Kenanga Research is maintaining its FY24 net profit estimate but increased its FY25 net profit by 8% to RM112mil.
PETALING JAYA: PIE Industrial Bhd
’s staff costs are expected to rise from 10% to 13% of total operating costs and to mitigate this impact, the group is actively negotiating with clients to pass through the cost hike.
The group faces challenges from increased minimum wages and mandatory Employees Provident Fund contributions for non-citizen employees, said Kenanga Research.
PIE’s fourth quarter of financial year 2024 (4Q24) is expected to show sequential and year-on-year improvements, supported by normalised foreign exchange rates and higher contributions from high-margin Customer A.
For the financial year of 2025 (FY25), the group remains optimistic, with expanded production from Customer A and contributions from a new switch and server client, targeting RM1bil in revenue at 50% utilisation of Plant 6.
PIE continues to streamline operations by prioritising high-margin clients and anticipates new orders from automotive, robotics, medical, and telecom sectors post-US election.
The research house is maintaining its FY24 net profit estimate but increased its FY25 net profit by 8% to RM112mil, reflecting an updated higher margin assumption for Customer A to align with recent trends. It also raised its target price to RM6.85 from RM6.35 a share based on FY25 earnings per share pegged to an unchanged price-to-earnings ratio of 23.5 times.
Kenanga Research likes PIE for its comprehensive skill set, making it a top-choice electronic manufacturing services provider for multinationals.
It enjoys various competitive advantages as a unit of Foxconn, and its diversified and evolving client base, from those involved in communication devices and power tools to the latest DeFi equipment.
The research house maintains its “outperform” stand.
It cited risks to its call that include loss of orders from or non-renewal of contracts by its key customer, labour shortage and rising labour cost and unfavourable currency movements.
PIE group’s 3Q24 performance was affected by a slower contribution from Customer A, due to earlier technical issues that have now been resolved, which led to re-work in assembly processes during the quarter, it said.
