Better days ahead for Panasonic Malaysia
KUALA LUMPUR: Panasonic Manufacturing Malaysia Bhd (Panasonic Malaysia) expects to see further recovery in demand, with management revealing that its workers reviously affected by the Covid-19 pandemic have resumed their duties.
The team at MIDF Amanah Investment Bank Bhd (MIDF Research) saw that Panasonic Malaysia’s utilisation rate now averages between 70 to 80 per cent.
To recall, 116 of its 2,137 employees have been tested positive for Coivd-19 in December. The plant was closed for about a week for deep sanitisation, thus losing production time.
Meanwhile, the latest Movement Order Control (MCO 2.0) is expected to have minimal impact as it is allowed to be fully operational while online distribution channels established earlier will enable continuous sales.
“The only concern is another outbreak in its factory, which will lead to loss production time,” MIDF Research forewarned. “Management has since further tightened standard operating procedures to limit risks.
“Going forward, Panasonic Malaysia plans to focus more on selling its main product categories, which are: fan, home shower and vacuum cleaner to their respective stronghold markets.
“For instance, it plans to export more fans to Vietnam, as the economy is unscathed from the pandemic.
“This could cushion any potential shortfall from other markets such as Thailand. Locally, it will continue to defend its market leadership in the ceiling fan segment.”
MIDF Research warned that Panasonic Malaysia’s higher operating costs may be offset by improving operating efficiency. It thus expect margins to come under pressure in the coming quarter owing to higher raw material costs and operating costs due to the more stringent standard operating procedures (SOPs).
“We will exclude one-off expenses related to the Covid19 outbreak in its factory from our core net income,” it added.
“Meanwhile, we noticed that some of its prices for certain main raw material such as plastic resins, copper and aluminium have been on an upward trend compared to the preceding quarter by four to 13 per cent.
“However, we are not overly concerned as we opine that some of these can be mitigated by Panasonic Malaysia’s on-going cost optimisation activities. On top of that, its associate, which has returned to profitability is expected to record sustainable profits in the future.”
Meanwhile, its new factory building at Shah Alam is expected to start commercial production in October.
The additional capacity will help to reduce the company’s reliance on external contractors by close to 50 per cent as it increases its internal capacity, thus helping it to improve its profitability in the long run. It is also planning to increase the number of its plastic injection machines.