KUALA LUMPUR: JF Apex Research has slashed its earnings forecasts on Boilermech Holdings Bhd due to lower revenue and eroded margins from the Covid-19 pandemic.
The group's recently released earnings showed a 63.8% year-on-year (y-o-y) plunge in 1QFY21 net profit to RM2.3mil, which came to only 9.1% of JF Apex's full-year estimate.
The weaker results came on the back of a 47.3% y-o-y fall in revenue on the back of lower project deliveries from both the bio-energy and water treatment segments.
Export sales were disappointing, slipping 62.5% y-o-y while local sales accounted for 58.4% of overall sales.
The research house, which cut its earnings forecasts for FY21F and FY22F by 25% and 8.1% respectively, downgraded the stock to "hold" from "buy". In line with the downgrade, it lowered its target price on the stock by two sen to 58 sen.
Moving forward, JF Apex is optimistic over the acquisition of a 60% stake in TERA VA Sdn Bhd, which is principally engage in the installation of sloar green power energy products and electircal machineries products.
"We believe it could contribute to the Group’s earnings going forward in view of TERA’s strong establishment and experience in projects secured," it said.
However, it expects contribution from the newly acquired business to only be reflected in FY22F onwards due to the current pandemic.
It added that Boilermech was also hopeful for a rebound in CPO prices although this could be temporary due to rising concern over Covid-19 and higher outputs from producing countries.
The group's recently released earnings showed a 63.8% year-on-year (y-o-y) plunge in 1QFY21 net profit to RM2.3mil, which came to only 9.1% of JF Apex's full-year estimate.
The weaker results came on the back of a 47.3% y-o-y fall in revenue on the back of lower project deliveries from both the bio-energy and water treatment segments.
Export sales were disappointing, slipping 62.5% y-o-y while local sales accounted for 58.4% of overall sales.
The research house, which cut its earnings forecasts for FY21F and FY22F by 25% and 8.1% respectively, downgraded the stock to "hold" from "buy". In line with the downgrade, it lowered its target price on the stock by two sen to 58 sen.
Moving forward, JF Apex is optimistic over the acquisition of a 60% stake in TERA VA Sdn Bhd, which is principally engage in the installation of sloar green power energy products and electircal machineries products.
"We believe it could contribute to the Group’s earnings going forward in view of TERA’s strong establishment and experience in projects secured," it said.
However, it expects contribution from the newly acquired business to only be reflected in FY22F onwards due to the current pandemic.
It added that Boilermech was also hopeful for a rebound in CPO prices although this could be temporary due to rising concern over Covid-19 and higher outputs from producing countries.
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