This article first appeared in The Edge Financial Daily, on January 4, 2016.

SKP Resources Bhd

SKP Resources Bhd, which saw its share price double since the beginning of 2015, still offers more upside potential, analysts said, anticipating a substantial jump in the group’s earnings for the financial year ending March 31, 2016 (FY16).

The main catalyst for the plastic parts and components manufacturer is the two contract wins from UK-based Dyson Ltd, for the manufacturing of cordless vacuum cleaners. The contracts are worth a combined RM1 billion per year, over five years.

Kenanga Research analyst Desmond Chong is optimistic on the two contracts and said they are an indicator of Dyson’s confidence in SKP’s capability.

“We are comforted by these new contract announcements as it signals Dyson’s confidence in SKP’s capability, which would boost its chances of securing other contracts in the near to medium term for other products.

“Beyond that, we also understand that the group has already involved in the development phase of new products that should take up another 20% to 30% capacity in the medium term, if all goes well,” said Chong.

Moreover, he noted that SKP could benefit from Dyson’s aggressive expansion plans, after the group announced an investment of £1.5 billion (RM9.54 billion) for the development of four new product ranges, for the launching of 100 new products in the next four years.

According to Bloomberg data, SKP’s share price jumped 103.13% in the past one year, despite the dampened domestic market. During the same period, the FBM KLCI saw a decline of 1.03%.

For the first half of FY16, net profit was 80% higher at RM36.32 million, compared with RM20.18 million in the preceding year, while cumulative revenue rose 85% to RM504.29 million from RM271.99 million.