Panasonic’s 1HFY17 lower than expected on weaker home appliance segment

KUCHING: Panasonic Manufacturing Malaysia Bhd’s ( Panasonic) first half of the financial year 2017 (1HFY17) has come in at the lower end of the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) expectation.

Panasonic reported in a filing on Bursa Malaysia that the company achieved a combined profit before tax of RM92 million for the half year ended September 30, 2016, the same amount as in the previous year’s corresponding period due to higher operation expenses and a lower share of profits from the associated company.

According to MIDF Research, Panasonic’s 1HFY17 financial performance came in at the lower end of expectation, accounting for 45.2 per cent of its FY17 full year earnings estimate.

While MIDF Research has maintained its revenue forecasts for FY17 and FY18, the research arm cut its FY17 and FY18 profit margin assumptions mainly from the home appliance segment to better reflect the results thus far.

“Consequently, our FY17 and FY18 earnings estimates are revised down by 7.4 per cent and six per cent respectively,” it said.

Following its earnings revisions, MIDF Research trimmed Panasonic target price to RM35.32 per share from RM36.18 per share previously.

The research arm noted that this was premised on price earnings ratio 2018 ( PER18) of 13.5-fold and earnings per share 2018 (EPS18) of 261.6sen per share.

“The assigned PER multiple equates to the group’s three-year average historical PER,” it said.

MIDF Research highlighted that despite stellar performance from fan product segment, the home appliance segment has posted weaker numbers.

“This has impacted the group’s overall performance,” the research arm said.

“In addition, income from its 40 per cent- owned associate, Panasonic Malaysia Sdn Bhd, continues to dwindle.”

All factors considered, MIDF Research maintained its ‘neutral’ recommendation on the stock.