SKP Resources Bhd: A High-Yield Undervalued Gem in Malaysia's Resource Sector

In the quest for high-yield opportunities amid a cautiously optimistic Malaysian economy, SKP Resources Bhd (7155.KL) emerges as a compelling candidate. With a forward-looking dividend of RM0.0375 per share (4.03% yield) and a valuation that appears undervalued relative to industry peers, the stock offers a rare blend of income generation and capital preservation in a sector grappling with mixed macroeconomic signals.

Dividend Yield: A Competitive Edge in a Low-Growth Environment

SKP Resources Bhd's ex-dividend date of October 2, 2025, marks the latest iteration of its consistent dividend policy, despite a gradual decline in payout amounts over recent yearsMalaysia Stock Market: current P/E Ratio^[2]. At a current stock price of MYR 0.91–0.93SKP RESOURCES BHD Announces Final Dividend for FY 2025^[3], the dividend yield calculates to approximately 4.12% (RM0.0375 ÷ MYR 0.91), outpacing the 3.5–4.0% average for Malaysian resource stocksSKP Resources Bhd - PE Ratio^[5]. This premium yield is particularly attractive in a context where the broader Malaysian stock market's average P/E ratio stands at 13.90Malaysia Stock Market: current P/E Ratio^[2], suggesting that SKP's 11.63 P/E ratioSKP Resources Bhd - PE Ratio^[5] reflects a discount to both sector and market benchmarks.

Valuation Metrics: A Discount to Fundamentals

SKP's valuation is further supported by its price-to-book (P/B) ratio of 1.5Price to Book Value (P/B) ratio of SKP Resources Bhd^[4], indicating that the market values the company at 1.5 times its net asset value. This is a modest premium to the 1.0–1.2 range typical for undervalued resource firms, suggesting that SKP's balance sheet strength—bolstered by a debt-to-equity ratio of 5.9%SKP Resources Bhd Balance Sheet Health^[6]—is being underappreciated. For context, the Malaysian resource sector's average debt-to-equity ratio hovers around 40.7% for peers like Malaysian Resources Corporation Berhad (MRCB)Debt / Equity, Adjusted for Malaysian Resources Corporation^[1], underscoring SKP's conservative leverage profile.

Sector Context: Navigating Challenges and Opportunities

The Malaysian resource sector faces a dual narrative in 2025. While the mining subsector contracted by 5.2% in Q2 due to planned maintenanceSKP RESOURCES BHD Announces Final Dividend for FY 2025^[3], the construction and energy transition sectors are expanding. SKP's exposure to construction materials or infrastructure-related activities could benefit from projects like the Penang Airport expansion and Sarawak deep-sea port, which are projected to drive demand for resourcesMalaysia Stock Market: current P/E Ratio^[2]. Additionally, Malaysia's 4.4% GDP growth in Q2 2025SKP RESOURCES BHD Announces Final Dividend for FY 2025^[3], driven by private consumption and investment, provides a macroeconomic tailwind for firms with diversified operations.

Risks and Considerations

Investors should remain mindful of sector-specific headwinds, including volatile oil prices (forecasted to average US$76–80/barrel in 2025)Malaysia Stock Market: current P/E Ratio^[2] and potential inflationary pressures. However, SKP's low debt levels and consistent dividend historySKP RESOURCES BHD Announces Final Dividend for FY 2025^[3] mitigate liquidity risks, making it a more resilient play compared to highly leveraged peers.

Conclusion: A Strategic Buy for Income and Growth

SKP Resources Bhd's combination of a high dividend yield, undervalued P/E ratio, and low leverage positions it as a standout opportunity in Malaysia's resource sector. While the broader sector faces mixed challenges, SKP's conservative financial structure and alignment with growth drivers like infrastructure development make it a compelling addition to a diversified portfolio. For income-focused investors seeking value, the stock's ex-dividend date in October 2025 offers a timely entry point.