The research house cited the seasonally strong final quarter of the year, steady growth from its existing customers and efficiency improvements as the company phases out its low-end communication device as positive catalysts for the coming quarter.
It maintained its market perform recommendation on the stock and kept its target price of RM1.40 as it believes the market has priced in the recovery expectation given the recent run-up in share price.
For the recently announced quarter, PIE recorded core net profit of RM16.8mil, which was 18% higher year-on-year (y-o-y).
This brought net profit for the first nine months of the year to RM25.4mil, or 14% higher y-o-y, to account for 65% and 68% of Kenanga's and consensus full-year estimates.
"We deem this to be inline as 4Q will usually see better results on the back of higher
seasonal production ramp-up for existing customer," said Kenanga.
Moving forward, PIE is still receiving enquiries from copmanies looking to shift their supply chain out of China, including one customers which is in preliminary discussions.
"We believe that this potential customer could contribute sales of >RM30m, assuming full ramp-up. If discussions are successful, meaningful contributions will likely kick in 2QFY20," said the research house.