PMM recorded core PAT of RM15.2m (+15% QoQ, +7% YoY). This brought 9MFY23 sum to RM39.2m (+11% YoY) which came broadly within our and consensus forecast at 69%/72% respectively. Overall, sales felt the pinch from the termination of rice cooker and certain kitchen appliances. W e opine the export outlook will be muted for PMM with the moderation in global growth as a result of a slowdown in major economic activities and sustained inflationary pressure. Maintain SELL, with TP of RM16.00 based on unchanged 17x PE multiple on FY23 earnings. We reckon that the multiple headwinds will persist and pose a challenge to PMM earnings moving forward.

Within expectations. PMM recorded 3QFY23 results with revenue of RM259.6m (- 11% QoQ, +2% YoY) and core PAT of RM15.2m (+15% QoQ, +7% YoY). This brought 9MFY23 sum to RM39.2m (+11% YoY). This came in broadly in line with estimates at 69%/72% of our/consensus forecast. 9MFY23 one-off adjustments include loss on derivatives (+RM91k), forex loss (+RM1.0m), insurance claim received from the flood incident in Dec 2021 (-RM22.3m) and claim for termination of certain kitchen appliances products (-RM12.4m).

Dividend. None declared. 9MFY23 DPS amounted to 15 sen (9MFY22: 15 sen).

QoQ/YoY. Revenue dropped by -11% QoQ/-2% YoY attributable to the drag in Living Appliances and Solutions Company LASC (-6% QoQ) and Heating & Ventilation A/C Company HVAC (-13% QoQ). LASC was affected by the discontinuance of rice cooker business and certain kitchen appliances. Additionally, the slow demand in domestic market also contributed to the decline. Despite the softer revenue, PMM chalked in core PAT of RM16.2m (+7% YoY) on the back of expansion in EBIT margin by 3.2ppt YoY.

YTD. Top line climbed by +21% thanks to the expansion in HVAC (+37%) that more than offset the drag in LASC (-10%). Higher revenue achieved was in line with the full market reopening and fulfilment of backlog orders arising from the flood incident in Dec 2021. The discontinuance of rice cooker business and certain kitchen appliances had impacted the overall revenue achievement. Bottom line increased moderately by +11% to RM39.2m offset by the higher cost of materials and labour coupled with the higher effective tax rate (9MFY23: 14.9% vs 9MFY22: 5.7%).

Outlook. The group is expecting to incur about 6-7% revenue impact from the termination of rice cooker and kitchen appliances products. Note that the rice cooker segment has been suffering losses for the past years. Additionally, we opine the export outlook to be muted for PMM with the moderation in global growth as a result of a slowdown in major economic activities and sustained inflationary pressure.

Forecast. Unchanged.

Maintain SELL, with TP of RM16.00 based on unchanged 17x PE multiple on FY23 earnings. We reckon that the multiple headwinds will persist and pose a challenge to PMM earnings moving forward.

Source: Hong Leong Investment Bank Research - 1 Mar 2023