SINGAPORE (Feb 18): Given the impact from the outbreak of the novel coronavirus (Covid-19), RHB Securities has turned cautious on integrated electronics manufacturing services provider Valuetronics.
The brokerage lowered its FY20 earnings forecast for the company by 8% as it believes that there will likely be a “negative” impact on its earnings in 4QFY20.
It also downgraded the stock to a “neutral” rating from a “buy”, with a lower target price of 76 cents from 82 cents previously.
According to RHB, Valuetronics has notified its customers about potential delays to its scheduled shipments.
The company also announced that it will submit an application to resume productions of its factories in Guangdong.
But RHB warns that labour and potential supply chain issues could still weigh on the company’s operations.
“We understand that the factory had closed a few days before the Lunar New Year and was supposed to resume production on the second week of February,” RHB analyst Jarick Seet writes in a note dated Feb 18.
“As a result, we think that there may likely be a total of [one-to-1.5] months of downtime, depending on when the government gives the approval to resume production,” he adds.
As at 11.23 am, Valuetronics was down 1 cent or 1.4% at 72.5 cents, with 938,800 shares changed hands.
