom Malaysia, Gamuda and Astro to be among the worst hit by a stronger US dollar.
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