CGS-CIMB Research said that demand for HPP's higher-margin corrugated packaging that caters mostly to the electrical and electronics sector is expected to increase, leading to a better product mix.
PETALING JAYA: Paper-based packaging maker HPP Holdings Bhd
is expected to post stronger earnings in the second half of financial year 2023 (FY23), primarily premised on demand recovery.
CGS-CIMB Research said this in a report, adding that demand for its higher-margin corrugated packaging that caters mostly to the electrical and electronics sector is expected to increase, leading to a better product mix.
Additionally, greater economies of scale from a higher utilisation rate on increased sales demand and a higher operating efficiency on better cost control should also help boost earnings.
In the report to clients, the research house also said it was retaining its “add” call on HPP with a target price of 55 sen.
Kenanga Research in its report on HPP, meanwhile, noted that the company’s first half of FY23 results disappointed due to weak sales in the consumer electronics segment.
“We foresee a stronger recovery in FY24. We cut FY23 and FY24 earnings by 9% and 1% but raise our target price by 15% to 53 sen from 46 sen as we roll forward our valuation base year to FY24. Maintain ‘outperform’,” it said.
