KUALA LUMPUR (Aug 26): Affin Hwang Capital has downgraded Pecca Group Bhd to “Sell” at RM1.27 with a lower target price of RM1.10 (from RM1.20) and said Pecca’s FY19 core net profit of RM16.4 million missed estimates due to the weaker-than-expected 4QFY19 performance.

In a note today, the research house said that although it was below expectations, Pecca’s FY19 core net profit was higher by 62% year-on-year due to a low-base effect.

“In light of the eroding margins, we cut our FY20-21E EPS forecast by 9-10% and lower our target price to RM1.10 (from RM1.20).

“At 15x FY20E PER, valuation looks demanding, considering a likely EPS contraction in FY20-22E. Downgrade to Sell,” it said.