It has maintained its Outperform rating on the stock with an unchanged target price of RM2.86. However, it is taking a more conservative view towards the final quarter of the financial year owing to the component and labour shortfalls, which it said should be resolved by as soon as early 2018.
"We cut our FY17E earnings by 12% to account for lower sales in 4Q17 as we have been overly bullish previously, while leaving our FY18E earnings unchanged," the research house said in its morning report.
Despite the component and labour limitations, PIE managed to post a third consecutive quarter of record revenue in Q3, owing to the continuing orders loading from its existing customers.
Net profit was negatively affected by the one-off impairment of receivable caused by technical glitches in the system adoption, resulting in late payment.
"we are not overly perturbed with this issue as we understand from management that the collection should be all done by year end which is very likely to be reversed back in 4Q17," said Kenanga Research.
On prospects from Q1FY18, PIE has noted that the order visibility and hit rates were improving, with stronger orders loadings grabbed from other competitors.
Two out of four new projects will also contribute to the Q3FY17 numbers.
"While we have already factored the two projects earlier in our model, we see possibility of the group securing other voluminous orders given the group’s high hit rate and advanced manufacturing capabilities," said Kenanga Research.