CARING (5245) - RHB cuts Caring Pharmacy TP by 17 sen, maintains Neutral
KUALA LUMPUR: RHB Research has cut Caring Pharmacy’s target price by 17 sen to RM1.10 from RM1.27 while maintaining its Neutral call on the stock after the latest Q2 results came in below expectations.
Caring’s earnings for the first six months of the 2015 financial year were at just 35% of full-year forecast, the research house noted.
While revenue in the period improved 5.8% year-on-year, net profit declined 60.3% (RM16.1mil vs RM20.6 previously) in the face of intensifying price war within the market. Nevertheless, quarter-on-quarter numbers showed improvements – with revenue and net profit up 0.7% and 175.6% respectively.
“This was mainly attributed to 1) contributions from 12 outlets opened in 2HFY14, 2) contributions from four new outlets opened in 1HFY15, and 3) better cost management. We expect improvement in revenue and net profit to continue into the second half of FY15,” RHB Research said.
The research house is cutting its FY15 earnings forecast for Caring by 28.9% in view of the slower earnings recovery, but is keeping its FY16-17 forecasts intact for the time being.
“We maintain our Neutral call with a lower TP of RM1.10 (from RM1.27), pegged to 16 times FY15F price-earnings ratio. We believe this is fair as the lower TP reflects our view that a challenging operating environment could potentially result in a slower earnings recovery for Caring," it said.
http://www.thestar.com.my
KUALA LUMPUR: RHB Research has cut Caring Pharmacy’s target price by 17 sen to RM1.10 from RM1.27 while maintaining its Neutral call on the stock after the latest Q2 results came in below expectations.
Caring’s earnings for the first six months of the 2015 financial year were at just 35% of full-year forecast, the research house noted.
While revenue in the period improved 5.8% year-on-year, net profit declined 60.3% (RM16.1mil vs RM20.6 previously) in the face of intensifying price war within the market. Nevertheless, quarter-on-quarter numbers showed improvements – with revenue and net profit up 0.7% and 175.6% respectively.
“This was mainly attributed to 1) contributions from 12 outlets opened in 2HFY14, 2) contributions from four new outlets opened in 1HFY15, and 3) better cost management. We expect improvement in revenue and net profit to continue into the second half of FY15,” RHB Research said.
The research house is cutting its FY15 earnings forecast for Caring by 28.9% in view of the slower earnings recovery, but is keeping its FY16-17 forecasts intact for the time being.
“We maintain our Neutral call with a lower TP of RM1.10 (from RM1.27), pegged to 16 times FY15F price-earnings ratio. We believe this is fair as the lower TP reflects our view that a challenging operating environment could potentially result in a slower earnings recovery for Caring," it said.
http://www.thestar.com.my
