MIDF Research upgrades Daibochi, target price RM1.52

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KUALA LUMPUR (Sept 26): MIDF Amanah Investment Bank Bhd Research has upgraded Daibochi Berhad to “Neutral” from “Sell” at price RM 1.71 with an unchanged target price of RM 1.52.

In a note today, the research house said that during an analyst briefing, Daibochi’s management had shared some of its plans to expand topline through selling more products to existing clients.

It said Daibochi also aims to improve target margin through cost controlling measures such as consolidation of headcount (from 936 to 770), improved inventory management and replacement of less efficient machines with better ones.

“They have also improved their floor plan of the plants for a better process flow,” the research house said.

With the management’s active measures in implementing plants to improve operational efficiencies and to boost sales, the impact on its financial may be gradual.

Therefore, the research house maintains its FY20F/FY21F earnings estimate of Daibochi.

According to the research house, Daibochi’s results for the 19 months ended March CY2019 (7QFY19) was lower than the 19-month estimates, making up 85% of house and 55.9% of consensus estimates.

No dividend was announced during the quarter but cumulative DPS came to 3.35 sen for the 19-month period.

Net loss of RM30,500 recorded for the quarter mainly due to inventory write down/off and on top off that, the company has also incurred one-off expenses for the acquisition of Mega Printing and Packaging (MPP).

“However, revenue for the quarter was a record high for DPP at RM 123.3million, which is an increase of 11.2% compared to the quarter ended April 30,” it said.