(UMWH MK/SELL/RM5.91/Target: RM4.80)

UMW’s 1Q17 core net profit of RM14.9m is within expectations. Although UMW is expected to return to profitability in 2017 as it exits its listed O&G business by Jul 17, we remain negative given operational headwinds at its core businesses – notably automobile - in the near to medium term. UMW intends to sell its unlisted O&G assets by end-18. Maintain SELL and target price of RM4.80 on demanding valuations and sub-optimal yields.

Source: UOB Kay Hian Research - 24 May 2017