(AJR MK/HOLD/RM3.38/Target: RM3.30)

Core net profit margin showed a qoq improvement – thanks to a higher ASP (+12.6% qoq) and declining production cost which mitigated the impact of lower sales volumes during the quarter. Expect margin contraction in 2Q17 due to still weak demand (led to lower qoq ASP) and the effect of a time lag of higher inventory cost. Downgrade to HOLD as we ascribe to a lower PE multiple to price in the “peak cycle valuation”. Our target price is revised to RM3.30 post earnings adjustment.

Source: UOB Kay Hian Research - 24 May 2017