Quick take: KESM falls 3.4%, top loser on Bursa

KUALA LUMPUR: KESM Industries Bhd is the top loser on Bursa Malaysia in early trade Wednesday after posting a net loss widened in the fourth quarter ended July 31.

The burn-in and test service provider fell 3.45%, or 29 sen to RM8.12, its lowest in two months.

KESM posted a net loss of RM3.28mil in the fourth quarter ended July 31 against a net profit of RM2.29mil a year ago.Its revenue for the period fell to RM46.25mil from RM70.9mil previously.

For the full year ended July 31, KESM’s net profit slumped 98.47% to RM96,000 from RM6.28mil, while revenue fell 21.6% to RM240.98mil versus RM307.37mil.

Kenanga Research said KESM’s latest earnings came in below expectations.

“KESM reported 4QFY20 core net loss of RM3.3mil, resulting in a lower FY20 CNP of RM0.1m (-99% YoY), accounting for merely 1.8%/2.4% of our/consensus’ estimates.

“The precipitous decline was due to the Covid-19 lockdown which led to lower production volume. This was further exacerbated by the group’s high degree of operating leverage,” it said.

However, Kenanag expects the group to see a gradual recovery from here on owing to encouraging indications in the global automotive space.

It has maintained a “market perform” on KESM with a higher target price of RM8.60 (previously RM7.40) based on rolled-forward CY21E PER of 17x, in line with its 5-year mean.

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