Stronger earnings for HPP on favourable margin mix
The packaging solutions provider posted a core net profit of RM3.2mil in FY25 – 49% above Kenanga Research's forecast.
'The variance against our forecast came largely from a more favourable margin mix brought by stronger contributions from the high-margin moulded pulp packaging,' the research house said in a note.
Despite the upbeat, Kenanga Research cautioned that HPP's 'earnings recovery path looks bumpy as its core electrical and electronics (E&E) space faces tariff-driven uncertainty.' Nonetheless, it acknowledged that HPPHB is 'not short of earnings drivers' going forward.
These include the introduction of new high-margin recyclable paper pulp moulded packaging products and a potential pickup in orders, particularly from the E&E and sheath contraceptive segments, as restocking and new product launches gain momentum.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
15 hours ago
- The Star
Stronger earnings for HPP on favourable margin mix
PETALING JAYA: HPP Holdings Bhd 's (HPPHB) earnings recovery may remain 'bumpy' but a better-than-expected performance in its financial year ended May 31, 2025 (FY25) has prompted Kenanga Research to revise its call on the stock to 'market perform' from 'underperform' previously. The packaging solutions provider posted a core net profit of RM3.2mil in FY25 – 49% above Kenanga Research's forecast. 'The variance against our forecast came largely from a more favourable margin mix brought by stronger contributions from the high-margin moulded pulp packaging,' the research house said in a note. Despite the upbeat, Kenanga Research cautioned that HPP's 'earnings recovery path looks bumpy as its core electrical and electronics (E&E) space faces tariff-driven uncertainty.' Nonetheless, it acknowledged that HPPHB is 'not short of earnings drivers' going forward. These include the introduction of new high-margin recyclable paper pulp moulded packaging products and a potential pickup in orders, particularly from the E&E and sheath contraceptive segments, as restocking and new product launches gain momentum.
The Star
a day ago
- The Star
Turning the tide in water sector
WATER rarely generates the buzz that electricity enjoys in the utilities space. While the latter has benefitted from policy support and investor attention, fuelled by solar schemes and grid upgrades, water has historically lacked a compelling growth narrative. That may be changing, with some – like Kenanga Research – suggesting that water could be 'the next big story' in Malaysia's infrastructure space, driven by tariff reforms, rising demand from data centres (DCs) and renewed private sector interest.
New Straits Times
a day ago
- New Straits Times
Dialog's earnings stay steady amid strong storage demand
KUALA LUMPUR: Dialog Group Bhd's earnings remain stable, supported by improved occupancy and spot rates at its independent tank terminals, driven by sustained regional demand for storage. Kenanga Research said the completion of legacy engineering, procurement, construction and commissioning (EPCC) contracts, which had been affected by cost escalations, should pave the way for at least a breakeven performance in the coming quarters. "For now, we believe the market's expectations are sufficiently conservative, and there remains upside potential in its medium-term earnings outlook. "That aside, the anticipated upturn in plant maintenance and turnaround activities in downstream Malaysia from financial year 2026 (FY26) could benefit its core plant maintenance segment," it added. Kenanga Research said Dialog's recent joint venture, which includes a US$330 million terminal usage agreement tied to the Pengerang Biorefinery project, was a positive surprise, as no additional capacity expansion beyond previously announced plans had been factored in. However, it said the internal rate of return (IRR) is expected to be lower at 9.5 per cent, compared to 11–13 per cent for earlier projects. "This could partly be due to a higher capex-to-capacity ratio of RM5,217 per cubic metre, versus RM4,846 per cubic metre for Pengerang Terminals 2, which has a capacity of 1.3 million cubic metres," it added. Based on a weighted average cost of capital of 6.3 per cent, Kenanga Research estimates a discounted cash flow valuation accretion of RM0.02 per share, while the annual earnings contribution is projected at RM16 million, or four per cent of its FY25 forecast. Notably, it said the project is environmental, social and governance-aligned, serving as a storage hub for sustainable aviation fuel, hydrogenated vegetable oil and bionaphtha. Kenanga Research has maintained an "Outperform" call on Dialog, with a target price of RM1.96. The firm continues to favour Dialog due to the ongoing margin recovery in its plant maintenance, EPCC and specialist product businesses.
