What's Happening?
SLP Holdings Bhd has reported a net profit of RM8.7 million for the first nine months of FY25, achieving 78% of Kenanga's full-year forecast. The company declared a third-quarter dividend of 1.25 sen, contributing to a year-to-date payout of 3.5 sen, aligning
with the full-year target of 4.8 sen. Despite a 2% year-on-year decline in turnover and a 13% drop in net profit, the company experienced a 37% surge in quarterly net profit due to milder forex fluctuations. The domestic market faced challenges from U.S. tariffs and a decrease in resin prices, leading to delayed orders. SLP Holdings ended the quarter with a net cash position of RM88.3 million.
Why It's Important?
The performance of SLP Holdings highlights the impact of international trade dynamics and domestic economic policies on manufacturing companies. The company's reliance on exports, particularly to Japan, Australia, and New Zealand, underscores the importance of global market conditions. The development of medical-related components and devices is a strategic move to enhance profitability, with potential growth projected for FY26. The company's ability to maintain dividend payouts and a strong cash position reflects resilience amid economic uncertainties, providing confidence to investors and stakeholders.
What's Next?
SLP Holdings is expected to continue facing forex-related pressures, with exports contributing significantly to revenue. The completion of medical-related components development in 1QFY26 is anticipated to drive growth. The implementation of the multi-tier levy mechanism for foreign workers in CY26 may lead to increased operational costs. Kenanga has upgraded SLP Holdings from Market Perform to Outperform, maintaining a target price of RM0.89, indicating positive investor sentiment and potential for future growth.
Beyond the Headlines
The strategic focus on medical-related components and devices could position SLP Holdings as a key player in the healthcare manufacturing sector, potentially leading to higher margins and diversified revenue streams. The company's adaptation to changing market conditions and investment in new technologies may foster long-term sustainability and competitiveness.
