HPP Holdings Bhd (HPP) experienced a seasonal increase in revenue for the fourth quarter of FY5/24, with a 25% quarter-on-quarter (QoQ) rise driven by its consumer electrical and electronics (E&E) segment. Despite this, the company reported a core net profit of RM4.6 million for FY5/24, a 53.8% year-on-year (YoY) decline, impacted by higher fixed production costs and margin reductions from newly commissioned operations.

CGS International Stock Broking House (CGS) maintains a REDUCE rating on HPP, with an unchanged target price of RM0.31. The bank highlights that, despite the recent uptick, HPP's valuation appears stretched at 28.3x FY25 Forecast Price-to-Earnings (P/E), significantly higher than the 3-year mean of 23x and peer average of 9x.

Looking ahead, CGS projects better performance for FY25/FY26, anticipating a recovery driven by demand in the consumer E&E and contraceptive industries. The firm expects revenue growth of 15.3% and 11.9% respectively, along with an improvement in gross margin to 20-21% from 18.6% in FY24, although it does not foresee a return to pre-pandemic revenue levels.