3Q20 below expectation, swing to red on lower revenue and Forex loss

TWPH 3Q20 posted lower revenue RM64.8m (yoy:-22.3%, qoq:-11.7%) and LAT of RM1.0m (yoy:-RM2.6m, qoq:+RM0.2m). Nine (9) months cumulative results disappoint revenue and PATMI of RM222.4m and RM1.3m only accounted for 56.5% and 16.0% of our forecast respectively.

Revenue for the quarter was affected by lower demand in certain cigarette brand related packaging products impacted by the Covid-19. Management actively taking cost saving measure and would have reported profitable quarter if not for net foreign exchange loss of RM2.5m.

Recovery 2020 hampered by Covid-19, focus on cost saving measures

Management’s effort to combat the adverse impact by Covid-19 is commendable which has prevent loss widen albeit revenue dip however given the challenging outlook and low earnings visibility, we maintain sell recommendation with unchanged TP at RM 0.84 pegged at P/B of 0.4x of FY20F NTA for TWPH.

Source: Mercury Research - 4 Dec 2020