HLIB lowers target price for Homeritz to 42 sen

KUALA LUMPUR (April 17): Hong Leong Investment Bank (HLIB) Research has maintained its “sell” rating of Homeritz Corp Bhd at 50 sen with a lower target price (TP) of 42 sen (from 45 sen) and said Homeritz’ second quarter of FY2023 (2QFY2023) core profit after tax and minority interest of RM5.3 million (quarter-on-quarter [q-o-q]: -11.6%; year-on-year [y-o-y]: -45.4%) brought first half of FY2023’s sum to RM11.3 million (y-o-y: -34.1%), which were below the house's expectations at 42.4% of the full-year forecast and consensus at 42.6%.

In a note on Monday (April 17), the research house said the negative deviation was mainly due to lower-than-expected sales volume.

“We cut our FY2023/2024/2025 forecasts by -10.2%/-6.3%/-3.8% to account for lower sales assumptions.

“We anticipate Homeritz’ subsequent quarters to remain soft and uncertain in view of elevated interest rates as well as a potential economic slowdown in the NA and EU regions, which will negatively impact demand for the group’s products.

“We maintain 'sell' with a slightly lower TP of 42 sen (from 45 sen) pegged to an unchanged P/E of 8x FY2023 core EPS of 5.2 sen,” it said.