KUALA LUMPUR: ECM Libra Investment Research has downgraded its end-2011 FBM KLCI target to 1,450 from 1,650 and said 2QCY11 earnings season was the second in succession which it deemed to have disappointed as negative earnings surprises exceeded positive earnings surprises.

In a market strategy report on Friday, Sept 2, ECM Libra said that earnings growth momentum was also waning as it cut CY11 and CY12 aggregate earnings of stocks within coverage by 2.3% and 2.1% respectively.

“As such, we are downgrading our end-2011 FBMKLCI target from 1,650 to 1,450 by pegging a lower 13x P/E to reflect higher risk aversion and risk of further earnings downgrades,” it said.

ECM Libra said the proportion of corporate results coming in below expectations at 16% exceeded that of those coming in above expectations at 14%, adding that when compared against consensus estimates, these corporate results also failed to meet street expectations with corporate results coming in below expectations at 33% exceeding those coming in above expectations at 14%.

It said PLANTATION [ ] stocks Sime Darby, KLK and IJM Plantation led the positive earnings surprises, while other stocks which also outperformed included AMMB, Wah Seong, SP Setia and Litrak.

Energy dependent stocks such as MAS, Tenaga and Lafarge led the negative earnings surprises due to high crude oil and coal prices, it said.

Other stocks which also underperformed include Axiata, Maxis, QL Resources, YNH Property and Notion VTec, it said.