PENSONI (9997) - Pensonic Holdings Berhad - Penning Higher Growth

Pensonic Holdings Berhad (Pensoni - 9997) had a history dated back then to 1965 as Keat Radio and Electrical Co in Penang. The Malaysian home grown breed of electrical manufacturing started to commence manufacturing and marketing under the brand name of Pensonic in the year 1988. Currently, the group had vast consumer electrical products ranging from kitchen appliances, home comfort, audio visual, laundry, lighting, refrigerator and others.

Despite the implementation of GST by the local Malaysian government as well as a weaker MYR starting end of 2014 due to the dropping commodity prices, Pensonic had emerge stronger than before with stringent measure in cost controlling, product diversification as well as strengthening export market.

In 2015, Pensonic had unlocked one of the land value in Penang with a disposal that sees a RM 8.4 million to the bottom line of FYE 2015.

Moving forward, what will be the key factor that Pensonic had undertook in order to continue seeing the growth of the group ?

Entering ODM market

One of the key note changes that Pensonic did is to convert competitor into client through ODM (Original Design Manufacturing). Pensonic will see ODM for larger home appliances such as washing machine and refrigerator. Tapping into ODM will enable Pensonic to see a better utilization rate of factory and better cost control in ordering of supplies. The group will look out for more ODM contracts in 2016 in order to see better cost management.

The previous 6 months result had saw Pensoni delivering a better EPS despite a slight drop in revenue. The main reason is attributable to the better operation cost.

El Nino effect towards a hotter than expected weather - A blessing in disguise

The El Nino effect in 2016 had been one of the worst for the decade with rising temperature hitting higher than expected. The hot spell which had severe effect in the South East Asian country had saw scorching sun rays sending temperature to as high as 40 degree celsius at peak afternoon in certain area.

Weather analyst are expecting the hotter than expected weather to prolong into end of June 2016. The heat wave had send consumer to buy electrical item such as fan, air cooler and air conditioner to comfort them from the scorching heat.

Sources and Panasonic Malaysia had been seeing increasing order for air ventilation unit such as fan and air conditioner. The buying spree had send Panasonic Malaysia (Panamy - 3719) share price rocketing up from a trading range of RM 24 to RM 30 in 3 months.

On a broader consumer outlook, the same could be applied to AEON which also retail consumer electrical item in Malaysia, taking a uptrend run after sliding from a peak of RM 4 at the end of 2014.

Pensonic, being a Malaysian home grown brand for consumer electrical item could be looking interesting at this juncture.

According to the chart, Pensonic had shown good support at the uptrend support line which is highlighted in red. Pensonic will be able to see a good rebound from the support line. Pensonic will be looking to challenge RM 0.70 as the psychological resistant line. A longer term outlook should be able to see Pensonic trading at RM 1.00 which will be supported by higher local demand from delivery of new completed property, stronger export to emerging market as well as better cost control management. A stronger MYR in 2016 will also underpinned better input cost for Pensonic compared to FYE 2015.

Pensonic short term TP RM 0.75 based on full year EPS projection of 7.5 cents, valued at PER x10.

PENSONI (9997) - Pensonic Holdings Berhad - Penning Higher Growth
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