Mewah at 2-mth low after Q3 net profit fall

Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.

Research House: Nomura

Price Call: HOLD

Target Price: 0.45

Shares of Mewah International Inc dropped to the lowest in two months after the palm oil firm reported a 82% fall in third-quarter net profit to $1.2 million from a year earlier.

Mewah shares fell as much as 4.6% to $0.415, the lowest since Sept. 11. The stock has fallen nearly 11% so far this year, lagging the 25% gain in the FT ST Mid Cap Index.

“The primary reason for the erosion in profits was Mewah’s emphasis on trying to maintain its margins, even at the cost of volumes, and this resulted in net income being barely positive due to fixed costs,” Nomura said in a report.

Nomura, which has a ‘neutral’ rating and $0.45 target price on the stock, said the outlook for Mewah’s fourth quarter appears weak due to the volatile crude palm oil prices. It added that a downward revision in its and consensus estimates is “inevitable”.