KUALA LUMPUR: Salutica Bhd
's earnings in its fourth quarter ending June 30, 2017, plunged 68% to RM2.4mil on the back of a 28% decline in revenue.
According to AmInvestment Research, this was attributed to a delay in the launch of a new product which incurred high fixed overheads due to underutilised facilities.
The group's full-year net profit was 12% below the research house's estimates, dipping 20% year-on-year (y-o-y) to RM19.4mil despite 2% y-o-y revenue growth.
The contraction in net profit margin from 10% in FY16 to 8% in the year under review resulted from costs incurred for several new product developments.
THe group has declared an interim dividend of 0.6 sen this quarter, bringing total dividends for the year to 2.4 sen.
Upsides to the group's business may include accelerated uptake of wireless Bluetooth headphones, pickup in AirBar orders as consumer upgrade to Windows 8 or 10, replacements of expensive touchscreen solutions with Neonode's zForce technoogy, and a rising adoption of the group's in-house tyre pressure monitoring system.
AmInvestment Research maintains its "hold" recommendation on Salutica with a lower fair value of RM1.66 a share after lowering FY18-19F net profit forecasts by 2% to 3%.
"Although prospects appear bright for Salutica, valuations are uncompelling. Salutica currently trades at a CY18F PE of 16x, while SKP Resources, PIE Industrial and VS Industry are trading at 12x, 13x and 16x respectively," it says.
Limited time offer:
Just RM5 per month.
