Asia Earnings Under Pressure Even Before Virus Outbreak

(Bloomberg) --

Asian equities are about a third of the way through the fourth-quarter reporting season, and the results to this point are lagging expectations.

Among the more than 440 companies out of some 1,300 MSCI Asia Pacific Index members scheduled to announce financial numbers, aggregate profits have fallen short of total forecasts by about 6.6% so far, according to data compiled by Bloomberg. That trails a 5.6% beat for S&P 500 Index members, with about two-thirds of them having released results, the data show.

While the results generally don’t cover the current viral outbreak, the situation is constraining 2020 outlooks with estimated 12-month forward earnings for the Asia Pacific gauge sliding since late January.

Fourth-quarter earnings are tracking below consensus currently “with Korea still dragging the region’s aggregate numbers,” strategists led by Mixo Das, Asia equity strategist with JPMorgan Chase & Co., wrote in a note sent on Monday. Earnings of Korean companies on the Kospi have trailed forecasts by about 27%, according to Bloomberg-compiled data.

Profit at Samsung Electronics Co., the biggest company in Korea, sank 38% to 5.23 trillion won ($4.4 billion), missing the average projection due to falling memory-chip prices, the firm said Jan. 30. It was a particular surprise as early numbers had beat analysts’ estimates.

Other firms have also missed estimates in the quarter:

• LG Electronics Inc. reported a loss of 875.4 billion won, compared with an projected loss of 58.5 billion won.
• Japanese messaging service Line Corp. posted an operating loss wider than any analyst estimate after expenses rose.
• Shiseido Co. net income fell short of projections, and the company forecast pronounced weakness in its sales in China during the Lunar New Year holiday due to the virus outbreak.

Looking ahead, the pace of earnings is not going to let up, with the majority of China- and Hong Kong-listed firms still yet to report.

Commonwealth Bank of Australia and SoftBank Group Corp. are scheduled to report their financial numbers on Wednesday. The region’s internet giant Alibaba Group Holding Ltd. will also release its third-quarter earnings on Thursday.

Stock-Market Summary

• MSCI Asia Pacific Index up 0.5%
• Hong Kong's Hang Seng Index up 1.3%; Hang Seng China Enterprises up 1.6%; Shanghai Composite up 0.3%; CSI 300 up 0.8%
• Taiwan's Taiex index up 0.7%
• South Korea's Kospi index up 0.7%; Kospi 200 up 0.8%
• Australia's S&P/ASX 200 up 0.5%; New Zealand’s S&P/NZX 50 up 1.1%
• India's S&P BSE Sensex Index up 1%; NSE Nifty 50 up 1.1%
• Singapore's Straits Times Index up 0.7%; Malaysia’s KLCI up 0.5%; Philippine Stock Exchange Index little changed; Jakarta Composite up 0.2%; Thailand's SET little changed; Vietnam's VN Index up 0.4%
• S&P 500 e-mini futures up 0.2% after index closed up 0.7% in last session

--With assistance from Moxy Ying.

To contact the reporter on this story: Eric Lam in Hong Kong at elam87@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Lianting Tu, Cecile Vannucci

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