KUALA LUMPUR: OSK Research has revised downwards the earnings forecast for Eng Teknologi (Engtek) after the management guided for a sequential profit before tax drop of 22% to RM10 million for 3QFY10 while 4QFY10 PBT is expected to come in at RM11 million.
"Based on the guidance, we are revising downwards our FY10 and FY11 earnings forecasts by 9%. Our fair value on the stock is accordingly revised lower," it said. Its target price was RM1.73 compared with its previous RM1.90.
OSK Research said in line with the cautious 3Q10 outlook from Western Digital, Engtek's management expects the company's 3QFY10 revenue to contract by 3.5% q-o-q before rebounding by about 8% q-o-q in a seasonally strong 4QFY10.
However, due to the stronger RM against US dollar, 3QFY10 PBT is expected to drop more than revenue, by about 22% q-o-q.
"Management now expects 4QFY10 PBT to come in at RM11m compared with RM10m in 3QFY10. This means that Engtek is on track to record its third consecutive contraction in q-o-q earnings, which are also at risk of shrinking further in 4QFY10," it said.
"Based on the guidance, we are revising downwards our FY10 and FY11 earnings forecasts by 9%. Our fair value on the stock is accordingly revised lower," it said. Its target price was RM1.73 compared with its previous RM1.90.
OSK Research said in line with the cautious 3Q10 outlook from Western Digital, Engtek's management expects the company's 3QFY10 revenue to contract by 3.5% q-o-q before rebounding by about 8% q-o-q in a seasonally strong 4QFY10.
However, due to the stronger RM against US dollar, 3QFY10 PBT is expected to drop more than revenue, by about 22% q-o-q.
"Management now expects 4QFY10 PBT to come in at RM11m compared with RM10m in 3QFY10. This means that Engtek is on track to record its third consecutive contraction in q-o-q earnings, which are also at risk of shrinking further in 4QFY10," it said.
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