Broker's take: DBS downgrades Citic Envirotech to 'hold' following earnings slump

DBS Equity Research has downgraded its recommendation on Citic Envirotech with a target price of S$0.34 after the environmental engineering services company posted a bottom-line slump for the second quarter and the first half of FY2019.

After market close on Wednesday, Citic Envirotech reported a 66 per cent drop in net profit to S$14.7 million for the quarter ended June from S$43.3 million a year ago. Second-quarter revenue shrank 30.3 per cent to S$202.8 million, mainly attributed to a 30 per cent decrease in the engineering business and a 44.7 per cent decrease in membrane system sales.

While the provider of environmental engineering services notched quarter-on-quarter improvements in the construction and membrane solution segments for Q2, Ms Yeung said that it is"uncertain if the improvement can be sustained".

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