INVESTMENT HIGHLIGHTS

• 6MFY18 loss more than expectations

• Weak bottomline influenced by lower revenue

• No change to our forecast for now

• We upgrade our recommendation to NEUTRAL pursuant to recent price weakness with an adjusted TP of RM3.18

6MFY18 loss more than expectations. LMFB’s 6MFY18 PATAMI registered at -RM152.4m (-63.8%YoY) which came in worst than expectations, registering for -68% of ours and -78% of consensus’ fullyear net loss forecasts respectively.

Weak bottomline influenced by lower revenue. We opine that its bland revenue of RM1.09bn (-1.3%YoY) was accentuated significantly to the following: (i) reduction in large infrastructure projects, (ii) increase in petcoke and coal prices, and (iii) oversupply of cement products.

No change to our forecast for now. Overall, we maintain our financial forecasts at this juncture.

Recommendation. Pursuant to recent price weakness, we upgrade our recommendation to NEUTRAL but with a lower TP of RM3.18 per share by pegging to its price-to-book ratio of 1.02x.

Source: MIDF Research - 3 Sept 2018