AllianceDBS Research downgrades CBIP to Hold, cuts target to RM2.20

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KUALA LUMPUR (Jan 28): AllianceDBS Research has downgraded CB Industrial Product Holding Bhd to “Hold” at RM2.10 with  lower target price of RM2.20 (from RM2.80) and said it expects the company’s near term earnings to be dragged by higher effective tax rate with the expiration of its pioneer status.

In a note today, AllianceDBS vice president for equity Cheah King Yoong said he was cutting his FY14-16 earnings estimates for the group by 10%/33%/26% respectively, mainly to factor in (1) lower contribution from its SPV division, and (2) higher effective tax rate.

“With the reduced earnings forecasts, we downgrade our recommendation for CBIP to Hold with a lower target price of RM2.20 based on SOP valuation.

“Although we continue to like the group’s long-term growth prospects, we believe that its near-term earnings outlook is unexciting, mainly dampened by the higher effective tax rate,” he said.