KUALA LUMPUR(July 27): Hong Leong Investment Bank Bhd Research (HLIB) has downgraded Sasbadi Holdings Bhd to a “Hold” call from a “Buy” previously, given the shortfall in the results for the third quarter of its financial year ending Aug 31, 2018 (3QFY18).

In a note today, HLIB said it is lowering its target price for Sasbadi to 42 sen, from 50 sen previously.

HLIB added that it has revised Sasbadi’s FY18 to FY20 earnings assumption downwards by 18 to 20% to RM12.9million, RM13.9million, and RM15.7million respectively, adjusted for a higher tax rate and operating costs.

In a filing to the exchange yesterday, Sasbadi reported an almost 80% drop in its 3QFY18 net profit to RM525,000, as a result of a lower gross profit margin due to a lower economies of scale.

Revenue for 3QFY18 dropped by almost 12% to RM19.1 million on lower revenue contribution from its print publishing divison, attributed to a continued weak market sentiment.

For the first nine months of its financial year ending Aug 31, 2018 (9MFY18) Sasbadi reported a 19.3% drop in net profit to RM9.91 million. Revenue for 9MFY18 came in lower by 6.3% to RM75.07 million.

At 9.52 am Sasbadi shares were down 2.7% to 36 sen, with 2.18 million shares changing hands.