Thursday, September 29, 2011

CIMB Research retains Underperform on Adventa

KUALA LUMPUR: CIMB Equities Research is retaining its underperform call on glove maker Adventa as it believes higher energy costs and weak demand will be de-rating factors for the stock.

It said on Thursday, Sept 29 that Adventa's nine-months results were at 60% of its full-year estimate and 65% of consensus.

The lack of a dividend was expected as Adventa pays a single final dividend after 4Q. Net profit continued to slip on quarter-on-quarter basis, falling 12% in 3Q due to rising costs and weak demand.

'As a result of the underperformance, we are cutting our FY11-13 EPS forecasts by 15%-40%. We roll over our valuation year to CY13.

'Even so, because of the earnings downgrade, our target price falls from RM2.01 to RM1.49, still based on a forward P/E of 9.14 times or a 30% discount to Top Glove's target P/E of 13.05 times,' it said.

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