KUALA LUMPUR (May 25): CIMB IB Research has maintained its “Reduce” rating on Hovid Bhd at 35 sen with a higher target price of 32 sen (from 30 sen) and said Hovid’s 9MFY17 core net profit were below expectations, at only 35% of house and 26% of Bloomberg consensus full-year estimates.

In a note May 24, the research house said Hovid’s 9MFY17 revenue and net profit declined by 2.6% and 54.4% y-o-y, respectively.

It said this was attributed to: i) production loss in 3QFY17 due to suspension of both its manufacturing licences, ii) lower sales volume, and iii) higher operating costs.

“Licence secured since for both plants at Chemor (March 6) and Ipoh (May 5); full production resumed.

“Maintain Reduce, but SOP-based target price raised to 32 sen. We are removing the 10% discount to its 5-year mean P/E, in tandem with the reissuance of both licences,” it said.