What's Happening?
SLP Holdings Bhd 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, maintaining its
dividend target. Despite a 2% year-on-year dip in turnover and a 13% decline in net profit, SLP's exports grew, driven by contributions from Japan, Australia, and New Zealand. The decline in domestic sales is attributed to U.S. tariffs and a drop in resin prices, leading to delayed orders. Higher operating costs due to a minimum wage hike also impacted profitability.
Why It's Important?
SLP Holdings' performance highlights the challenges faced by manufacturing companies in balancing export growth with domestic sales pressures. The impact of U.S. tariffs and resin price fluctuations underscores the complexities of global trade and supply chain dynamics. The company's focus on medical-related components and devices as a growth driver reflects the potential for diversification and higher margins. SLP's strong cash position and strategic reinvestments indicate resilience and adaptability in navigating market challenges.
What's Next?
SLP Holdings is expected to continue facing forex-related pressures, with exports contributing significantly to revenue. The development of medical-related components is anticipated to drive growth, with completion targeted for 1QFY26. The implementation of the multi-tier levy mechanism for foreign workers may affect operational costs, but specifics are yet to be released. Kenanga has upgraded SLP's rating, reflecting confidence in its strategic direction and potential for future growth.
Beyond the Headlines
SLP Holdings' situation reflects broader trends in manufacturing and trade, where companies must adapt to changing economic conditions and regulatory environments. The focus on medical components highlights the importance of innovation and diversification in achieving sustainable growth. The company's strategic investments and cash management demonstrate a proactive approach to overcoming challenges and seizing opportunities.
