This was on the back of manageable disruption from MCO shutdown as SKP Resources resumed work on May 1, thereby seeing only six weeks of shuttered operations (two weeks in FY20, four weeks in FY21).
KUCHING: SKP Resources Bhd (SKP Resources) is set to see improvements after resuming back to its full capacity since May to meet order backlogs.
This comes as the group’s revenue of RM426 million in its fourth quarter of its financial year 2020 (4QFY20) continues to reflect the resumption in work flows, while sequential weakness is anticipated given seasonality effects.
Public Investment Bank Bhd (PublicInvest Research) recapped that its net profit of only RM7 million for the quarter was marred by significantly higher costs as a result of its recent expansions.
Recall that the group had recently spent about RM90 million on capital expenditure.
“Its current quarter’s net margin of 1.7 per cent is a one-off. We anticipate improvements to between 5.5 and 5.9 per cent from FY21 onwards,” it said yesterday.
“We gather that the group is now assembling an even wider portfolio of products for a key customer given its enhanced capabilities and capacities in printed circuit board assembly (PCBA) and injection molding.
“Production of battery packs, of which it has also been qualified for, will result in further cost savings in FY21, thereby enhancing margins further.”
This was on the back of manageable disruption from MCO shutdown as SKP Resources resumed work on May 1, thereby seeing only six weeks of shuttered operations (two weeks in FY20, four weeks in FY21).
“In fact, one particular subsidiary did operate throughout April as it provided for the essential sector, though contributions are deemed relatively inconsequential.
“We have been made to understand that the group is already running at close to full capacity currently, already quickly making up for lost time.”
Continuing the positive newsflow, Kenanga Investment Bank Bhd (Kenanga Research) saw that SKP Resources’ pipeline is currently fully occupied with a slew of exciting household and hygiene products.
“One of the products recently launched two week ago boasts the same efficiency as its predecessor but at half the weight, which allows for better portability,” it said in its own ntoes.
“This item will be mainly catered to the South East Asia (SEA) region. The group is still experiencing robust demand for existing products from the SEA region and the western market, thanks to strong online sales even during the lockdown period.
“With the gestation period over, better performance can be expected in FY21 as the group’s PCBA line and battery pack assembly line is expected to be well optimised for the production of the new variant household product.
“The group is also in the midst of getting qualified by its key customer to supply PCBA for other products that are currently in the group’s portfolio. We are positive on the group’s effort to be self-sufficient on PCBA, as it will better equip the group for more potential contracts given the key customer’s emphasis for its contract manufacturers to be vertically integrated.”