UOBKH Research believes SKP is working to onboard a third trade diversion-related opportunity.
PETALING JAYA: SKP Resources Bhd
may have secured more orders from its key customer following the latter’s supply chain reconfiguration back to the South-East Asian region.
In terms of new prospects, the group has started mass production for its two new customers, which will see 5% to 10% revenue contribution in financial year 2026 (FY26), said UOB Kay Hian (UOBKH) Research.
UOBKH Research believes SKP is working to onboard a third trade diversion-related opportunity, which could help fill its ample capacity, while also engaging in discussions with new prospects.
SKP’s share price corrected 16% year-to-date primarily due to concerns over the proposed artificial intelligence diffusion framework and fears of broad-based US tariffs.
Additionally, UOBKH Research said such valuation troughs were last seen during March 2020 during the mandatory control order lockdowns, late-2023 (sharp order reductions from a key customer) and late November 2024 (market rumours of a scale-back in customer operations on select products).
Each of these instances, followed by mean reversion bargain-hunting, underscored its sound fundamentals on business resiliency.
The research house views this valuation reset as sentiment-driven rather than fundamentally justified, making the unwarranted weakness a compelling entry point supported by solid underlying catalysts.
It maintains its “buy” call with a higher rollover target price of RM1.20 a share.
Both TA Research and CIMB Research also maintained their “buy” calls, while Kenanga Research retained its “outperform” call on the stock.
TA Research revised the target price from RM1.43 to RM1.46 a share based on 13 times 2026 earnings.
CIMB Research lowered its target price to RM1.28 from RM1.37 a share, while Kenanga Research retained it at RM1.24 a share. UOBKH Research tweaked its FY26 to FY27 earnings by 1% to 2%.
TA Research maintained its FY26 and FY27 earnings forecasts and introduced the FY28 earnings forecast of RM193mil, representing an earnings growth of 6.6%.
Furthermore, CIMB Research revised downwards its FY26 to FY27 earnings per share projections by 5% to 6% to reflect lower profit margin assumptions owing to start-up costs associated with new customer programmes.
Kenanga Research retained its FY26 earnings following the result review and introduced its FY27 projection, underpinned by continued contributions from both existing and new customer engagements.
UOBKH Research said there will be minimal impact from the new round of minimum wage implementation.
The increase in minimum wage to RM1,700 (+RM200) officially came into effect on Feb 1, 2025, which represents about a 13% salary adjustment on about 9% of the group’s cost of sales.
It expects the latest adjustment to be mitigated via a mixture of end customer absorption, strategic product mix and operational efficiencies, minimising any material impact on overall profitability.
