PETALING JAYA: Kenanga Research anticipates that SLP Resources Bhd
’s current marketing push into new markets and higher-value products will partially offset cost pressures going forward.
The research house added that, coupled with increasing orders from overseas markets, it expects better performance ahead.
“A key earnings catalyst for SLP is its ongoing development of medical-related components and devices, which command better-than-average margins for several international clients,” it said, adding that management is now targeting finalisation in the second quarter of financial year 2026 (2Q26), slightly delayed from the previously targeted 1Q25.
“On that note, we have also included part of the potential profits into our estimates, being one of the primary drivers for the 42% net profit growth forecast for financial year 2026 (FY26),” the research house noted.
Kenanga Research kept its FY26 earnings forecast unchanged while introducing new FY27 projections, implying 17% net profit growth. It also maintained its dividend discount model-derived target price at RM0.81.
The research house expects the company to distribute broadly steady dividends, supported by a positive outlook for FY26 and a strong net cash position of RM81mil.
The company is reinvesting a portion of its earnings into strategic assets like the new mono film machine.
The research house views SLP as an attractive investment case due to its product mix focusing on high-margin, less commoditised segments such as kangaroo pouches and mono films, robust cash flow and strong balance sheet with a net cash position.
These factors enable consistent and generous dividend payments, alongside project pipelines for its planned expansion into higher-margin medical device components.
Kenanga Research maintained its “market perform” call, noting that risks include weaker consumer demand for plastic packaging and significant fluctuations in the foreign-exchange market.
SLP’s FY25 result fell below the brokerage’s expectations, accounting for just 92% of its full-year forecast. The deviation was mainly due to faster-than-expected strengthening of the ringgit and delays in some order deliveries arising from logistics-related issues in 4Q25.
Although export sales grew, revenue declined 6% and net profit fell 27% due to heightened domestic competition.
The weaker performance was also attributed to the stronger ringgit, impairment of receivables and inventories, and higher operating costs following the implementation of the higher minimum wage in February 2025.
In a filing on Monday on its financial results, SLP said it continued achieving sustainable growth in its overseas markets.
This, it said, was notwithstanding the financial impact arising from one-off adjustments to inventories and receivables, as well as subdued domestic demand throughout FY25.
“Following the successful commissioning of new machineries, the group is well positioned to expand its customer base and broaden its product portfolio, thereby driving further value enhancement,” it said.
