KUALA LUMPUR: Affin Hwang Capital research has affirmed its sell rating on Cycle & Carriage Bintang Bhd with a lower target price of RM1.18 from RM1.48 previously, following a core net loss of RM6.4mil in 1Q19.
"Overall, the result was below expectations," said the research house.
In its earnings announcement yesterday, CCB said 1Q19 revenue fell 25% year-on-year (y-o-y) to RM293.2mil due to 27% lower vehicle sales although this was mitigated by 19% higher service revenue.
According to Affin Hwang, the group also recorded a larger negative Ebitda of RM4.6mil in the quarter from negative RM2.3mil in 1Q18 as it was dragged by a shift to a lower margin mix from E-Class to the C, GLC and A-Class models, as well as higher interest expenses and operating costs.
"We think the launch of the all-new Benz A-Class sedan will likely reinvigorate sales volume in the coming months, but the lower priced product mix could further erode margins for CCB.
"If conditions worsen, CCB has expressed the intention to distribute other car brands as part of its medium-to-long term strategy," said Affin Hwang.
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