SAM Engineering & Equipment’s earnings are expected to gradually improve from 2Q25 as issues at its aerospace segment are resolved.
PETALING JAYA: Sam Engineering & Equipment
(M) Bhd’s earnings in the upcoming quarters are expected to see improvement, says Maybank Investment Bank (Maybank IB) Research.
The research house said the manufacturer of production equipment and aerospace products’ core net profit for the first quarter of its financial year 2025 (1Q25) dropped by 43% year-on-year (y-o-y) to RM9.9mil due a temporarily halt in deliveries following a change in product design along with material shortages and quality defects found in materials from a supplier.
“Our industry checks indicated that the issues are only a temporary blip and operations should normalise in the next one to two quarters,” Maybank IB Research said.
According to the research house, the global aerospace growth outlook is intact with both Airbus and Boeing having plans to raise their monthly production from 2026 to 2027.
“Forecast International (a US-based market researcher) estimates the July 2024 monthly production rate for A320neo at 52 behind 2019’s level of 60. Airbus plans to ramp up this model’s production rate to 75 by 2027. “Boeing plans to raise its production of 737Max and 787 to 50 and 10 units each by 2026 (from less than 38 and four units currently), which will still be behind 2019’s level of 52 and 12,” it pointed out.
It said supply chain disruptions or shortages is the cause, particularly the shortage of engines, landing gears, seats and toilets, plus Federal Aviation Administration restricting B737Max due to door plug issues as well as incorrect installation of fasteners on B787 fuselages.
SAM Engineering & Equipment’s earnings are expected to gradually improve from 2Q25 as issues at its aerospace segment are resolved.
Maybank IB Research cut its FY25 earnings per share estimate for the company by 19% to account for lower aerospace revenue and margins after being impacted by raw material shortages and material quality defects from a supplier.
The research house also cited a higher group effective tax rate.
“We have lowered FY25 estimated aerospace revenue by 3% and aerospace pre-tax margin by 0.7 percentage points to 0.3%,” it added.
