PETALING JAYA: Hong Leong Investment Bank (HLIB) Research is maintaining a cautious outlook on Panasonic Manufacturing
Malaysia Bhd (PMM), as the group’s growth could be muted due to suboptimal plant utilisation.
In a note published yesterday, the research house reported that PMM’s lower plant use is due to the company’s discontinuing the manufacturing of kitchen appliances products as a result of a global production realignment for Panasonic Group.
Although PMM recently introduced its Reverse Osmosis Water Purifier and the Water Purification System, the group has indicated that this new segment will take three to five years to ramp up.
At the same time, it pointed out that exports may also be sluggish for PMM with the moderation in global growth amid elevated inflation, escalation of geopolitical tensions and slower-than-expected economic recovery from China.
However, HLIB Research said that PMM could be a beneficiary of higher discretionary spending from the government’s income boosting measures, such as the Employees’ Provident Fund Account 3 and the pay hike for civil servants.
“The moderation of raw-materials price would also help cushion the bottom line impact from lower sales,” it said.
The research house noted that the cessation of kitchen products ate into PMM’s revenue, which saw a 9% year-on-year decline for the financial year ended March 2024, but added the group’s cumulative net profit rose 15.6% to RM92.6mil.
It said PMM’s bottom line improved on the back of the lower operating expenditure, thanks to moderation of raw-material prices; increase in finance income from interest rate hikes; and higher share of results from its associate company due to lower marketing costs.
The research house maintained a “hold” call on the counter, with a target price of RM20.02.
