This article first appeared in The Edge Financial Daily on March 1, 2019

CI Holdings Bhd
(Feb 28, RM1.50)
Maintain hold with a lower target price of RM1.49: CI Holdings Bhd posted a profit after tax and minority interest (Patmi) of RM3.6 million for the second quarter of financial year 2019 (2QFY19), which slid 33.5% quarter-on-quarter (q-o-q) and 67.4% year-on-year (y-o-y). Both q-o-q and y-o-y performances were weighed down by a lower olein price. CI Holdings’ Patmi for the first half (1H) of FY19 only meets 38% of our full-year forecast earnings given a lower selling price.

CI Holdings’ edible oil product segment’s q-o-q performance was dragged by a lower margin in view of a weaker olein selling price. Profit before tax (PBT) was down 27.2% despite a flat revenue growth of 0.1% y-o-y, no thanks to a lower olein selling price.

CI Holdings’ 2QFY19 revenue was down 4% y-o-y despite full container loads increasing close to 8% given a 23% drop in olein price. Meanwhile, the lower selling price put downward pressure on gross profit margin, which saw a decrease of 1.37 percentage points to 4.12%. As such, PBT tumbled 43.5% y-o-y. On the same note, CI Holdings’ PBT for 1H of financial year 2019 (FY19) slumped 47.7% in view of the lower selling price. Meanwhile, revenue decreased 10.6% y-o-y to RM1.24 billion.

We tweak down our earnings forecasts for FY19 and FY20 by 21%-23% to account for a softer selling price. — JF Apex Securities, Feb 28