(SKP MK/HOLD/RM2.00/Target: RM1.85)

SKP expects to achieve vertically integration (VI) status by mid-18. With the VI status coupled with peers’ plants at full utilisation currently, SKP could be in the sweet spot to take up more jobs from its key customer. We raise FY19-20 net profit forecasts by 13% and 26%. Maintain HOLD with a higher target price of RM1.85, based on 13x 2019F PE. Key re-rating catalyst will be higher-than-expected contract wins from its key customer or new customer. Entry price: RM1.70.

Source: UOB Kay Hian Research - 15 Nov 2017