Why Panasonic Manufacturing Malaysia Berhad (KLSE:PANAMY) Faces a Dual Threat to Earnings and Revenue Growth

The recent downgrade of Panasonic Manufacturing Malaysia Berhad (KLSE:PANAMY) by analysts and its struggling competitive positioning in a saturated market paint a grim picture for the company’s near-term prospects. Despite being a cornerstone of Malaysia’s consumer electronics sector, PMM is grappling with a perfect storm of declining demand, fierce competition, and structural inefficiencies. This article dissects the dual threats—analyst skepticism and industry headwinds—that are eroding PMM’s earnings and revenue growth.

Analyst Downgrades Signal Earnings Pressure

Analysts have slashed their forecasts for PMM, reflecting a sharp loss of confidence. For 2026, revenue estimates were cut from RM993 million to RM756 million, while EPS projections fell from RM1.08 to RM0.69—a 39% reduction [1]. This pessimism is rooted in PMM’s 2025 performance, where revenue dropped 9.2% to RM822.8 million, and net income plummeted 50% to RM46.1 million [2]. The company’s FY 2025 EPS of RM0.76 missed analyst expectations by 19%, underscoring operational misalignment [2].

The consensus price target for PMM’s stock has also fallen 36% to RM6.88, signaling a re-rating of its intrinsic value [1]. HLI Research, a key player in Malaysian equity analysis, has maintained a SELL rating, citing “limited near-term catalysts” and “continued earnings pressure” [4]. These downgrades are not arbitrary; they reflect a broader narrative of waning demand and margin compression.

Competitive Industry Positioning: A Fragile Foundation

PMM’s core HVAC segment, which accounts for 81% of its revenue, is under siege. While the Malaysian HVAC market is projected to grow at a 4.7% CAGR to USD 1.47 billion by 2030 [5], PMM’s market share is being eroded by domestic and international rivals. Chinese imports of electric fans and HVAC systems have flooded the market, driving down prices and margins [1]. Meanwhile, domestic competitors are leveraging cost advantages to capture market share, particularly in the fan segment [1].

The company’s profitability is further strained by a high cost of sales—87% of total revenue in 2025 [3]—and a profit margin that halved to 5.6% from 10% in 2024 [3]. This inefficiency is compounded by underutilized manufacturing capacity after PMM exited the kitchen appliances segment. While the company is pivoting to water-related products, meaningful scale is at least five years away [4], leaving a void in growth drivers.

Global trade dynamics add another layer of risk. U.S. tariffs and retaliatory measures have dampened export demand, particularly in Iraq, Vietnam, and Hong Kong [4]. For a company reliant on export markets, this volatility threatens to exacerbate revenue declines.

A Market in Transition, but Not for PMM

The HVAC and fan markets in Malaysia are evolving, driven by energy efficiency mandates and urbanization. However, PMM’s strategic realignment appears misaligned with these trends. While the market is projected to expand, PMM’s focus on cost control and digital transformation lacks the innovation needed to differentiate in a crowded field [3]. Competitors like Daikin and Carrier are investing in smart HVAC solutions, while PMM’s product portfolio remains stagnant.

Conclusion

PMM’s dual threats—analyst downgrades and a hostile competitive landscape—highlight a company struggling to adapt. With earnings and revenue growth in freefall, and no clear path to differentiation, investors should tread cautiously. The recent SELL rating from HLI Research and the 36% drop in price targets underscore a market that has priced in further deterioration. For PMM, the road to recovery will require more than cost-cutting; it demands a bold reimagining of its role in a rapidly changing industry.

Source:
[1] Need To Know: This Analyst Just Made A Substantial Cut To Their Panasonic Manufacturing Malaysia Berhad (KLSE:PANAMY) Estimates, [https://simplywall.st/stocks/my/consumer-durables/klse-panamy/panasonic-manufacturing-malaysia-berhad-shares/news/need-to-know-this-analyst-just-made-a-substantial-cut-to-the-32]
[2] Panasonic Manufacturing Malaysia Berhad Full Year 2025 Results, [https://finance.yahoo.com/news/panasonic-manufacturing-malaysia-berhad-full-222502782.html]
[3] Panasonic Manufacturing Malaysia Berhad Full Year 2025... [https://finance.yahoo.com/news/panasonic-manufacturing-malaysia-berhad-full-222502782.html]
[4] Dim Outlook For Panasonic Malaysia, [https://www.businesstoday.com.my/2025/05/29/dim-outlook-for-panasonic-malaysia/]
[5] Malaysia HVAC Market Size & Share Analysis, [https://www.mordorintelligence.com/industry-reports/malaysia-hvac-market]