Posted on 10 May 2023
Hong Leong Investment Bank (HLIB) Research has maintained its “sell” rating on Panasonic Manufacturing Malaysia Bhd at RM22.68 with a higher target price of RM18.70 (from RM16) and said it expects tepid profitability on the back of the suboptimal plant utilisation from the termination of kitchen appliances coupled with higher sunk cost due to excess labour in hand.
In a note on Wednesday (May 10), the research house said the group is expected to receive final round of claim in the fourth quarter of financial year 2023 (4QFY2023) in relation to the termination of kitchen appliance products.
It said that as for raw materials, compared to the past two quarters, upward trends are seen in copper, aluminium, and nickel (approximately 5%-10% increase), while resin and steel are trending lower.
“Management does not discount the possibility of another round of price revision to defend its margins.
“Additionally, we opine export outlook to be muted for PMM with the moderation in global growth as a result of a slowdown in major economic activities and sustained inflationary pressures.
“Maintain 'sell', with TP of RM18.70 based on 17 times PE multiple on FY2024 earnings,” it said.
Source:The Edge
