KUALA LUMPUR: CIMB Equities Research is maintaining its Underperform rating on MISC BHD [] with several potential derating catalysts ahead.
The research house said on Friday, Aug 19 that MISC's 1Q11 core net profit came in at only 12.5% of its full-year forecast and 14.6% of consensus, which was probably due to the usual suspects - tanker and liner losses - and an unusual suspect, heavy engineering.
'We are maintaining our earnings forecasts and target price of RM5.75 (1.2x P/BV) pending today's briefing but flag that we may cut earnings by 30-50% for FY11 and 10-20% for FY12-13,' it said.
CIMB Research said as expected, no dividends were declared for 1Q11, which is the quarter ending June 11 due to a change in the fiscal year-end from March to December.
'We continue to rate MISC an UNDERPERFORM, with the potential de-rating catalysts being (1) these poor results, (2) weak near-term prospects for petroleum and chemical tanker freight rates, and (3) swelling liner losses. We recommend a switch into the aviation sector instead,' it said.
The research house said on Friday, Aug 19 that MISC's 1Q11 core net profit came in at only 12.5% of its full-year forecast and 14.6% of consensus, which was probably due to the usual suspects - tanker and liner losses - and an unusual suspect, heavy engineering.
'We are maintaining our earnings forecasts and target price of RM5.75 (1.2x P/BV) pending today's briefing but flag that we may cut earnings by 30-50% for FY11 and 10-20% for FY12-13,' it said.
CIMB Research said as expected, no dividends were declared for 1Q11, which is the quarter ending June 11 due to a change in the fiscal year-end from March to December.
'We continue to rate MISC an UNDERPERFORM, with the potential de-rating catalysts being (1) these poor results, (2) weak near-term prospects for petroleum and chemical tanker freight rates, and (3) swelling liner losses. We recommend a switch into the aviation sector instead,' it said.
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