KUALA LUMPUR (May 30): Hong Leong IB Research has downgraded HPMT Holdings Bhd to “hold” at 50 sen with a lower target price (TP) of 55 sen (from 65 sen) and said HPMT’s 1QFY22 core PATAMI of RM2.7 million (-17% y-o-y and q-o-q) fell below expectations at 19% of forecasts.

In a note on Monday (May 30), the research house said the shortfall was due mainly to operating margin miss which "we attribute to unfavourable forex and possibly higher raw material costs".

“With the Russia-Ukraine war dragging much longer than anticipated, we reckon there would be further impact on supply chain disruptions, possible energy interruption and weaker end markets.

“Likewise, China’s strict Covid-19 policy has also led to contractionary manufacturing PMI reading in April 2022.

“Hence, we grow cautious on HPMT’s near term business prospects. Cut FY22-23 earnings by -14.6% and -0.4%. Downgrade to 'hold' with a lower TP of 55 sen,” it said.