KUALA LUMPUR: Kenanga research is cutting its FY18E/FY19E earnings forecasts on Boustead Holdings Bhd
and downgrading its target price from RM2.05 to RM1.50.
It said Boustead's core net loss widened year-on-year to RM29.4mil if excluding one-off gains, due to weaker contributions from plantation, property and heavy industries divisions.
"The Plantation division revenue fell 21% due to lower palm product prices and FFB production.
"The Heavy Industries division revenue fell 50% due to lack of ship repair activities.
The Property division’s revenue decreased by 7%, mainly as a result of lower contribution from property development activities in Taman Mutiara Rini, Johor and hotel operations."
The research house said it expects the group to continue seeing volatile quarterly results based on several past quarters' volatile trend.
It expects plantation earnings to anchor the bulk of the earnings. With 91% of the plantation estates already matures, performance will hinge largely on CPO price movements, which have a cloudy short-term outlook.
Meanwhile, the heavy industries division remains volatile while it expects the trading and manufacturing as well as pharmaceutical divisions to show pedestrian growth and deliver sustainable recurring incomes.