In a note, the research house said SKP's FY21 net profit of RM128.3mil was deemed within expectations as it came to 105% and 103% of its and consensus full-year forecasts.
Meanwhile, the group has secured a third product contract from its key customer, which completes a 100% win rate for this year's tender activity.
"We believe that SKP’s operational track record has managed to impress its
key customer, positioning the group as the preferred contract manufacturer among its peers for future product awards," said Kenanga.
Moving forward, SKP has acquired a 6.4-acre land for RM14mil in Johor Bahru and set aside RM45mil for the construction of the new plant.
Construction of the latter is slated to be completed by July 2022, which is a slight delay from the initial timeline of end-2021 due to the pandemic.
This will provide an additional 600k sq ft of production pace, representing a 60% increase from existing floor space.
Kenanga maintained FY22 net profit of RM161.6mil and introduced FY23 net profit forecast of RM1733mil, representing 26% and 7% growth respectively.
It reiterated its "outperform" call with an unchanged target price of RM2.40 based on 23x FY22 price-earnings, representing two standard devisions to the three-year mean.