Company Name: MEWAH INTERNATIONAL INC.
| Research House: DBS Vickers | Price Call: SELL | Target Price: 0.38 |
DBS Vickers downgraded palm oil refiner Mewah International to ‘fully valued’ from ’hold’ and cut its target price to $0.38 from $0.46, citing weak earnings outlook.
By 12:19 p.m., Mewah shares were up 1.2% at $0.425 and have fallen 8.6% so far this year, compared to the FT ST Consumer Goods Index’s 15.6% drop.
Mewah International said its net profit for April-June rose 3.8% to $6.3 million from a year ago, helped partly by a fall in cost of sales, although its revenue dropped 18.8%.
DBS cut its 2012-2014 earnings forecast for Mewah by 10-19% on expectations that slow demand for consumer pack will persist and on slower-than-expected take up of its new capacity for speciality fats business.
Malaysian refineries are expected to remain uncompetitive against their Indonesian peers unless crude palm oil prices fall to around 2,100 ringgit/metric tonne, an unlikely scenario, DBS said.
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