KUALA LUMPUR (June 16): CIMB IB Research has downgraded Eco World Development Group Bhd (EWDG) to “Hold” at RM1.71 with an unchanged target price of RM1.70 and said EWDG’s 1H17 core net profit was below expectations as it was only 38% of house full year forecast (39% of consensus) due to disappointment in gross profit margin.

In a note June 15, the research house said it revised its earnings forecast to reflect the share of loss and profit from Eco World International Bhd (EWI), in which EWDG recently took up a 27% stake during EWI’s IPO.

It said this, coupled with the weak results, led CIMB Research to cut FY17F EPS by 39%.

“However, we raise our FY18-19F EPS to reflect the earnings contribution from EWI.

“Maintain target price, based on 20% discount to RNAV, but downgrade to Hold as its share price has risen 28% YTD and the weak profit margin could cap its share price upside,” it said.