Hong Leong Investment Bank Research has lowered its target price for plantation firm Kuala Lumpur Kepong Bhd to 23.39 ringgit from 23.60 ringgit to reflect lower forecasts for the company's earnings.
Hong Leong lowered net profit forecasts for the next two years by up to 3.5 percent to reflect lower assumptions of fresh fruit branches (FFB) output, and the fact that contributions from two new refineries and an oleochemical plant are expected to come onstream only next year. KLK's existing refineries were affected by the revision of export tariffs in Indonesia and the weak global economic outlook, Hong Leong added.
"In our view, the weak performance of KLK's refinery operations will likely improve when its two new refineries in Indonesia commence operations. KLK would benefit from the tax advantage in Indonesia, given that its land bank there contributes over 40 percent of total FFB production," it added.
The brokerage maintained its 'hold' rating on the stock.
Shares of KLK dipped 1.54 percent to 21.7 ringgit after Malaysian palm oil futures fell to a three-year low on Tuesday.
1023(0224GMT)
(Reporting by Al-Zaquan Amer Hamzah in Kuala Lumpur; alzaquan.amerhamzah@thomsonreuters.com); Editing by Jijo Jacob
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RHB Research initiated coverage of IHH Healthcare Bhd
with 'outperform' rating and fair value of 3.53 ringgit per share, citing strong earnings growth prospects for the world's second largest private healthcare service provider through 2014.
"While valuations are relatively expensive at 33.5 times 2013 price-to-earnings ratio, we believe there is still room for valuations to move higher given its strong earnings visibility and wider network of hospitals, which could result in significant savings from better economies of scale compared to its regional peers," the research house said in a note on Wednesday.
RHB forecast core net profit growth of 5.8 percent for IHH in 2012, 25.9 percent in 2013 and 26.0 percent in 2014.
"Singapore will be the main earnings driver for the company, driven by the gradual ramp-up of the new state-of-the-art Mount Novena hospital," it added.
The counter dropped 0.31 percent to 3.18 ringgit per share, underperforming the benchmark index's 0.07 percent rise.
0933 (0133 GMT) (Reporting by Yantoultra Ngui in Kuala Lumpur; yantoultra.ngui@thomsonreuters.com); Editing by Jijo Jacob
Keywords: MARKETS MALAYSIA STOCKSNEWS/KLK