February 16, 2011

SUPERMX - OSK Research: Supermax FY10 results within expectations, TP unchanged at RM7.84

Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Research House: OSK

KUALA LUMPUR: OSK Research said Supermax Corp Bhd's FY10 results were within expectations and as anticipated, the results were lower on-quarter owing to spiralling latex price and no improvement in forex.

The research house said on Wednesday, Feb 16 although the company is the closest to Top Glove in terms of product mix, it has managed to differentiate itself by having a higher OBM mix as well as distribution income to smoothen its manufacturing profits.

'Our target price for Supermax remains unchanged at RM7.84, based on the existing PER of 13x FY11 EPS. Supermax remains one of our top two picks for the sector besides Kossan. Although we maintain Neutral on the sector, Supermax's valuation still stands out over some of its peers given its single-digit valuation.

'Going forward, we believe the stock would come in for a re-rating when latex price gets toppish, which we think would be sometime in May 2011 when the wintering season of rubber trees is over,' it said.

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