Panasonic’s earnings to improve going forward
KUALA LUMPUR: In spite of Panasonic Manufacturing Malaysia Bhd’s (Panasonic) financial year 2018 (FY18) performance coming in slightly lower than estimated, analysts believe that the group’s earnings will improve going forward.
As per Panasonic’s filing on Bursa Malaysia, the group’s profit after taxation for the year ended March 31, 2018 amounted to RM131.02 million, higher than RM127.12 million in the previous year.
Panasonic’s recorded earnings for FY18 was slightly lower than the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus expectations, accounting for 93.2 per cent and 94.9 per cent of full year FY18 earnings forecasts respectively.
MIDF Research noted that the commendable FY18 performance was due to the strong growth of the home appliance segment which recorded a profit before tax (PBT) growth of 54.2 per cent year on year (y-o-y).
“We believe that earnings will improve going forward driven by the completion of two new plants in 2018 and early 2020 respectively which is expected to increase production capacity by 25 per cent,” the research arm said.
It noted that the decrease in effective tax rate by four per cent to five per cent from FY19 as a result of additional tax incentive in regards to research and development expenditure will also drive improvement in earnings.
Panasonic’s share price had risen 13.6 per cent since MIDF Research’s ‘buy’ recommendation on February 28, 2018 and the research arm believed that at the current price, better earnings prospect has been factored in.
Therefore, MIDF Research downgraded its recommendation to ‘neutral’ with an unchanged target price of RM38.15 per share.