KUALA LUMPUR (March 22): Hong Leong IB Research has downgraded United Malacca Bhd to “Sell” at RM5.40 with a lwer target price (TP) of RM4.57 (from RM4.90) and said United Malacca’s core net loss of RM3.4 million in 3QFY19 took 9MFY19 core net loss to RM10.6 million.

The research house said while it expects 4Q to come in stronger (on the back of improved palm product prices), the results  disappointed (versus house projected full -year core net profit forecast of RM800,000), mainly on the back of lower-than-expected FFB production in Malaysia operations.

“We revised our FY19 forecast to a core net loss of RM22.4 million (from a core net profit of RM800,000 previously), and lower our FY20-21 core net profit forecasts by 21.6% and 20.7%, largely to account for lower FFB output assumption in Malaysia operations.

“Post earnings revision, we downgrade our rating to Sell (from Hold previously) with a lower TP of RM4.57 (from RM4.90 previously),” it said.