PETALING JAYA: SLP Resources Bhd
is expected to record higher sales for the financial year 2023 (FY23) due to high-value products as well as improvement in production and utilisation rates.
According to Hong Leong Investment Bank (HLIB) Research, its supply chain diversification and “design for recycling” products would contribute to SLP’s revenue in FY23.
As for SLP’s utilisation rates, HLIB Research said they would recover in the upcoming quarters, aided by increased employee productivity and a more favourable operating environment brought on by the reopening of China’s border.
“The average selling prices of SLP’s products are also holding well with a marginal decrease recorded as opposed to the polymer prices that corrected significantly since the second half of 2021,” added HLIB Research.
SLP will improve its production and utilisation rate by continuing to invest and transform its production process with more automation and digitalisation, according to Public Investment Bank Research (Public IB Research).
While material and logistic costs are easing, the slowing global economy will dampen external demand, according to the research house.
“On a positive note, the labour shortage issue is abating and the group’s premium flexible packaging products for the circular economy are gaining traction,” said the research house.
SLP has recorded a lower net profit of RM3mil year-on-year (y-o-y) in the first quarter of FY23 due to lower revenue of RM40.3mil y-o-y and higher operating costs.
The company has also declared a first interim dividend of one sen per share.
Meanwhile, HLIB Research has maintained a “neutral” call on SLP with a target price of 96 sen per share.
Public IB Research has maintained a “hold” call on SLP with an unchanged target price of 89 sen per share, considering its uninterrupted dividend track record with a sustainable yield of 6.6% in FY23.
In a filing with Bursa Malaysia on its first quarter performance, SLP said: “The group anticipates the over-supply situation and weak external demands to continue.”
