CIMB downgraded Dairy Farm to Hold from Add after earnings missed its forecasts amid a sluggish food division.
It noted that 2017 core net profit of US$467.5 million was just 94.7 percent of its forecast, with the figure excluding a one-off business-change cost of US$64 million for the Southeast Asia food business.
CIMB pointed to poor performances in the supermarket and hypermarket segments in Malaysia, Singapore and Indonesia, with some underperforming stores closed and the company writing off slow-moving stock.
“The weakness in the food division dwarfed the gains in other divisions,” including the convenience segment in Hong Kong, China and Macau, and health and beauty in Hong Kong, Indonesia and Vietnam, it said in a note dated Friday.
CIMB cut its target price to US$8.40 from US$9.18 after lowing its price-to-earnings ratio basis and cutting its 2018-19 earnings per share forecasts by 0.8-5.9 percent.
The lower price-to-earnings basis for the target was because “we believe it may take some time to bear fruit from the ongoing strategic review,” CIMB said.
The stock ended Friday down 2.31 percent at US$8.03.