Kumpulan Perangsang Selangor Berhad - Results beat but outlook still muted
Tue, 25-Nov-2025 08:33 am
by Brian Chin Haoyan • Apex Research

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KPS (5843)

Target Price (RM)

0.65

Recommendation

Hold

  • KPS recorded 3Q25 core net profit of RM8.8m (-45% QoQ, -23% YoY), bringing 9M25’s sum to RM31.5m (+441% YoY). The results came in above our expectation at 100% of FY25 forecast due to better-than-expected margins.

  • 9MFY25 was boosted by (i) lower admin expenses with the sale of Plaza Perangsang, (ii) RM10.2m reduction in finance costs arising from the full settlement of the Sukuk and (iii) lowered tax and zakat by RM5.9m closure of non-performing units at CBB and shift to accrual accounting resulting in increased zakat payments in 2024.

  • We have raised our FY25/26/27F forecasts by 24%/6%/6% after imputing higher margin assumption for its manufacturing segment. Retain HOLD rating but with a higher TP of RM0.65 (from RM0.61) based on 10x FY26F earnings.

 

Above expectations. KPS recorded 3Q25 core net profit of RM8.8m (-45% QoQ, -23% YoY), bringing 9M25’s sum to RM31.5m (+441% YoY). The results came in above our expectation at 100% of FY25 forecast due to better-than-expected margins from both manufacturing and trading segments. 3QFY25’s core net profit was arrived after deducting gain on land and building disposal (-RM10.5m), gain on fair value of short-term funds (-RM0.5m) and net forex gain (-RM0.1m).

 

Dividend. The Group declared a first interim dividend of 1.0 sen per share (ex-date: 8 Dec 2025), unchanged from the corresponding quarter last year.

 

QoQ. Core earnings dipped 45% due to lower revenue contribution from manufacturing segment as Toyoplas saw earlier front-loading from key customers in 2Q25 ahead of the tariff implementation in Aug 2025, causing lower plant utilisation rate in China, Malaysia and Indonesia. Hence, the weaker operating leverage in Toyoplas resulted in lower net margin for the group. Oil and gas segment (NGC Energy) also registered wider losses of RM1.4m (2Q25: -RM0.5m) due to lower LPG sales.

 

YoY. Core net profit fell 23%, dragged by weaker revenue from Toyoplas (-7%) as soft consumer electronics demand led to reduced orders from key customers. Revenue from Century Bond (CBB) also declined 8% due to lower sales of carton and paper products amid intense competition and pricing pressure from low-cost Chinese exports.

 

YTD. Core bottom line jumped 4.4 times, boosted by (i) lower admin expenses with the sale of Plaza Perangsang, (ii) RM10.2m reduction in finance costs arising from the full settlement of the Sukuk and (iii) lowered tax and zakat by RM5.9m closure of non-performing units at CBB and shift to accrual accounting resulting in increased zakat payments in 2024.

 

Outlook. The manufacturing segment is expected to remain subdued amid macro uncertainties. Post-tariff implementation, Toyoplas may continue to face muted orders from key consumer electronics customers. Meanwhile, CBB is likely to sustain losses due to intense competition from China and an oversupplied packaging sector. Consequently, we expect CBB’s utilisation rate to remain subpar (3Q25: 46%) and for the segment to remain in the red in the coming quarter.

 

Earnings Revision. Due to the results beat, we have raised our FY25/26/27F forecasts by 24%/6%/6% after imputing higher margin assumption for the manufacturing segment.

 

Valuation. We retain our HOLD rating but with a higher TP of RM0.65 (from RM0.61), based on 10x FY26F earnings and a three-star ESG rating. 

 

Risk. Stiff competition from local and international EMS players, potential geopolitical and trade disruptions, and exposure to foreign-currency fluctuations.

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