DNeX falls as much as 4% in active trade

DNeX falls as much as 4% in active trade
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KUALA LUMPUR (Dec 1): Shares in Dagang NeXchange Bhd (DNeX) fell by as much as 4.31% or 2.5 sen to 55.5 sen in active trade on Thursday (Dec 1).

The counter saw 59.26 million shares changing hands, making it the day's seventh most actively traded stock on Bursa Malaysia.

The stock opened half a sen higher at 58.5 sen and rose to an intra-day high of 59.5 sen, before its fortune reversed in the afternoon as selling emerged.

It closed down two sen or 3.45% at 56 sen, giving the group a market capitalisation of RM1.77 billion.

DNeX, which has been embroiled in legal disputes over its 60% investment in semiconductor wafer foundry SilTerra Malaysia Sdn Bhd, has fallen 26% over the last two weeks, from 75.5 sen on Nov 16.

Last Friday, the group reported an 85.79% drop in its net profit for the first quarter ended Sept 30, 2022 (1QFY2023) to RM41.72 million, from RM293.56 million a year earlier, when there was a one-off bargain purchase effect from the acquisition of the 60% interest in SilTerra.

Excluding the one-off gain from the bargain purchase, DNeX's net profit grew 44% from the normalised 1QFY2022 net profit of RM29.05 million.

Quarterly revenue grew 55% to RM419.58 million from RM270.87 million in 1QFY2022, driven by higher contribution from both the group's technology and energy segments.

Commenting on DNeX’s 1QFY2023 results, CGS-CIMB analyst said the group's core net profit was below expectations, accounting for 18% of the research house's and consensus full-year net profit forecast, due to softer-than-expected volume loading at Silterra.

According to the research firm, DNeX expects the softer volume loading at SilTerra to continue in the second and third quarters followed by the lower volume loading seen in 1QFY2023 due to a delay in new order replenishment from its customers in light of softer consumer electronics demand.

As such, the research house has cut its earnings per share forecast for FY2023 to FY2025 by 19% to 29% to account for lower utilisation at SilTerra.

Nonetheless, the research house said DNeX’s current share price already reflects the near-term uncertainty. With that, it had retained its “add” call for the counter, but lowered its target price to RM1 from, RM1.17 previously.

Bloomberg data showed that all three analysts tracking the stock have placed a “buy” call, with a 12-month average target price of 95 sen.

Read also:
Excluding SilTerra bargain purchase effect, DNeX starts FY2023 on stronger footing
DNeX’s one-third market value wiped off on dispute with Chinese partner over SilTerra

S Kanagaraju