Kenanga cuts forecast for Magna Prima on the back of weak 1H result

KUALA LUMPUR: Kenanga research cut its earnings forecast for MAGNA PRIMA BHD following weaker-than-expected results for 1H19.

“Post results, we reverse our FY19-20E from profits to losses, with CNL of RM6.3m and RM4.5m, respectively, after lowering our revenue estimation and EBIT margin assumption, factoring in lower selling price and higher rebates in view of MAGNA’s effort in clearing existing inventories,” it said in a note.

The research house maintained underperform on the counter with a lower target price of 71 sen from 74 sen previously.

In its recent earnings announcement, Magna Prima said it recorded core net losses of RM9.9mil after stripping out a one-off loss, which was worse than estimates, due to low property sales and profit margin.

According to Kenanga, Magna’s focus moving forward will continue to be on clearing its existing inventory of RM254.4mil at cost in Boulevard Business Park, Jalan Kuching and Desa Mentari projects.

The group also plans to re-open booking for the The View Residence project atShaha Alam by offering a better sales package.

The research house said Magna Prima could boost earnings by successfully monetising its 2.6 acres of land along Jalan Ampang, valued at about RM400mil, which has not been imputed into its estimates.

Source: TheStar