PETALING JAYA: Despite the sequential improvement in profitability, Panasonic Manufacturing
Malaysia Bhd is expected to see muted growth for the remainder of the year, according to Hong Leong Investment Bank (HLIB) Research.
It attributed this to suboptimal plant utilisation from the termination of kitchen appliances coupled with higher sunk costs due to excess labour on hand.
To counter this, the research house said the group is intensifying its effort to venture into new products to maintain its competitiveness and counter the loss of sales from recently terminated businesses.
“Additionally, we opine the export outlook to be muted for Panasonic with the moderation in global growth amid elevated inflation, the escalation of geopolitical tensions and a slower-than-expected economic recovery in China.
“Management shared that it is experiencing a slowdown in orders from other regions, especially in the Middle East and certain Asean countries,” it added.
The company is involved in the manufacture and sale of electrical consumer products, home appliances, batteries and related components.
HLIB Research is reiterating its “sell” call on Panasonic stock with an unchanged target price of RM18.70 based on 17 times the financial year 2024 earnings per share.
For its first quarter ended June 30, 2023, Panasonic’s net profit rose to RM20.42mil from RM11.45mil in the previous corresponding period, mainly due to higher sales achieved and the share of results from an associate company.
Revenue, however, dipped to RM228.24mil from RM243.68mil a year earlier. Basic EPS stood at 34 sen, versus 19 sen previously.
According to Panasonic, the global economy is expected to grow at a slower pace in 2023 amid elevated inflation, geopolitical tensions and a slower-than-expected economic recovery in China.
