$CHINWEL / 5007 (CHIN WELL HOLDINGS BERHAD)
Research by PB
Underperform - TP of RM0.80

"Barely Break-even"

Chin Well Holdings (Chin Well) reported weaker net profit of RM0.3m (-97.0% YoY, -90.1% QoQ) for 2QFY24 on lower revenue and reduced profit margin. Cumulative 6MFY24 reported net profit of RM2.8m (-38.2% YoY) was below both our and consensus expectations, accounting for only 10.5% and 8.7% of full year estimates, respectively. The discrepancy was largely due to weaker than expected demand from European market and depressed average selling price (ASP) resulting from price competition from China. The outlook for the Group remains challenging, particularly in Europe as demand continues to be affected by the on-going geopolitical conflicts and higher manufacturing cost. We cut our FY24-25F earnings forecasts by an average of 20% to account for a slower demand growth recovery. Consequently, our PE-based target price revised to RM0.80 (RM1.00 previously) and retain our Underperform call on Chin Well. No dividend was declared for the current quarter.

Analyst(s):
Denny Oh
research@publicinvestbank.com.my