UOBKH Research expects SKP’s 3Q25 earnings to come in at between RM25mil and RM27mil.
PETALING JAYA: SKP Resources Bhd
will likely see higher volume loadings for its household products given the year-end seasonality whereby its key customer has been ramping up orders.
According to UOB Kay Hian (UOBKH) Research, the company has started mass production for its two new customers which will see 5% to 10% revenue contribution in FY26.
“It is currently working to onboard its third new trade diversion-related opportunity which could fill up its ample capacity,” it added.
The research house noted that SKP has registered year-on-year (y-o-y) growth again since the fourth quarter of the financial year ended March 31, 2024 (FY24), underpinned by its major customer’s inventory replenishment following the correction (lasting for five consecutive quarters).
The company posted a jump in 1H25 core earnings of RM62.7mil on the back of ongoing inventory replenishment from its key customer and better operational efficiency.
“While 3Q25 could reflect seasonal weakness on a sequential basis, the group should stage a stronger quarter y-o-y backed by healthy loadings from its key customer with maiden contribution from its new customers,” it added.
The research house expects SKP’s 3Q25 earnings to come in at between RM25mil and RM27mil, translating to a y-o-y increase of between 9% and 17%.
“In 4Q25, a healthy ramp-up from its key customer alongside contributions from new customers could anchor a full-year earnings rebound of 29% y-o-y,” it added.
SKP share price corrected 12% year-to-date with its valuation down to 11.3 times FY25 price earnings ratio, dragged by concerns over the proposed artificial intelligence diffusion framework and fears of broad-based US tariffs.
“We view this valuation reset as sentiment-driven rather than fundamentally justified, making the unwarranted weakness a compelling entry point supported by solid underlying catalysts,” the research house pointed out.
UOBKH Research anticipated minimal impact on SKP from the new round of minimum wage implementation. “The increase in the minimum wage to RM1,700 came into effect on Feb 1, which represented more than 13% salary adjustment on about 9% of the group’s cost of sales,” it said.
