Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Research House: OSK
Supermax Corp Bhd
(April 23, RM6.98)
Maintain buy at RM6.99 with higher target price of RM11.39: Supermax's 1QFY10 (FY ends Dec 31) results were above consensus and our expectations, making up 31% of the FY10 forecasts. The 1QFY10 revenue of RM220.7 million was higher by 12.3% quarter-on-quarter (q-o-q), mainly contributed by surging sales and higher selling prices of gloves as the company passed on the higher latex cost to its customers.
The increase was also contributed by continuous demand for medical examination gloves, which allows Supermax to effectively pass through more than 90% of its costs in a timely manner (less than one month). The revenue growth also led to a higher 1QFY10 core net profit of RM51.5 million, which was an increase of 4% q-o-q.
To recap, there was an exceptional item in 4QFY09 in the form of a one-off interest payment of RM5.4 million arising from the company's earlier redemption of its bonds. Revenue and net profit were higher year-to-date, bolstered mainly by higher production capacity and higher selling prices of gloves.
Upgrading our FY10-11 forecasts by 14%-18%. Our upgrade is in line with the stellar 1QFY10 results and anticipation of robust demand for examination gloves as hygiene awareness among the global population grows.
We are upgrading our target price for Supermax to RM11.39 based on the stock's existing PER of 15 times FY11 EPS. We continue to like the company's ideal product mix (more than 70% natural rubber gloves) targeting the right markets in developing countries.
We believe the company is poised to be one of the big beneficiaries as hygiene standards in developing countries like China and India start to move up as awareness grows. - OSK Investment Research, April 23
This article appeared in The Edge Financial Daily, April 26, 2010.
Company Name: SUPERMAX CORPORATION BHD
Research House: OSK
Supermax Corp Bhd
(April 23, RM6.98)
Maintain buy at RM6.99 with higher target price of RM11.39: Supermax's 1QFY10 (FY ends Dec 31) results were above consensus and our expectations, making up 31% of the FY10 forecasts. The 1QFY10 revenue of RM220.7 million was higher by 12.3% quarter-on-quarter (q-o-q), mainly contributed by surging sales and higher selling prices of gloves as the company passed on the higher latex cost to its customers.
The increase was also contributed by continuous demand for medical examination gloves, which allows Supermax to effectively pass through more than 90% of its costs in a timely manner (less than one month). The revenue growth also led to a higher 1QFY10 core net profit of RM51.5 million, which was an increase of 4% q-o-q.
To recap, there was an exceptional item in 4QFY09 in the form of a one-off interest payment of RM5.4 million arising from the company's earlier redemption of its bonds. Revenue and net profit were higher year-to-date, bolstered mainly by higher production capacity and higher selling prices of gloves.
Upgrading our FY10-11 forecasts by 14%-18%. Our upgrade is in line with the stellar 1QFY10 results and anticipation of robust demand for examination gloves as hygiene awareness among the global population grows.
We are upgrading our target price for Supermax to RM11.39 based on the stock's existing PER of 15 times FY11 EPS. We continue to like the company's ideal product mix (more than 70% natural rubber gloves) targeting the right markets in developing countries.
We believe the company is poised to be one of the big beneficiaries as hygiene standards in developing countries like China and India start to move up as awareness grows. - OSK Investment Research, April 23
This article appeared in The Edge Financial Daily, April 26, 2010.
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