Kingsmen downgraded by OCBC Sec to Hold from Buy & cuts its target price to $0.65 from $0.82in view of its hazy near-term outlook. Highlights Kingsmen has been growing exponentially since its listing with earnings growth recording double-digit rates btw 2003 & 2008 but believe this trend may reach a plateau in FY10/11 after projecting a mild contraction in FY10 profits followed by flat earnings growth in FY11.
Trims FY10 & FY11 estimates by 14% & 23%, r’pectively to reflect a more cautious stance, adding the group's ambition of doubling its revenue in 5 yrs now appears stretched. Cites potential headwinds in orderbook gap as the bulk of revenues from Universal Studios Spore has already been recognised & arbitration proceedings agst a sub-contractor. However, house remains sanguine over Kingsmen's longer-term prospects; stock is also supported by 6% dividend yield.
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