KUALA LUMPUR (Feb 27): Kawan Food Bhd shares fell 6.12% in thin trade at mid-morning today, after CIMB IB Research  maintained its “Add” rating on Kawan Food Bhd (Kawan) at RM4.41, with a lower target price of RM5.15 (from RM5.56) and said that at 87% of FY16 forecasts, Kawan’s net profit was below consensus and house expectations, mainly due to higher-than-expected adex and promotional expenses.

At 10.24am, Kawan lost 27 sen to RM41.4, with 26,100 shares traded.

In a note Feb 26, the research house said Kawan’s new factory is facing teething issues; to start only from early 2H17 onwards.

“No approval yet from authorities on tax-free status. We cut FY17-18F EPS to reflect taxes to be paid. The company has reinvestment tax allowance.
“Still an Add, but target price falls from RM5.56 to RM5.15, following FY17-18F EPS cuts,” it said.