KUALA LUMPUR (Aug 23): Shares of Main Market-listed Dagang Nexchange Bhd (DNeX) fell 3.81% in active trade this morning after its net profit came in 87% lower at RM11.93 million for the second financial quarter ended June 30, 2017 (2QFY17) compared with RM89.5 million a year earlier, largely because last year's earnings had booked in a pre-acquisition gain of excess fair value of RM85.3 million for its Ping Petroleum Ltd buy.

At 9.50am. DNeX fell 2 sen to 50.5 sen with 28.62 million shares done.

The group's quarterly revenue grew 4% year-on-year to RM49.11 million from RM47.42 million, on the back of the consolidation of OGPC Sdn Bhd's results, recurring income from the operation and maintenance of the VEP & RC system, and oilfield drilling services to Petronas.

For the first half of FY17 DNeX's net profit fell 72% to RM27 million from RM94.87 million. Net profit was affected by the volatility of crude oil price and margin compression in the oil and gas industry even though revenue clocked in 25% higher at RM92.93 million against RM74.31 million a year ago.

Meanwhile, CIMB IB Research maintained its “Add”rating on Dagang NeXchange Bhd (DNex) at 50 sen with an unchanged target price of 75 sen and said the company’s 1H17 net profit was in line at 41% of house/consensus FY17F forecasts as the research house expects a stronger 2H17 driven by new downstream O&G contracts and higher vehicle enrry permit (VEP) revenue.

In a note Aug 22, the research house said DNex’s core net profit in 1H17 surged 156% y-o-y due to higher contributions from all segments, and the consolidation of OGPC’s earnings.

“We expect stronger earnings in 2H17 driven by new PCS contracts for mini pump station installations and the balance of the Johor-Singapore VEP contract payment.

“The stock is down by 23% from its YTD high in May 17; we see the recent pullback as a good buying opportunity given that the stock trades at an attractive 13x FY18 P/E.

“Maintain Add with an unchanged SOP-based target price of 75 sen,” it said.