CIMB: Capitalise on weakness of LCL shares (ext: Edge)

SHARES of LCL Corp Bhd jumped by an impressive 27% or 13.5 sen to 63.5 sen yesterday, snapping two consecutive days of losses, after the interior fit-out (IFO) specialist submitted its audited financial year 2008 (FY08) earnings to regulators on Tuesday.

The rise in LCL’s share price more than compensated the 7.5% loss in the stock between last Thursday and Tuesday (May 5). Investors had sold the stock after the firm was dragged into the spotlight for failing to release its audited financials by last Thursday’s deadline.

According to analysts, the delay was mainly due to a potential RM5 million inventory writedown by the external auditors, a move deemed unnecessary following clarification by LCL.  

“While we view this as an overreaction, we are not surprised by it as investors generally expect the worst whenever there is uncertainty.

“Although this incident has dented investor sentiment on the stock, we think investors should take advantage of the share price weakness to pick up the stock as its fundamentals remain intact,” wrote CIMB Research which maintained its trading buy call on LCL with a 94 sen target price.