Friday, 11 May 2012

RHB Research downgrades Century Logistics, slashes fair value to RM1.63

KUALA LUMPUR (May 11): RHB Research has downgraded CENTURY LOGISTICS HOLDINGS BHD [] to Underperform and slashed its fair value to RM1.63 (from RM2.09) and said the company’s 1QFY12 net profit came in below expectations.

“We believe this was mainly due to: (1) start-up losses from the operation of its double hull product tanker; (2) Lower-than-expected contribution from the ship-to-ship (STS) segment; and (3) The ongoing strike by container haulage drivers had indirectly hampered its total logistics segment,” the research house said in a note Friday.

RHB Research said that Century believes its weak 1Q12 earnings was the trough and management was optimistic of better earnings ahead as: (1) Oil transport business to turn profit (from losses currently) in the coming quarters as it increases its frequency; and (2) To reinstate 3-4 additional floating storage units (FSUs) in PTP.

“We have reduced our FY12-14 net profit forecast by 10.5-26.1% respectively after imputing lower contribution from the STS segment.

“Fair value is reduced to RM1.63 based on 8x FY12 FD EPS. Downgrade to Underperform,” it said.

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