KUALA LUMPUR: Maybank Investment Bank expects better earnings for Westports Holdings Bhd in the fourth quarter of this year on festivity-led demand and potential tax credit.
“Earnings in the fourth quarter could be stronger given the festivity-led demand and the possibility of tax credit as Westports utilises its Investment Tax Allowance (ITA) for CT8-9,” it said in a note.
Additionally, the research house said it may carry forward the unutilised ITA, hence, the effective tax rate in financial year 2018 could remain low at about 15 per cent.
Maybank IB raises Westports’ earnings per share forecast in FY18 by five per cent as it reduces its tax rate assumption to 15 per cent from 20 per cent previously.
“Our model has assumed for volume drop of nine per cent in FY17 and volume growth of four per cent and five per cent in FY18 and FY19 respectively,” it added.
Maybank IB maintains a “hold” call on Westports with an unchanged target price of RM3.80.