HLIB Research downgrades woodbased sector to Neutral

TheEdge Tue, May 22, 2018 09:50am - 5 years View Original


KUALA LUMPUR (May 22): Hong Leong IB Research has downgraded the woodbased manufacturing sector to “Neutral” (from Overweight) and said that 1Q18 earnings will be weaker (both year-on-year and quarter-on-quarter) mainly due to (i) new implementation of foreign labour levy, (ii) rising crude oil price, (iii) stronger ringgit vs US Dollar, and (iv) long festive season (Chinese New Year).

In a note today, the research house said it removed its positive stance on HeveaBoard Bhd and Evergreen Fibreboard Bhd as the particleboard players are impacted by ongoing intense price competition.

“The higher packaging, coating and labour cost will also pressure furniture makers in the near future.

“In view of continuous hike in cost and slowdown in expansion plans in the sector, we downgrade the sector to Neutral from Overweight,” it said.

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