CIMB Research cut its target price for logistics company Keppel Telecommunications & Transportation to $1.20 from $1.22 and kept its neutral rating, citing potentially higher operating expenses.
By 9:01 a.m., shares of Keppel T&T were 0.4% lower at $1.13 and have gained 1.8% since the start of the year, compared to the FT ST Industrials Index's 15% rise.
CIMB said although Keppel T&T's second quarter net profit of $14.2 million was in line with its estimates, operating expenses were above expectations due to higher staff costs and increased maintenance for its data centres and warehouses.
Keppel T&T's net gearing in the second quarter was 0.68 times, and CIMB expects it to continue rising as the company enters a capital expenditure-intensive phase in the coming years. This could give rise to capital raising including rights issue or placement of new shares, CIMB said.
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