KUALA LUMPUR (April 17): SKP Resources Bhd (KL:SKPRES) may see lower orders in the coming quarters as consumers hold back spending amid protracted Middle East conflict, an analyst flagged on Friday.

The increase in crude oil prices would result in higher cost of production for the electronic manufacturing services, translating to lower affordability for discretionary products, Public Investment Bank (Public IB) said and downgraded SKP Resources to 'neutral' and cut its target price to 39 sen.

“As there is no immediate resolution for the conflict in the Middle East, we are turning more cautious on SKP’s outlook,” the research house said.

SKP Resources slipped 1% to 38.5 sen on Friday. The stock has declined more than 20% as geopolitical tensions in the Middle East dragged into the second month.

A fragile truce reached with Iran is now at risk as the US blockades the Strait of Hormuz which is critical for shipping of one-fifth of the world’s oil and gas supply.

Public IB is slashing its earnings estimate for SKP Resources by an average 50% for this year and the next two years. The company will likely report a net profit of RM68.3 million for the financial year ended March 2026 (FY2026), which may decline to RM28.6 million in FY2027.

SKP Resources is expanding its printed circuit board assembly and injection moulding capabilities while engaging potential clients, “which should gradually diversify its revenue base and enhance earnings resilience over time," the research house said.

The company is currently bidding to manufacture several new models with a key customer, which if secured could help to maximise utilisation rates and cover fixed costs, the house noted.