Kumpulan Perangsang Selangor Berhad - One-Off Distribution Masks a Weakening Core
Fri, 28-Aug-2026 07:24 am
by Research Team • Apex Research

Counter

KPS (5843)

Target Price (RM)

0.44

Recommendation

Sell

KPS recorded 1HFY26 core net profit of RM6.6m (-70.8% YoY), coming in below expectations at 34% of our FY26F forecast and 27% of consensus, dragged by lower order volumes from both manufacturing and trading divisions.

We remain cautious on KPS's near-term outlook amid persistent macro headwinds. Nonetheless, management is targeting 2HFY26 performance to improve from 1HFY26.

We cut FY26F/FY27F/FY28F core net profit by 14%/16%/15% to RM19.3m/RM23.6m/RM26.7m.

We downgrade our call from HOLD to SELL with a lower TP of RM0.44 based on 10x FY27F Core EPS of 4.4sen (previously 5.2sen).

 

Below expectations. KPS's 2QFY26 recorded a core net profit of RM4.9m, after adjusting exceptional items including fair value gains (-RM0.6m), net forex loss (RM0.6m), and one-off income distribution from SPLASH (RM11.5m). 1HFY26 core net profit came in as RM6.6m, which is below our estimates, accounting for only 34% of our FY26F core net profit forecast and 27% of market consensus.

QoQ. Revenue rose 11.2% QoQ to RM231.5m from RM208.2m in 1QFY26, mainly on higher manufacturing and trading sector revenue as customer orders and Century Bond Bhd's ("CBB") paper division volumes picked up sequentially. While core net profit increased by 173.7% QoQ, mainly due to higher revenue contribution in the current quarter.

YoY. Revenue fell 14% YoY to RM231.5m from RM268.8m, due to lower sales order volumes in both manufacturing and trading segments, while the stronger Ringgit against the US Dollar more than offset growth in the Communications and Information Technology segment. With that, core net profit declined by 69.6% YoY to RM4.9m (2QFY25: RM16.0m).

Outlook. We stay cautious on KPS's near-term outlook, as management flags continued geopolitical developments, evolving trade policies and foreign exchange volatility as headwinds into 2HFY26. That said, management still guides for 2HFY26 performance to improve from 1HFY26.

Earnings Revision. We cut our FY26F/27F/FY28F core net profit forecasts by 14%/16%/15% to RM19.3m/RM23.6m/RM26.7m (previously RM22.6m/RM28.1m/RM31.3m) respectively, to reflect the weaker-than-expected manufacturing contribution amid soft consumer sentiment and global uncertainties from geopolitical tensions.

Valuation & Recommendation. We downgrade our call from HOLD to SELL, with a lower TP of RM0.44 (from RM0.52), based on 10x FY27F core EPS of 4.4sen and a three-star ESG rating.

Risks. Prolonged softness in contract manufacturing demand, elevating raw material costs, FX volatility.

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