KUALA LUMPUR (Nov 30): Affin Hwang Capital has downgraded Genting Plantations Bhd to "hold" at RM9.65 with a lower target price of RM9.76 after it cut earnings forecasts as a result weaker profit margins.

The research house in a note today said it downgraded the stock from a "buy" call with a previous target of RM10.98 to factor in weaker profit margins, especially from the upstream plantation division, which resulted in lower net profit for the nine-month period, falling below expectations.

"Due to weakness in crude palm oil (CPO) prices as well as our higher production cost assumptions mainly attributable to the higher minimum wage in Malaysia, we cut our 2018-2020 core earnings per share forecasts by 34%-46%," it said.

Meanwhile, MIDF Amanah Investment Bank Bhd Research and Kenanga IB Research have also lowered their target prices on the stock, both to RM10.50.

Yesterday, Genting Plantations said earnings slumped by 69% to RM23.5 million or 2.93 sen per share in the third quarter ended September, from RM76.46 million or 9.63 sen per share a year ago, as depressed prices on palm products weighed in on the group's performance.

This was despite a 12.7% year-on-year growth in revenue to RM488.84 million from RM433.89 million, on the back of improved offtake from its downstream manufacturing segment and better sales at its Indahpura project.

For the cumulative nine months, net profit fell 31.5% to RM150.63 million, while revenue grew 11% to RM1.42 billion.

At 10.27am, shares of Genting Plantations are down 4 sen or 0.41% to RM9.61, with a market value of RM7.74 billion.