2Q18 core earnings fell 89% qoq and 83% yoy to RM1.0m. The poor performance was due to its core businesses – Software & Services and Academy segments – slipping into the red. We believe the former could be impacted by the government transition in May possibly resulting in timing of payment in services. Additionally, the effective tax rate surged drastically in the quarter.
Overall, 1H18 core earnings grew 10.7% on higher 1Q18 revenue recognition from the SKIN project. Contribution from 1Q18 made up c.90% of 1H18 earnings. Notwithstanding, earnings trailed ours and consensus’ estimates at only 19% and 15% respectively.
A second interim DPS of 0.2 sen was declared, bringing total DPS for FY18 of 2.8 sen (FY17: 3.0 sen). This implies a dividend yield of 0.2% at current level.
We have put our estimates and recommendation under review pending a revisit to our earnings outlook on the stock.
Source: BIMB Securities Research - 30 Aug 2018
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