Outlook for wood-based manufacturing stays challenging in 2H18, says HLIB Research

TheEdge Wed, Jul 11, 2018 09:19am - 5 years View Original


KUALA LUMPUR (July 11): Hong Leong IB Research has maintained its “Neutral” rating on the wood-based manufacturing sector and said that moving into 2H18, it believes that the sector will remain unfavourable as we opine that weaker ringgit alone is insufficient to mitigate the negative factors of (i) potential minimum wage hike and (ii) high rubber log wood prices.

“However, we favour the furniture players over the engineered wood players, as they are not involved in intense price war.

“We cut our FY18-20 earnings forecast on Evergreen Fibreboard Bhd by 16-28% to account for higher log prices in Thailand operations. Post earnings downgrade, target price (TP) on Evergreen is lowered to 42 sen (previously: 51 sen) with Hold rating maintained.

“We also cut our FY18-20 earnings forecast on Homeritz Corp Bhd by 13-18% respectively to account for higher operational cost assumptions with TP lowered to 67 sen (previously: 78 sen) and we maintain our Hold rating,” it said.

The research house however upgraded its rating on HeveaBoard Bhd to Hold (from Sell previously) with unchanged TP of RM0.83 sen, as valuations have become more palatable given the recent sharp share price retracement.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






Related Stocks

EVERGRN 0.305
HEVEA 0.330
HOMERIZ 0.550

Comments

Login to comment.