MORNING CALL:23/10/23 - video Dailymotion

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10/22/2023

Kenanga is looking beyond HPP Holdings weak numbers

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00:00 We start this week with Kenanga Research's post-results review of packaging company HPP

00:06 Holdings, where the research house says it is willing to look past the weak first half,

00:10 heaping its outperformed call and $0.72 target price, which is 95% more than what it is at

00:16 current levels.

00:17 Its first quarter FY24 Cornet profit of $2.3 million disappointed.

00:22 The variances against Kenanga's forecast largely came from a weaker-than-expected pickup

00:27 in orders and a higher-than-expected input cost.

00:30 An earnings boost over the near term is expected from its new high-margin, paper pulp-moulded

00:35 packaging products, a substitute to similar styrofoam packaging products.

00:39 This alternative to styrofoam is made of eco-friendly recycled materials.

00:44 It is also cost-effective and free from the hefty environmental taxes imposed on styrofoam

00:49 packaging in various countries.

00:51 There is a strong and ready market for the new products from both existing and new customers

00:55 given their recyclable attribute, which meets stringent EU environmental standards and ride

01:00 on the rising global ESG trend.

01:02 Meanwhile, Kenanga anticipates a demand recovery from its customers in the E&E space as they

01:08 restock their inventory levels.

01:10 Kenanga cut its FY24 net profit forecast by 16% to reflect softer demand for its non-corrugated

01:17 packaging products and higher input costs while maintaining its FY25 numbers.

01:22 Based on Bloomberg data, it is one buy and one hold, which comes from CJSCIMB's report

01:26 back in late July.

01:28 The average target price is 54 cent, which is 17 cent more than its last close.

01:32 Thank you.

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