KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Porsche is working to restore production volumes and shift spending priorities towards a more flexible product line-up following months of supply chain issues, slow electric vehicle (EV) demand, and a sales slump in China. Despite solid half-year results, news of significant production cuts in the second quarter has shaken investor confidence.
Key Points for Investors:
Production Challenges:
- Output Cut: Porsche disclosed that production would likely fall by over 10,000 cars in the second half due to an aluminum shortage.
- Impact: The shortage has particularly affected Porsche due to its high percentage of pre-ordered cars, low volumes, and detailed car specifications.
Supply Chain Improvements:
- Dual Sourcing: Porsche is increasing dual sourcing in its supply chain and improving visibility over problems at indirect suppliers to mitigate future risks.
Financial Performance:
- Operating Profit: Fell by just over 20% in the first half to €3.06 billion.
- Sales: Declined 4.8% to €19.46 billion.
- Operating Return on Sales: Achieved 15.7%, slightly above the reduced outlook for the year of 14% to 15%.
Market Reactions and Analyst Views:
- Stock Performance: Shares have dropped 42% since last May, reflecting setbacks from software issues, launch delays, and weakening sales in China.
- Analyst Concerns: Tim Rokossa of Deutsche Bank emphasized the need for premium execution, while Stephen Reitman of Bernstein Research noted that recent developments had disrupted expectations of sequential improvement.
Strategic Adjustments:
- China Market: Sales fell 33% in the first half. Porsche plans to introduce new combustion engine models and hybrids if the luxury EV segment does not pick up.
- Profit Margin Forecast: CFO Lutz Meschke is confident in reaching the mid-range profit margin target of 17% to 19% by 2025 with a new model range in place.
Leadership and Management:
- CEO Dual Role: Oliver Blume's position as CEO of both Porsche AG and Volkswagen has raised concerns about the capacity to lead two major companies effectively.
Conclusion:
Porsche's efforts to address production issues and adapt its product line-up to market demands are critical in restoring investor confidence. While supply chain improvements and strategic adjustments in key markets like China are underway, the company faces significant challenges. Investors should monitor Porsche's progress in executing these plans and managing broader economic and industry-specific risks.
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