KUALA LUMPUR (Nov 20): Shares of Cape EMS Bhd (KL:CEB) fell on Wednesday morning in highly active trade, after the electronic manufacturing services firm reported its first quarterly loss since its listing.
Cape EMS slipped as much as four sen or 10% to 34.5 sen. The stock was trading at 37 sen at 9.30am, and was the most active by volume on Bursa Malaysia, after more than 84 million shares changed hands. At its last price, the company had a market capitalisation of RM367 million.
Cape EMS reported a headline net loss of RM19 million in the third quarter of 2024 (3Q2024), impacted by RM12.6 million unrealised forex loss, RM4 million amortisation of intangible asset and RM2.2 million impairment on trade receivables.
Philip Capital said that excluding the exceptional items, 3Q2024 "barely broke even" with a core net loss of RM200,000, with the earnings before interest, taxes, depreciation and amortisation (Ebitda) margin declining by nine percentage points to 4%.
"Management attributed the drastic margin decline to customers’ cost down in both industrial and consumer electronic segments, particularly in wireless communication equipment and e-cigarettes, respectively," it said.
Philip Capital, which ceased its coverage on the stock, said Cape EMS aligns with the broader trend of global supply chain relocation amid US-China trade tensions, the company’s underperformance and ongoing uncertainties, as reflected in its latest quarterly results, raise concerns on its near-term outlook.
"We are ceasing coverage on Cape EMS due to a reallocation of resources. Our last recommendation was a 'buy' with a target price of 60 sen, based on target 12x PE (price-earnings) multiple on 2025E EPS (earnings per share)," it said in a note on Wednesday.