KUALA LUMPUR (Nov 3): Affin Hwang Capital Research has initiated coverage on Kim Hin Industry Bhd with a “Hold” rating at RM1.67 and target price (TP) of RM1.73.
In a note today, the research house said that as one of Malaysia's leading tile manufacturers, Kim Hin has about a 25% share of the domestic revenue of the four Malaysian-listed pure-play tile manufacturers.
It said with 44 years of experience, the company has an international presence with operations in Malaysia, China, Australia and Vietnam.
“We expect moderate earnings growth in FY18/19E of 15/23% year-on-year given rising energy costs, intense price competition among manufacturers and lower export revenue due to Ringgit appreciation against the US dollar.
“But this could be partially offset by a better contribution from Australia, where a moderate property market recovery could drive higher ceramic demand.
“We initiate coverage with a Hold call and 12-month TP of RM1.73, based on a Price/Book ratio of 0.45x (10% discount to peer average),” it said.