Asian companies could offer higher shareholder returns in 2011
Asian companies are likely to experience another year of strong growth as they maintain strong balance sheets and good revenue growth expectations, according to a survey of analysts by Fidelity International.
The analysts revealed that companies are also planning to use excess cash for acquisitions, capital expenditure or dividend payouts, the survey found.
“The vast majority of companies meeting with us in the region continue to have very strong balance sheets (63 per cent) and deploying their excess cash through capex, dividends and buy-backs will improve shareholder returns, and make another strong year of market performance more likely,” said the head of Fidelity’s Asia Pacific research team, Matthew Sutherland.
Over 77 per cent of Fidelity’s analysts said the companies they met with during 2010 expected to see sales growth of more than 10 per cent in 2011, while 50 per cent stated they expected operating margins to grow in excess of 10 per cent over the same period.
Sutherland said the companies were showing an increased willingness to use the large cash piles they had built up in reaction to the global financial crisis.
“We should thus expect a year with good earnings growth coupled with higher yields and buy-backs, which makes for likely higher total shareholder returns,” he said.
Sutherland said regulation and inflation issues were of concern for companies in 2011, with inflation possibly resulting in reduced margin expectations.
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