SKP expects better growth on higher orders

PETALING JAYA: SKP Resources Bhd is anticipating continued growth in the final quarter (4Q25) of its financial year 2025 (FY25)and FY26, backed by increased orders and operational efficiency, according to Kenanga Research.

The Johor-based plastics contract manufacturer reported a net profit of RM88mil for the nine-month period, meeting analysts’ expectations.

Year-on-year revenue grew 17% to RM1.6bil, driven by higher order volumes across its product portfolio.

Kenanga said management remains cautious, focusing on maintaining a lean and efficient operating structure amid inflationary pressures and rising costs.

“The group continues to expand its capabilities in printed circuit board assembly (PCBA), injection moulding and engineering to enhance its product offerings for key customers.

“Notably, the PCBA segment is currently operating at a utilisation rate of less than 20%, highlighting room for improvement should ongoing customer acquisition efforts materialise,” the research house said in a report.

To mitigate customer concentration risk, the research firm said SKP is working to diversify its customer base.

Additionally, the electricity tariff review in second half of 2025 is expected to have minimal impact, given the cost passthrough mechanism, albeit with a slight lag.

“We have revised our FY25 and FY26 turnover forecasts up by 10% and 8%, respectively, to factor in contributions from two new customers and reflect the latest order run rate.

“In tandem with the higher revenue projections, we have also raised our net profit estimates by 3% for FY25 and 2.5% for FY26,” said Kenanga Research, which increased its target price for the stock to RM1.24 from RM1.21 previously.

Meanwhile, RHB Research has a target price of RM1.31 from RM1.03 previously.

“The current below-mean valuation is deemed attractive as we view SKP as a proxy to capitalise on the recovery of global demand for consumer electronics and opportunities arising from the trade war diversion.

“We have baked in a new order book win of RM200mil in FY26,” it added.