MAYBANK Investment Bank Bhd has downgraded plantation and property firm IOI Corp Bhd and revised its recommendation to "sell" from "hold" previously, due to lower earnings forecast and the demerger of its property arm. In its research note, Maybank Investment said it has revised the stock's target price to RM3.95 after cutting its earnings forecasts. IOI shares were last traded at RM4.52 . "The stock lacks short-term catalyst post its demerger exercise with a tepid three-year 2013-2016 fresh fruit bunches output cumulated average growth rate of 3.8 per cent (post the Unico-Desa acquisition) and no property development potential to boost earnings. "Valuations are steep at 23.6 times 2015 price-earnings ratio and RM146,000 earnings value per planted ha versus the sector's RM66,000 ," it said. The research house added that after the demerger of its property development business via a separate listing to be completed on January 15 , IOI will be a pure integrated plantation player with 173,000ha of planted oil palm estates located mostly in Sabah and its downstream operations.
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