Slp Resources Berhad

Plastic packaging manufacturer SLP Resources Bhd is currently experiencing a resurgence in orders from Japan for its kitchen and garbage bags, after a period of subdued demand.

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by PublicInvest

KUALA LUMPUR: SLP Resources Bhd is poised to see a modest earnings recovery driven by stimulus and more moderate inflation in its key market, Japan. 

© New Straits Times Press (M) Bhd

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Public
Neutral – TP RM 0.860

"Modest Turnaround May Be In Sight”

Despite the challenging business environment, the Group expects a moderate recovery driven by a potential turnaround in its export markets, particularly Japan. Stronger wage growth, government subsidies, and more moderate inflation following the Bank of Japan’s recent interest rate move are expected to boost consumer spending. To note, Japan contributed RM47.4m or 29%, to the Group’s total revenue in FY2023. As for the domestic market, demand is expected to improve underpinned by resilient domestic consumption and rising tourism, however average selling price may remain depressed due to stiff competition. Given the recent fall in share price, our unchanged TP of RM0.86 suggests a downside of only 4.4%. As such, we upgrade our call from Underperform to Neutral.

Analyst:
Denny Oh
research@publicinvestbank.com.my

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga
OUTPERFORM – TP RM1.05

"JPY’s Strength May Lift Exports to Japan”

SLP’s 1HFY24 results disappointed due to cost pressures. Nonetheless, its 1HFY24 core net profit surged 32% YoY on strong exports to Japan, which could be further lifted by the increased buying power of Japanese buyers on the heels of the JPY’s strength of late. We cut our FY24-25F earnings forecasts by 11% and 16% respectively, reduce our TP by 9% to RM1.05 (from RM1.16) butmaintain our OUTPERFORM call.

Analyst:
Thin Yun Jing
thinyj@kenanga.com.my

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by HLIB
HOLD – TP RM 0.83

" Heightened competition”

SLP reported 1HFY24 core PAT of RM8.2m (+25.5%), which came in within our and consensus expectations. The quarter saw lower GP margin due to heightened competition in the local packaging industry, leading to a downward revision in ASP. While the appreciation of JPY against USD is expected to enhance its sales outlook in the Japanese market, the limited availability of shipping containers in SEA could constrain the recovery. Prolonged logistical issues may also lead to further shifts in the local market, affecting local sales. In light of the recent weakness in share price, we upgrade SLP to HOLD (from Sell), with an unchanged target price of RM0.83, as the risk-reward profile has now become more balanced.

Analyst:
Sam Jun Kit
jksam@hlib.hongleong.com.my

General Meetings: Outcome of Meeting

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga
Outperform – TP RM1.16

“Price Cuts Offset by Improved Economies"

SLP remains positive on the Japanese market (kitchen bags and garbage bags). Although it is encountering some challenges in Thailand, its first shipment to Vietnam is en route. Slight price cuts in response to competition are cushioned by improved economies of scale from the higher sales volumes. We maintain our forecasts, TP of RM1.16 and OUTPERFORM call.

Analyst:
Teh Kian Yeong
tehky@kenanga.com.my

PETALING JAYA: Although SLP Resources Bhd started the financial year 2024 (FY24) on a strong note, there are lingering risks that could impact its sales and recovery prospects.

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga
Outperform – TP of MYR 1.16

“A Japanese Delight”

SLP’s 1QFY24 results beat expectations. Its 1QFY23 core net profit soared 64% on an improved product mix. We expect sustained recovery driven by the export of kitchen bags and garbage bags to Japan. We raise our FY24F and FY25F earnings forecasts by 13% and 12%, respectively, lift our TP by 10% to RM1.16 (from RM1.06) and maintain our OUTPERFORM call.

Analyst(s):
Clement Chua
clement.chua@kenanga.com.my

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by PB
Underperform – TP of MYR 0.86

“Within Expectations”

SLP Resources Berhad (SLP) reported higher net profit of RM4.9m in 1QFY24 (+63.1% YoY) primarily owing to better product mix and higher output. Results were in-line with our and consensus estimates, accounting for 28% and 29% of full year estimates respectively. We keep our forecast unchanged and retain our Underperform call with higher target price of RM0.86 (from RM0.73 previously) as we rollover over valuation base to FY25. On a side note, SLP declared a 1st interim dividend of 1.00sen for FY24 (FY23: 1.00sen).

Analyst(s):
Denny Oh
research@publicinvestbank.com.my

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by HLIB
Sell (Maintain) – TP RM0.83

“Rebound in export sales"

SLP reported 1Q24 core PAT of RM4.9m (+156.4% QoQ, +63.1% YoY), which came in above our expectation but within the consensus forecast. This positive deviation was primarily driven by a stronger-than-anticipated rebound in its manufacturing segment, resulting in improved margins and a str onger bottom line. We raise our FY24F and FY25F earnings by 12% and 11% respectively, following the upward adjustments to our utilization rate assumptions. Post earnings adjustment, we still maintain SELL call but with a higher TP of RM0.83 based on a 14.5x P/E on FY24f EPS of 5.1sen. Notably, SLP is trading at 19x FY24F P/E, a valuation we consider to be at a premium.

Analyst:
Sam Jun Kit
jksam@hlib.hongleong.com.my

SLP - Notice of Book Closure

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

First Interim Dividend

Circular To Shareholders In Relation to Proposed Renewal Of Shareholders' Mandate For Recurrrent Related Party Transactions Of A Revenue Or Trading Nature

General Meetings: Notice of Meeting

Annual Audited Accounts - 31 Dec 2023

OTHERSProposed Renewal of Shareholders' Mandate For Recurrent Related Party Transactions Of A Revenue Or Trading Nature

GEORGE TOWN: SLP Resources Bhd will spend RM20mil to upgrade and expand its production capacity in 2024 to meet rising domestic demand for its flexible plastic packaging products.

SLP Resources Bhd’s growth prospects are expected to be supported by an uptick in orders and increased exports to overseas markets.

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga
Outperform – TP of RM1.06

“A Safe Bet on Mono Film”

SLP is seeing an uptick in orders, especially for kitchen bag exports to Japan. It expects a pick-up in orders for its machine direction- oriented PE (MDO-PE) film in mid-FY24. We raise our FY24-25F earnings forecasts by 12% and 9%, respectively, lift our TP by 10% to RM1.06 (from RM0.96) and upgrade our call to OUTPERFORM from MARKET PERFORM.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my

Changes in Director's Interest (Section 219 of CA 2016) - MR KHAW SEANG CHUAN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - MR KHAW SEANG CHUAN

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

Changes in Director's Interest (Section 219 of CA 2016) - MR KHAW SEANG CHUAN

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - MR KHAW SEANG CHUAN

$SLP / 7248 (SLP RESOURCES BERHAD)
Research by Kenanga
Market Perform - TP of RM0.96

"New Product to Cushion Downturn"

SLP’s FY23 results disappointed on cost pressures. Its FY23 core  net profit dropped 34% due to sluggish exports and higher labour  and utility costs. A more sustained recovery of the plastic  packaging industry still hinges on the health of the global  economy. We cut our FY24F earnings by 13% but maintain our TP  of RM0.96 and MARKET PERFORM call.

Analyst(s):
Teh Kian Yeong
tehky@kenanga.com.my