SKP's 9MFY13 results were slightly below our and consensus forecasts. Its top- and bottom-  lines  rose  by  14.7%  and  27.8%  y-o-y  respectively,  supported  by  better demand  for  the  plastic  injection  moulding and  its  value-added services.  Gross  and EBIT margins were 1.3% and 1.4% better  y-o-y on the back of a better product mix.  Maintain  BUY with  its  FV  revised  at  RM0.49, based  on 9x  CY13  EPS  after adjusting for the staggered conversion of its warrants. 

Just  a  tad  off  target.  SKP Resources' 9MFY13 results  were  marginally  lower  than expected,  accounting  for  72.9%  and  73.4%  of  consensus' and OSK's  full-year  forecasts respectively.  Turnover  and  net  profit  grew  by  14.7%  and  27.8%  y-o-y  respectively  on  the back of stronger demand (+12.2% y-o-y) for its plastic moulding products and value-added services  such  as  assembling  plastic  products  and  components  for  the  electrical  and electronics  industry.  Vis-à-vis  last  quarter,  revenue  and  earnings  slipped  by  25.3%  and 18.3% respectively from lower orders from existing customers, due to the softer economy. We believe the slowdown in sales will likely impact its performance in 4Q as well.

Better margins. Gross margin for the period widened by 1.3%, from 15.9% to 17.2%, while the  EBIT  margin inched up  1.4%  from  11.6% to  13%  y-o-y.  The  margins  were  buoyed  by higher revenue and a solid product mix.

Maintain  BUY.  In  view  of  the  slower  orders  from  its  customers  due  to  a  tough  operating environment, we are revising downwards our FY13 and FY14 forecasts by 4.9% and 6.7% respectively. We  are  optimistic  on  SKP's  future  performance,  as  it  will  still  be well-supported  by:  i)  its  client,  Dyson's expansion  to  China,  and  ii)  stable  orders  from  the company's other clients. Our FV is adjusted to RM0.49 after trimming our forecast and factoring  in  a  staggered  conversion  of  its  warrants  given  their  long  maturity  period. Nonetheless, the dividend yield still remains attractive at 7.1%.

Source: OSK