Stronger earnings for HPP on favourable margin mix

PETALING JAYA: HPP Holdings Bhd’s (HPPHB) earnings recovery may remain “bumpy” but a better-than-expected performance in its financial year ended May 31, 2025 (FY25) has prompted Kenanga Research to revise its call on the stock to “market perform” from “underperform” previously.

The packaging solutions provider posted a core net profit of RM3.2mil in FY25 – 49% above Kenanga Research’s forecast.

“The variance against our forecast came largely from a more favourable margin mix brought by stronger contributions from the high-margin moulded pulp packaging,” the research house said in a note.

Despite the upbeat, Kenanga Research cautioned that HPP’s “earnings recovery path looks bumpy as its core electrical and electronics (E&E) space faces tariff-driven uncertainty.” Nonetheless, it acknowledged that HPPHB is “not short of earnings drivers” going forward.

These include the introduction of new high-margin recyclable paper pulp moulded packaging products and a potential pickup in orders, particularly from the E&E and sheath contraceptive segments, as restocking and new product launches gain momentum.