SINGAPORE (Feb 20): RHB Research is maintaining “neutral” on Kimly Limited with a lower target price of 24 cents after lowering FY19F PATMI by 5% and says it sees limited potential upside to the stock despite its reasonable valuations.
This comes post the release of Kimly’s 1Q19 earnings results, which reflected a lower y-o-y bottomline despite revenue growth, as distribution and selling expenses rose on the back of higher online delivery fees and packing materials used.
In a report last Thursday, analyst Jarick Seet says he expects ongoing investigations to create an overhang on Kimly’s stock and generate some negative sentiment – even as the group intends to continue expanding its footprint and diversify product offerings, as well as synergise central kitchen operations.
RHB’s previous “buy” call on Kimly was downgraded to “neutral” in Dec 2018 after the group cancelled its intended $16 million acquisition of Asian Story Corp (ASC) – following which regulators launched an investigation into the group’s executive chairman and executive director for a suspected offence under the Securities and Futures Act.
Instead, the analyst prefers Silverlake Axis as his top sector pick, which has been rated “buy” with a target price of 65 cents.
As at 3:13pm, shares in Kimly are trading flat at 24 cents or 2.88 times Sept-19F book value.
