KUALA LUMPUR (Feb 13): CIMB Equities Research said Malaysian Genomics Resource Centre’s (MGRC) results significantly undershot its expectations with a 2Q net loss of RM1.42 million.
“We had earlier forecasted a net profit of RM2.62m for the full year and had been too optimistic in our projections. Higher operating costs were to blame for the poor 2Q, prompting us to cut our FY12-13 EPS by 58%-78%,” it said.
CIMB Research said in view of the volatile earnings, it changed its method of valuation from a price-to-earnings (P/E)basis to a price-to-book (P/B) basis.
“The stock remains firmly a SELL despite a slight nudge upwards in MGRC’s target price from 34 sen to 35 sen, as we now value the stock at 1.0 times P/B.
“Potential de-rating catalysts are 1) these set of poor 1H results, 2) continuing margin squeeze, and 3) a lack of new projects,” it said.
“We had earlier forecasted a net profit of RM2.62m for the full year and had been too optimistic in our projections. Higher operating costs were to blame for the poor 2Q, prompting us to cut our FY12-13 EPS by 58%-78%,” it said.
CIMB Research said in view of the volatile earnings, it changed its method of valuation from a price-to-earnings (P/E)basis to a price-to-book (P/B) basis.
“The stock remains firmly a SELL despite a slight nudge upwards in MGRC’s target price from 34 sen to 35 sen, as we now value the stock at 1.0 times P/B.
“Potential de-rating catalysts are 1) these set of poor 1H results, 2) continuing margin squeeze, and 3) a lack of new projects,” it said.
