RHB cuts IOI Corp earnings forecast, lowers TP

by **Cals** Thu 21 Aug 2014, 12:52

Business & Markets 2014

Written by Gho Chee Yuan of theedgemalaysia.com

Thursday, 21 August 2014 11:17

KUALA LUMPUR (Aug 21): RHB Research Institute Sdn Bhd has cut its earnings forecast for IOI Corp Bhd and lower the target price (TP) for the plantation group's shares.

In a note today, RHB said it lowered its earnings estimates for IOI Corp for financial years (FY) ending June 30, 2015 (FY15) and 2016 (FY16) by 7.5% to 9%.

RHB, which maintained its "neutral" rating on IOI Corp shares, has lowered its TP for the stock to RM5.42 from RM5.50 as there was no significant share price catalyst in sight.

"After updating FY14 results, raising our production cost estimates by 5% and reducing our refining volume and margin assumptions, we lower our FY15-16F earnings forecasts by 7.5 to 9%, said RHB, which has prepared its note following the announcement of IOI Corp's 4QFY14 and full year results.

Yesterday, IOI Corp said net profit rose to RM407.5 million in 4QFY14 from RM270.7 million a year earlier. Revenue was lower at RM2.83 billion versus RM2.94 billion. The company attributed the results to a translation gain of RM101.3 million on foreign currency-denominated borrowings and gain of RM52.4 million rom the demerger of the property business from the group.

Full year net profit rose to RM3.37 billion from RM1.97 billion a year earlier. Revenue fell to RM11.91 billion from RM12.2 billion.

Today, RHB said IOI Corp's full year core net profit was below the research firm's forecast, although the figure was in line with street estimates.

"IOI Corp’s FY14 core net profit was below our (forecast) but in line with consensus expectations, coming in at 88% and 97% of the respective FY14 forecasts," RHB said.