Stock Name: AJIYA
Company Name: AJIYA BHD
Research House: OSK

KUALA LUMPUR: OSK Research said Ajiya's earnings came in below its estimates as earnings dipped in 3Q as higher operating expenses and lower other income undermined its bottom-line earnings although the higher-than-expected decline was a surprise.

The research house said on Wednesday, Oct 20 that the higher costs stemmed from the commencement of Ajiya's new production line, which was still at the gestation phase during 3Q.

Although this will translate into lower earnings growth this year,'' this investment will bring about future gains as it ramps up plant utilization to cater to the government development plans outlined in Budget 2011, which will spur demand for building materials.

'We cut our earnings estimates (~5%), which reduces our TP to RM2.74 from RM2.81 previously,' it said.