1H13 results review.SKP Resources recorded 1H13 revenue of RM243.9m and net profit of RM23.8m, making up 50.5% and 54.1% of our full-year projections respectively. YoY, the 1H13 revenue rose 44.2% while net profit grew by 64.9%, attributable to the strong surge in demand for its plastic injection moulding segment as well as value-added services such as assemblies of plastic products and components for the electrical and electronics industry.

Its payday!Recall that in our earlier report dated 25 September 2012, we had called a TRADING BUY on SKP Resources as we noted the stock's undemanding valuation at 7.3x FY13 PER (34.5 sen) and high dividend yield of 7.1%. The share price closed at 38.5 sen yesterday, having climbed 14.4% to as high as 39.5 sen since that report. The group has declared an interim dividend of 1.3 sen, which will go ex- entitlement today.

Time to take profit.During the same period, the FBM KLCI has risen only a mere 0.7% amid jittery investor sentiment on a global scale. Much uncertainty has also stemmed from China's subpar economic data in recent months, a market where SKP Resources is expected to have increased dependence via its largest client - Dyson (Note that Dyson accounts for around 55% of SKP Resources' revenue). Hence, we reckon it is appropriate for risk averse investors to lock in on the gains at 39 sen for a handsome 17% return (including dividends) since our report call two months ago.

Strengths: A almost 100% raw material and currency pass-though protects SKP from earnings fluctuations. Full turnkey project management capabilities and specialty skill sets also allows SKP to have a superior client retention.

Weaknesses: Heavy dependence on a single client.

Opportunities:Ability to leverage on Dyson's maiden foray into China. Current capacity utilisation of 75% allows SKP room to grow.

Threats: Rampant counterfeit of Dyson products in China and a slowing global economy.

Resistance:RM0.40 (R1), RM0.41 (R2)

Support: RM0.36 (S1), RM0.33 (S2)

Comments: SKP's share price is on a mild uptrend.

Overall, the technical indicators point towards a sustainable uptrend, although a near term downcycle may be on the cards. Expect some dowside in the short term, look to buy back towards the lower 36 sen support level.

SKP Resources Bhd primarily manufactures plastic parts and components, makes precision molds, sub-assembles electronic and electrical equipment and other secondary processes. It has three main subsidiaries i.e. SKP, GHI and SPI. SKP has been manufacturing plastic injection moulded parts and components for the electronic and electrical products industry since 1994.

Goodhart Industries (GHI), its other manufacturing arm, targets on enhancing the range of plastic injection moulded parts produced by the group and focuses on precision engineering plastics injection moulding and 'big tonnage' injection moulding. The group is now Malaysia's leading local One-Stop Solution Centre, which also caters to a global base of clients. Its portfolio of clients include Dyson, Toshiba, Sony, Pioneer and more.

Services provided:New product development/ program management, full service engineering consultation, mould design and fabrication, close tolerance plastic injection, advance secondary process operation, component assembly, contract manufacturing/box built Production Breakdown

Injection molding operation: Precision injection molding, gas assist molding, high speed thin wall molding, auto insert molding, in mould label molding, e mold, heating and cooling, double injection

Perfect Finish:Spray painting, automated multi colour tempo printing facilities, tempo printing for profile surfaces, hot stamping, untrasonic welding, heat staking, silk screen printing.

Source: Kenanga