The main reasons for the broker's downside revision are lower overall revenue growth, from 19 per cent to 6 per cent, driven down by all segments across the board; lower gross margin, from 26.5 per cent to 25.5 per cent; and lower net margin, from 9.8 per cent to 9.5 per cent.

However, from this year onward, Sahamit Machinery will enjoy a 25-per-cent tax benefit from being a listed company, from last year's regular rate of 30 per cent. This will help improve Sahamit Machinery's earnings and net margin.

Despite operating among several unfavourable factors, Sahamit Machinery will be able to retain earnings sustainability.

The brokerage believes this results from Sahamit Machinery's highly conservative business strategy of building on its core strengths, which have been built up over the past 20 years: market leadership in most business segments it is operating in, long-standing solid relationships with customers and a large, diversified client base.

With a strong market leadership position in special steel, currently contributing more than 52 per cent of total revenues and up to 70 per cent of earnings, Sahamit Machinery's overall margin has long been sustained at a high level.

Its gross margin has hovered at about 25 per cent and its net margin at more than 9 per cent.