KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research expects muted growth for Panasonic Manufacturing Malaysia (PMM) in the coming quarters, despite nine-month core net profits coming in above expectations.

HLIB research said this is because of  suboptimal use of its plant after the discontinuation of kitchen appliances manufacturing and higher sunk cost due to excess labour.

"To counter this, the group is intensifying its effort to venture into new products to maintain its competitiveness and to counter the loss of sales of recently terminated businesses. "Additionally, we opine the export outlook to be muted for PMM with the moderation in global growth amid elevated inflation, escalation of geopolitical tensions and slower-than-expected economic recovery from China," the bank-backed research firm said.

HLIB research has revised upward its forecasts for PMM for the financial years 2024, 2025, and 2026 (FY24/25/26) by 12 per cent, 5 per cent, and 5 per cent respectively, after nine-month core net profit of RM59.7 million surpassed forecasts.

HLIB research continues to recommend a 'Hold' rating for PMM, with a minor adjustment to the target price to RM18.50 (previously RM18.70).

"We reckon that the multiple headwinds will persist and pose a challenge to PMM's earnings moving forward," it said.