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Published: Monday May 28, 2012 MYT 9:21:00 AM
KUALA LUMPUR: CIMB Equities Research said IOI Corp's near term earnings remain exposed to margin pressure, with reference to its refining business and weaker output growth, when compared with it peers.
"We maintain our Underperform rating and target price basis of 14 times CY13 price-to-earninga, which is its historical average. We prefer Sime Darby for its cheaper valuations," it said on Monday.
CIMB Research said it liked the group's improved transparency and plans to extract value.
However, this was offset by near-term earnings weakness from lower downstream earnings and slower output growth. It maintained its Underperform recommendation on IOI Corp.
Nevertheless, CIMB Research said it was impressed with its downstream expansion into value-added products that allowed the group to weather the rising competition from Indonesian players better than its Malaysian peers.
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