Stock Downgraded: Roly Int downgraded to hold by OCBC!

OCBC said it has cut its rating for Roly International to "hold" from "buy", with a fair value of 0.28 sgd, and lowered its estimate of earnings for the company for the year to next April. "We have marked down our net profit estimate for year to April 2007 to 10. 3 mln usd to reflect spillover restructuring costs and the challenging market conditions faced by Linmark," OCBC said in a note to clients. "Nevertheless, this still represents a 43 pct improvement over the net profit achieved in year to April 2006, and reflects expected improvement in its underlying cost structure," the brokerage said. Roly's net profit for the year to last April declined to 7.2 mln usd from 7.8 mln usd the year before, although its revenue more than doubled to 396 mln usd from 194.4 mln usd. The fall in earnings was due to a restructuring charge of 3 mln usd to scale down the cost structure of unit Linmark and the unit's one-off provisions for doubtful debts of 5.5 mln usd. But Roly's management expects an improvement in earnings in the year to next April because a number of exceptional charges taken in the last financial year are not expected to recur, OCBC said. At 10.46 am, Roly was down 0.02 sgd or 6.78 pct at 0.275, on volume of 20, 000 shares.