Hot Stock Favelle Favco down on weak 1H performance

Hot Stock Favelle Favco down on weak 1H performance
Business & Markets 2013
Written by Shalini Kumar of theedgemalaysia.com
Tuesday, 27 August 2013 11:32

KUALA LUMPUR (Aug 27): FAVELLE FAVCO BHD [] (FFB) saw its share price fall in morning trades, following the group's announcement of its financial results for the first half ended June 30 - which came in below analysts' expectations.

At 11.03 am, FFB was trading 27 sen lower at RM2.61, with 596,500 shares done. It was amongst the top decliners across the exchange.

In a note today, RHB Research said FFB’s 1H13 net profit of RM21.6 million was below its estimate, making up a mere 30.5% of the
full-year estimate.

"Due to the weaker-than expected 1H13 results, we lower our FY13-14 earnings estimate by 8.5% and 5.8% respectively," it said.

"While operating margins were steady above the 9% mark, FFB’s tax expenses rose significantly y-o-y after the expiration of its pioneer tax status," it added.

RHB is maintaining a 'buy' call on FFB, but lowered its target price to RM3.55 from RM3.80 previously - in line with its earnings forecast downgrade.

However, the research house believes the second half of the year will look up for FFB.

"Backed by an orderbook of RM832 million, of which majority is for the oil & gas segment, we believe that revenue is likely to improve in 2H13 as these cranes will likely be delivered towards the end of the year," it said.