PETALING JAYA: Demand for Oceancash Pacific Bhd’s insulation products from automotive players are slower than expected, but as the phase one of the National Recovery Plan (NRP) restrictions eased, it should recover swiftly.
CGS-CIMB Research said demand from its automotive customers were disrupted as automotive production is not allowed to operate during the current stage of the NRP.
It said this will likely impact insulation segment sales in the second and third quarters for the financial year 2021 (FY21), depending on when the restrictions will be lifted.
Oceancash had reported reduced profit for the first quarter of 2021, mainly due to lower-than-expected revenue and operating margins for its hygiene segment.
The first-quarter revenue slid 8.1% year-on-year (y-o-y), mainly dragged by weak export sales for its hygiene segment (-11.7% y-o-y), particularly to its Japanese customers.
The research house said sales for its insulation segment only dropped 2.5% y-o-y as the y-o-y weakness for its Indonesian insulation segment was partially offset by better domestic insulation product demand from its automotive customers.
Led by those factors, the research house has cut its FY21-FY23 earnings per share forecasts by 2.0%-18%.