In a filing with Bursa Malaysia yesterday, the group said earnings per share (EPS) decreased to 2.47 sen from 4.92 sen.

Revenue for the quarter also dropped 26.4% to RM73.63 million versus RM100.07 million a year earlier on lower contributions from its manufacturing division, offset by higher contribution from its property development division.

For its cumulative nine-months (9M FY2023), net profit fell 30.2% to RM27.47 million from RM39.35 million a year earlier, due to lower revenue of RM245.22 million, from RM259.04 million.

“The decrease was primarily driven by lower profit margin sales mix, weaker market demand, and high cost of setting up a new manufacturing plant,” said Kobay.

The group is primarily involved in the manufacturing of precision components and automation equipment, and fabricated structures for the electrical and electronic (E&E) and oil and gas industries.

“Other operating segments which are mainly involved in the property letting businesses reported a better PBT (profit before tax) quarter-on-quarter and year-on-year due to additional rental income generated,” it added.

The management expects the manufacturing division to face challenges in the remaining quarter of FY2023, in light of the current economic climate.

Thus, the division has plans to broaden its clientele exposure to include renewable energy-related businesses, optimise its manufacturing footprint, and enhance its overall cost structure.

Managing director and CEO Koay Hean Eng said in a statement the group is working hard to sustain the existing demand from customers in the E&E industry.

Hong Leong Investment Bank (HLIB) Research has downgraded Kobay to “hold” with a lower target price of RM2.38 from RM4 previously.

The research house has also cut its manufacturing sales contribution, leading to lower FY2023-25 EPS by 31%, 25% and 27%, respectively.

At 3.33pm, Kobay’s share price slipped 3.54% or 8 sen to RM2.18, giving it a market capitalisation of RM711.1 million.