Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
KUALA LUMPUR:'' CIMB Equities Research is maintaining its Underperform rating on IOI Corp Bhd and it is not making any changes to its earnings forecast or target price of RM5.48, which is based on 16 times forward price-to-earninings.
It said on Monday, July 18 the PLANTATION []s-property group's valuations were not attractive and near-term earnings growth prospects were unexciting.
'The main de-rating catalysts are lower crude palm oil (CPO) prices and weaker manufacturing margin. Sime Darby is our preferred pick among the Malaysian planters,' it said.
CIMB Research said it was neutral on IOI Corp's plans to raise its property exposure. While it will help to drive earnings growth for the group amid the constraints on growth of its estate business, it will reduce the group's plantation exposure and its appeal as a CPO play.
'Also, the market may accord lower P/E ratings to IOI Corp over time since property plays typically fetch lower P/E valuations than plantation stocks. The group's mixed track record, where overseas property projects are concerned, adds to our reservations,' it said.
The research house pointed out that in November 2008, the group forfeited a deposit of RM73 million when it scrapped its plans to acquire Menara Citibank.
'We expect IOI Corp to announce more property M&As in the near future. Its plantation expansion may take a backseat unless a good opportunity comes around.
'On the plantation front, the group will be concentrating on planting up its 66%-owned Indonesian subsidiaries' landbank of 50,000ha and expanding the planted areas of its 33%-owned plantation associate PT Bumitama Gunajaya Agro,' it said.
Company Name: IOI CORPORATION BHD
| Research House: CIMB | Price Call: SELL | Target Price: 5.48 |
KUALA LUMPUR:'' CIMB Equities Research is maintaining its Underperform rating on IOI Corp Bhd and it is not making any changes to its earnings forecast or target price of RM5.48, which is based on 16 times forward price-to-earninings.
It said on Monday, July 18 the PLANTATION []s-property group's valuations were not attractive and near-term earnings growth prospects were unexciting.
'The main de-rating catalysts are lower crude palm oil (CPO) prices and weaker manufacturing margin. Sime Darby is our preferred pick among the Malaysian planters,' it said.
CIMB Research said it was neutral on IOI Corp's plans to raise its property exposure. While it will help to drive earnings growth for the group amid the constraints on growth of its estate business, it will reduce the group's plantation exposure and its appeal as a CPO play.
'Also, the market may accord lower P/E ratings to IOI Corp over time since property plays typically fetch lower P/E valuations than plantation stocks. The group's mixed track record, where overseas property projects are concerned, adds to our reservations,' it said.
The research house pointed out that in November 2008, the group forfeited a deposit of RM73 million when it scrapped its plans to acquire Menara Citibank.
'We expect IOI Corp to announce more property M&As in the near future. Its plantation expansion may take a backseat unless a good opportunity comes around.
'On the plantation front, the group will be concentrating on planting up its 66%-owned Indonesian subsidiaries' landbank of 50,000ha and expanding the planted areas of its 33%-owned plantation associate PT Bumitama Gunajaya Agro,' it said.
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