IOI Corp. Shares Fall After Weak Third-Quarter Results

By Ying Xian Wong

IOI Corp.'s shares fell Wednesday after the company's weak fiscal third-quarter earnings led analysts to cut their target price.

Shares fell as much as 5.4% and were last at 3.72 ringgit, down 4.9% for the day and 12% over the past year.

The Malaysian planter late Tuesday said its fiscal third-quarter net profit was 52% lower on year at 197.4 million ringgit ($42.9 million) from MYR411.2 million a year earlier, mainly on weakness in the plantation segment due to lower crude palm oil prices. Quarterly revenue was 35% lower at MYR2.66 billion.

The company also said it expects its operating environment to be challenging and guided for its fiscal fourth-quarter financial performance to be flat with a downside bias.

TA Securities downgraded its rating on the stock to hold from buy and cut its target price to MYR4.20 from MYR4.53, due to limited upside.

TA Securities analyst Angeline Chin cut FY 2023 earnings estimates for IOI by 19% to factor in lower-than-expected fiscal third-quarter earnings, lower fresh fruit bunches production growth and lower contribution from associates.

Hong Leong Investment Bank lowered its target price for IOI to MYR4.30 from MYR4.36, as analyst Chye Wen Fei reckons the company's fiscal fourth-quarter may remain weak due to the challenging operating environment for its manufacturing segment.

AmInvestment Bank also cut its target price to MYR3.75 from MYR3.90, but maintained its hold rating on the stock, after earnings came in below expectations.

AmInvestment Bank analyst Gan Huey Ling lowered FY 2023 and FY 2024 net profit forecasts for IOI by 22% and 4%, respectively, to factor in lower plantation and manufacturing Ebit margins in its fiscal third quarter.

Write to Ying Xian Wong at yingxian.wong@wsj.com

(END) Dow Jones Newswires

May 31, 2023 04:57 ET (08:57 GMT)

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