KUALA LUMPUR: Despite observing sequential improvements in profitability, Hong Leong Investment Bank (HLIB) Research maintains its 'sell' rating on Panasonic Manufacturing Malaysia (PMM), citing concerns over the muted export outlook.
HLIB Research said this is premised on global growth moderation, elevated inflation, escalating geopolitical tensions, and slower-than-anticipated economic recovery in China.
"We opine the export outlook to be muted with the moderation in global growth amid elevated inflation, escalation of geopolitical tensions and slower-than-expected economic recovery from China." said the research house in a note today.
PMM's management said it is experiencing a slowdown in orders from other regions especially in the Middle East and certain Asean countries.
Exports form the bulk of PMM's sales averaging about 52-64 per cent of total revenue.
PMM chalked up revenue of RM228.2 million and net profit of RM15.9 million for its 1QFY24 results.
HLIB said this within expectations, at 24 per cent of its consensus full year forecasts.
Overall, YoY sales registered weakness due to the impact of discontinuance of kitchen appliances products and softness of export sales, it said.
To counter this, PMM is intensifying its effort to venture into new products to maintain its competitiveness and to counter the loss of sales of recently terminated businesses.
In a filing with Bursa, PMM said it has made further progress in the utilisation of technology in its manufacturing facilities to improve productivity and increase efficiency, while continuing to implement cost-reduction measures to reduce overall cost of production and to improve profitability.
Panasonic said that with these measures in place, it will strive to meet those challenges ahead with agility and resilience to achieve positive results for FY2024.
HLIB reiterated its sell rating with unchanged target price of RM18.70.
At the time of writing, PMM's share price increased by 0.77 per cent to RM20.90.