KUALA LUMPUR (Feb 16): Shares of Plantation group IOI Corp Bhd took a beating after it reported a 96% fall in second quarter profit from a year earlier.

The stock fell as much as 10 sen or 2% to RM4.71 before paring losses. At 12:30pm, IOI Corp (fundamental: 1.7; valuation: 2.1) settled at RM4.74 with some five  million shares done.

Last Friday, IOI Corp announced a net profit of RM19.6 million for its second quarter ended December 31, 2014 (2QFY15) versus RM487.1 million a year earlier. This brought 1HFY15 net profit to RM196.2 million from RM788.9 million a year earlier.

IOI Corp proposed a dividend of 4.5 sen a share in 2QFY15.

Maybank Investment Bank, which advocated a “sell” call for IOI Corp shares, said the group might face challenging times for the remainder of FY15 as no downstream margin recovery was in sight.

To add, output of oil palm fresh fruit bunches might be slowing or even contracting, said Maybank analyst Ong Chee Ting.

“With its high net gearing at 80% as at Dec 31, 2014, there is no room for capital management. And IOI is still at risk of dropping off the Shariah Indices this end-May 2015,” Ong said.

Maybank’s target price for IOI Corp was set at RM3.93.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)