More volatility seen for Boustead going forward
Analysts see ‘pedestrian growth’ for conglomerate
PETALING JAYA: Diversified group Boustead Holdings Bhd is expected to continue seeing volatile quarterly results based on its historical volatile earnings trend, says Kenanga Research.
The research unit said in its latest report that the group’s trading, manufacturing and pharmaceutical divisions were expected to show “pedestrian growth,” but could deliver sustainable recurring incomes.
However, Boustead’s plantation earnings will rely on the crude palm oil movement since 91% of its plantation estates are already matured, it said, adding that “the outlook over the short term looks cloudy.”
The group’s heavy industries division is expected to remain volatile with the quarterly earnings oscillating between profits and losses, according to Kenanga Research.
The research house, which has a “market perform” on Boustead Holdings, has also lowered its target price to 66 sen from 80 sen previously.
This was in line with Kenanga Research’s lower target prices for Affin Holdings Bhd and Pharmaniaga Bhd.
Boustead Holdings is an umbrella holding company for the Armed Forces Fund Board (LTAT), which controls several companies including Boustead Plantations Bhd, Boustead Heavy Industries Corp Bhd, Affin Holdings and Pharmaniaga.
Kenanga Research, however, pointed out that the downside to Boustead Holdings’ share price may be limited by a yet-to-be finalised proposal that LTAT plans on taking Boustead private at 80 sen per share.
On the group’s first quarter FY2020 core net loss that came in at Rm73.1mil, the research unit said “we deemed the results to be in line with our expectations.”
It noted that it will keep the FY2020 forecasts unchanged on expected volatile quarters ahead, with the group swinging back and forth between profitability and losses, judging by past quarterly trends.