Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: JF APEX | Price Call: HOLD | Target Price: 2.07 |
Showing posts with label SUPERMX. Show all posts
Showing posts with label SUPERMX. Show all posts
March 2, 2015
Disappointing Earnings
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: TA | Price Call: SELL | Target Price: 2.05 |
November 10, 2014
Supermax Corp Berhad - 9MFY14: Below expectations
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: JF APEX | Price Call: HOLD | Target Price: 2.20 |
December 4, 2013
SUPERMX - Expansion Plans to Run Concurrently
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: TA | Price Call: BUY | Target Price: 3.50 |
SUPERMX - Bracing for tougher times
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: JF APEX | Price Call: HOLD | Target Price: 2.67 |
November 11, 2013
Supermax - Acuqiring land in Serendah
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: JF APEX | Price Call: HOLD | Target Price: 2.67 |
September 4, 2013
Supermax Corporation Berhad - Back to the Hunting Grounds
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: TA | Price Call: BUY | Target Price: 2.90 |
March 7, 2013
Growth Momentum Intact
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: TA | Price Call: BUY | Target Price: 2.45 |
February 19, 2013
Stretching on nitrile
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: MIDF | Price Call: BUY | Target Price: 2.25 |
November 28, 2012
Lower input price moderated by lower profit from associates
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: MIDF | Price Call: BUY | Target Price: 2.48 |
August 23, 2012
Double-Digit Earnings Growth Guidance Intact
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: TA | Price Call: BUY | Target Price: 2.65 |
March 28, 2012
Rubber Glove - Neutral - 28 March 2012
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Stock Name: ADVENTA
Company Name: ADVENTA BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: KENANGA | Price Call: BUY | Target Price: 3.64 |
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 8.32 |
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 4.36 |
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 2.06 |
Stock Name: ADVENTA
Company Name: ADVENTA BHD
| Research House: KENANGA | Price Call: SELL | Target Price: 1.41 |
We are currently NEUTRAL on the sector due to the high latexprice, which is eroding the sector margins. While we are cautious on the latexprice trend, the glove players on the other hand believes that latex priceswill ease back later due to the ample supply of natural rubber. Hence, we mayupgrade the sector later if the price situation improves significantly in theshort term. For now, we are maintaining a Neutral rating on the sector in viewof the current high latex price, which is being supported by the Thaigovernment and a strengthening of RM. For the sector, we have an Outperformcall on Kossan Rubber (TP: RM3.64) and are maintaining our Market Perform callson Hartalega (Market Perform; TP: RM8.32), Top Glove Corporation (Market Perform; TP: RM4.36) and Supermax Corporation(Market Perform; TP: RM2.06). We retainan Underperform call on Adventa (Under Perform; TP: RM1.41)
4Q11 results update. The rubber glove companies' 4Q11 results weremostly in line with expectations with the exception of Topglove, which exceededexpectations and Adventa, which saw its results coming in below expectations.The companies generally recorded flattish quarterly earnings with flat marginsand a small growth in sales QoQ. Topglove however reported a very strong growthduring the quarter (+70% QoQ) with higher margins from 5.7% to 9.7% as itbenefits the most from the positive spread due to the lower latex price.
Stabilizing latexprice? Since the government of Thailand set a minimum price for latex, theprice of latex has surged by more than 11% in the past few months fromRM7.00/kg to a high of RM7.80/kg currently. Although the latex price hasincreased, the glove players still expect natural latex price to ease backlater and stabilise in the long term as they opined that there is no shortage of naturalrubber latex supply and believe that there is an ample supply of natural rubberdue to the additional plantations in neighboring countries like Cambodia andSouth Vietnam. Furthermore, these players expect latex traders to release theirstocks later to unlock their cash flow, and this would suppress the latexprices.
Currency impact.The USD has depreciated c.4% to less than RM3.03/USD from an average ofRM3.15/USD three months ago. Thestrengthening of Ringgit would have negative impacts to glove makers' bottomlines given that most of their sales are denominated in USD. That said,Thailand, the industry's nearest competitor, is facing even bigger problemsgiven the greater volatility in the Thai Baht compared to Ringgit (by c. 6% in thesame period). Meanwhile, Malaysia has not been losing any competitive advantageto Indonesia as the latter does not have the same production scale and technologydespite its weaker currency exchange against the USD.
Reducing cost viathinner latex gloves. We understandthat the glove players are moving to super thin gloves (3.5g), which is similaror in line with nitrile powder free glove. This will reduce the consumption ofnatural rubber latex, which accounts for about 50%-60% of the production cost.Meanwhile, demand growth for gloves remains healthy, allowing glove makers tocontinue being price makers and passing on any cost increases to customers.
Maintain Neutral.We maintain a Neutral rating on the sector given the current higher latex pricecaused possibly by the artificial support of rubber prices by the Thai,Indonesian and Malaysian governments and the continuing strengthening of RM againstthe USD. We like Kossan Rubber (Outperform; TP: RM3.64) for its well balanced mix in nitrile andlatex gloves and are maintaining our Market Perform calls on Hartalega (MarketPerform; TP: RM8.32), Top GloveCorporation (Market Perform; TP: RM4.36) and Supermax Corporation (MarketPerform; TP: RM2.06). We retain anUnderperform call on Adventa (Under Perform; TP: RM1.41).
Source: Kenanga
March 2, 2012
Supermax Corp - Warming up to nitrile
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Target RM2.43
Nitrile was in focus at Supermax's 4Q11 briefing and we sensed that management views this product with more favour now. Much time was spent discussing nitrile's merits, affirming our view that it is the way forward for the industry due to its light weight and price stability.
Source: CIMB Day Break 02 March 2012, Full PDF Report
Company Name: SUPERMAX CORPORATION BHD
| Research House: CIMB | Price Call: BUY | Target Price: 2.43 |
Target RM2.43
Nitrile was in focus at Supermax's 4Q11 briefing and we sensed that management views this product with more favour now. Much time was spent discussing nitrile's merits, affirming our view that it is the way forward for the industry due to its light weight and price stability.
Source: CIMB Day Break 02 March 2012, Full PDF Report
Supermax (SUCB MK, BUY, FV:2.50, CL:RM1.99)
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.50 |
Supermax held an analyst briefing yesterday to update investors on its strategygoing forward. Management is targeting to increase its mix of nitrile gloves to 50% by 2013 from the present 35% to cashin on the changing demand for natural rubber and nitrile gloves. It alsoexpects to unveil new glove products by 2QFY12 that will contribute earnings by 3QFY12. We are positive on the company's strategygoing forward. Maintain Buy.
Ramping up nitrileglove (NBR) mix to 50%, or 10bn pieces a year, by 2013. This is a significantshift in product mix and an increase from the current NBR portion of 35%. To implementthis, the company will replace the older natural rubber (NR) lines in itsexisting factory (Lot 6070) to make way for capacity to produce 1.4bn pieces ofnitrile gloves while its new factory in Glove City (Lot 6058) will provideannual capacity for 3.8bn pieces. The earnings contribution from both Lot 6070and 6058 should come in by 3QFY12 and 2013 respectively.
Unveiling newproducts in 2QFY12; earnings to flow by 3QFY12. Supermax expects to launchnew glove products globally starting from 2QFY12. Although the companydid not reveal the type of glove to be produced, we surmise that it may be a mix of NR and NBRgloves, and that it would be lighter and thinner. Our guess is that it wouldalso be an examination glove since morethan 90% of the company's products target the medical segment.
NR latex price tocome down in 2H12. Although management acknowledged that NR latex pricewould continue to be volatile due to over-speculation and intervention by the Thaigovernment, it expects prices to begin to trend down again from 2H12. Thiswould be on the back of: i) new NR latex supply from Cambodia and SouthVietnam; ii) declining demand for NRlatex as existing NR glove producers gradually shift to NBR gloves, and iii)the market preference for thinner gloves, which would mean that less NR latexwill be used eventually. As such, management expects NR latex price to drop toRM6.00/kg. We think that the price could fall to this level if there is nofloor price for hard rubber (proposed at RM11.84/kg) and the tension in Irandoes not stoke a further rise in crude oil price.
Maintain Buy. Ourfair value for Supermax remains unchanged at RM2.50, based on the existing PERof 13x FY12 EPS. We are positive on itsmove to go big on NBR as the examination glove market is a dynamic one where preferences for glove types may change rapidly, especially when aprice difference arises.
Source: OSK188
February 29, 2012
SUPERMX (FV RM2.50 - BUY) FY11 Results Review: A Stable Quarter
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.50 |
Supermax's FY11 results were within expectations. Itsrevenue was quite flattish q-o-q as the higher sales volume was offset by thelower selling price of gloves. However, its net profit was lower q-o-q due tothe continuous stiff competition as well as lower contribution from itsassociates. We are downgrading our FY12 earnings by 9% since latex pricecontinues to be high and we expect some negative impact on its demand growth aswell as a potential price war. Maintain Buy but with a lower fair value ofRM2.50.
Within expectations.Supermax's FY11 results were within consensus and our expectations, making up95% and 100% of FY11 forecasts. Its 4QFY11 revenue of RM276.2m was quiteflattish q-o-q as the higher sales volume was offset by the lower selling priceof glove since latex price was lower in 4QFY11 versus 3QFY11 at RM7.25/kg versusRM8.67/kg. However, the 4QFY11 net profit of RM28.2m was 8.9% lower q-o-q dueto the 70% cost pass following the continuous stiff competition as well aslower contribution from its associates. Finally, on a YTD comparison, its FY11revenue of RM1,026.9m was higher by 5.1% due to the higher selling price as aresult of higher latex price in FY11 versus FY10 at RM8.95 versus RM7.47 andhigher sales volume of gloves sold as a result of bigger capacity.Nevertheless, its FY11 net profit of RM106.0m was again lower by 33.2% dueto margin erosion from strongcompetition, lower associates contribution and investment bond written off.
Downgrading FY12earnings by 9%. Earlier, we hadexpected the latex price to stay within the RM7.00/kg range but unfortunately,the price has shot past this level due to the news of hard rubber floor price support by the Thai Government at RM11.84/kg (latex expectedto be about RM7.10/kg with the assumption of having 60% hard rubber content andthe balance 40% water). Latex price also rose driven somewhat by the rise in oilprice due to tensions in Iran, causing its direct substitute, nitrile latex, toalso be on a rising trend since it is aby-product of oil. Hence, we think this would negatively impact demand growthgoing forward and may eventually lead to some price war to move out rubberglove inventories.
Maintain Buy. Ourfair value for Supermax has been downgraded to RM2.50 (previously RM2.75) basedon existing PER of 13x FY12 EPS. We continue to like the company for its attractivevaluation as well as operating in a recession proof industry. Also, Supermaxhas declared an interim dividend of 1.8sen.
Source: OSK188
Supermax Corp - Fits like a glove
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Company Name: SUPERMAX CORPORATION BHD
| Research House: CIMB | Price Call: BUY | Target Price: 2.43 |
Target RM2.43
2011 came to a fitting end as FY11 net profit came in at 97% of our forecast and 102% of consensus. But the final DPS of 1.75 sen was below our 3.9 sen forecast. Supermax's focus on distribution and own-brand gloves will buffer it from the next 1-3 years of glut.
February 2, 2012
Overweight rate on rubber gloves sector stays
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
OSK Research retained its Overweight rating on the rubber gloves sector with its top pick being Supermax with a target price of RM2.75.
As at 4.55pm, the Supermax share price was unchanged at RM2.14.
In its research report, OSK Research said the high rating on the company was premised on its attractive valuation and the fact that it operated in a recession-resilient industry.
It also said that there had been isolated cases of bird flu in Asia and that although it has not reached alarming levels, healthcare MNCs may prepare themselves by gradually stocking up rubber gloves to avoid buying them at "cut throat" price should there be a pandemic break out.
It said risks included further artificial support of rubber prices by the Indonesian and Malaysian governments, and a rising Ringgit.
It expects latex price to stay above RM7 in the shorter term.
"This is due to the uplift in sentiment for the commodity created by the Thai Government," OSK Research said.
Last week, the media reported that the Thai Cabinet had approved a plan to increase the price of locally-grown natural rubber to THB120 (RM11.84)/kg.
This is done through the Bank of Agriculture and Agricultural Cooperatives offering soft loans of THB5bn to local agricultural institutes and another THB10bn soft loan to the Rubber Estate Organization, both at zero per cent interest to help them purchase natural rubber from local rubber farmers.
The main reasons given for the intervention include the poor rubber prices arising from the global economic slowdown; the flooding crisis in Thailand which had temporarily suspended its production of automobiles and parts, and slower automotive growth in China.
China also slowed down its purchase of Thai natural rubber and instead had switched to the cheaper Indonesian rubber.
"In our view, unless the Thai Government continues to support the price of rubber in the longer run, the price would still be ultimately decided by the forces of demand and supply," OSK Research said. -- Bernama
Company Name: SUPERMAX CORPORATION BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.75 |
OSK Research retained its Overweight rating on the rubber gloves sector with its top pick being Supermax with a target price of RM2.75.
As at 4.55pm, the Supermax share price was unchanged at RM2.14.
In its research report, OSK Research said the high rating on the company was premised on its attractive valuation and the fact that it operated in a recession-resilient industry.
It also said that there had been isolated cases of bird flu in Asia and that although it has not reached alarming levels, healthcare MNCs may prepare themselves by gradually stocking up rubber gloves to avoid buying them at "cut throat" price should there be a pandemic break out.
It said risks included further artificial support of rubber prices by the Indonesian and Malaysian governments, and a rising Ringgit.
It expects latex price to stay above RM7 in the shorter term.
"This is due to the uplift in sentiment for the commodity created by the Thai Government," OSK Research said.
Last week, the media reported that the Thai Cabinet had approved a plan to increase the price of locally-grown natural rubber to THB120 (RM11.84)/kg.
This is done through the Bank of Agriculture and Agricultural Cooperatives offering soft loans of THB5bn to local agricultural institutes and another THB10bn soft loan to the Rubber Estate Organization, both at zero per cent interest to help them purchase natural rubber from local rubber farmers.
The main reasons given for the intervention include the poor rubber prices arising from the global economic slowdown; the flooding crisis in Thailand which had temporarily suspended its production of automobiles and parts, and slower automotive growth in China.
China also slowed down its purchase of Thai natural rubber and instead had switched to the cheaper Indonesian rubber.
"In our view, unless the Thai Government continues to support the price of rubber in the longer run, the price would still be ultimately decided by the forces of demand and supply," OSK Research said. -- Bernama
November 14, 2011
Two to benefit from latex price collapse
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Rubber gloves sector
Maintain overweight: Last Friday, the latex price quoted by the Malaysian Rubber Board dropped by a significant 45 sen per kg, or 6.4%, in one day to RM6.56 per kg. This means the price has plunged by RM1.02 per kg, or 13.5%, in a week from Nov 4's RM7.58 per kg.
The most recent sharp drop was in mid-February to mid-March 2011, during which the latex price retraced sharply by RM2.33 per kg from its high of RM10.90 to RM8.56 per kg in a matter of three weeks. It rebounded to its all-time high of RM10.93 per kg in early-April although it failed to sustain that level.
From then on, the latex price has been on a downtrend, with prices dropping gradually until last week, when we witnessed the very steep drop of RM1.02 per kg.
We believe the longer term downtrend is likely to be sustained, but probably not at the same intensity as the recent retracement. In our opinion, the drop has been too sharp, and based on the recent trend of sharp historical retracement, the latex price tends to rebound strongly within days.
Nevertheless, we maintain our longer term view that it may continue to fall back, probably to the RM6 to RM7 per kg level because: (i) it has not retraced sufficiently since 2009. The price usually peaks in 1H every year, when the wintering of rubber trees sets in and falls back in 2H when supply catches up;
(ii) the strong growth in demand is no longer there as rubber gloves manufacturers are gradually shifting their product mix to nitrile gloves and given the lack of a pandemic; and
(iii) the automotive sector is experiencing a setback in demand amid the global economic slowdown and the operations of many auto manufacturers are being adversely affected by the recent floods in Thailand. Hence, we do not think the latex price will return to its all-time high of RM10.93 per kg.
We see the drop in latex price benefiting Supermax Corp Bhd and Top Glove Corp Bhd on two fronts: (i) the incremental cost being absorbed by them, if any (the balance 30%), would be much lower now compared with previously; and (ii) there will be a boost in sales volume leading to higher earnings in the immediate term (4QCY11) as customers may stock up on the belief that the drop is too steep and is unsustainable.
This is mainly because their product mix comprises 75% natural rubber gloves,'' the highest among their peers. Hence, both companies will benefit the most following the drop in the price of natural rubber. With the latex price at about RM9 per kg, which we understand made up 65% to 67% of their total cost, the two companies were previously passing on 70% of the higher latex cost to their customers.
We maintain 'overweight'. Our top pick remains Supermax ('buy', fair value: RM5.50). We continue to like the company's attractive valuation (trading at single digit price earnings ratio of nine times FY2 earnings per share) against Top Glove ('neutral', FV:RM4), which is trading at 17 times FY2 EPS. Also, we like the fact that the two companies operate in an industry that is resilient against downturns. ' OSK Research, Nov 14
This article appeared in The Edge Financial Daily, November 15, 2011.
Company Name: SUPERMAX CORPORATION BHD
| Research House: OSK | Price Call: BUY | Target Price: 5.50 |
Rubber gloves sector
Maintain overweight: Last Friday, the latex price quoted by the Malaysian Rubber Board dropped by a significant 45 sen per kg, or 6.4%, in one day to RM6.56 per kg. This means the price has plunged by RM1.02 per kg, or 13.5%, in a week from Nov 4's RM7.58 per kg.
The most recent sharp drop was in mid-February to mid-March 2011, during which the latex price retraced sharply by RM2.33 per kg from its high of RM10.90 to RM8.56 per kg in a matter of three weeks. It rebounded to its all-time high of RM10.93 per kg in early-April although it failed to sustain that level.
From then on, the latex price has been on a downtrend, with prices dropping gradually until last week, when we witnessed the very steep drop of RM1.02 per kg.
We believe the longer term downtrend is likely to be sustained, but probably not at the same intensity as the recent retracement. In our opinion, the drop has been too sharp, and based on the recent trend of sharp historical retracement, the latex price tends to rebound strongly within days.
Nevertheless, we maintain our longer term view that it may continue to fall back, probably to the RM6 to RM7 per kg level because: (i) it has not retraced sufficiently since 2009. The price usually peaks in 1H every year, when the wintering of rubber trees sets in and falls back in 2H when supply catches up;
(ii) the strong growth in demand is no longer there as rubber gloves manufacturers are gradually shifting their product mix to nitrile gloves and given the lack of a pandemic; and
(iii) the automotive sector is experiencing a setback in demand amid the global economic slowdown and the operations of many auto manufacturers are being adversely affected by the recent floods in Thailand. Hence, we do not think the latex price will return to its all-time high of RM10.93 per kg.
We see the drop in latex price benefiting Supermax Corp Bhd and Top Glove Corp Bhd on two fronts: (i) the incremental cost being absorbed by them, if any (the balance 30%), would be much lower now compared with previously; and (ii) there will be a boost in sales volume leading to higher earnings in the immediate term (4QCY11) as customers may stock up on the belief that the drop is too steep and is unsustainable.
This is mainly because their product mix comprises 75% natural rubber gloves,'' the highest among their peers. Hence, both companies will benefit the most following the drop in the price of natural rubber. With the latex price at about RM9 per kg, which we understand made up 65% to 67% of their total cost, the two companies were previously passing on 70% of the higher latex cost to their customers.
We maintain 'overweight'. Our top pick remains Supermax ('buy', fair value: RM5.50). We continue to like the company's attractive valuation (trading at single digit price earnings ratio of nine times FY2 earnings per share) against Top Glove ('neutral', FV:RM4), which is trading at 17 times FY2 EPS. Also, we like the fact that the two companies operate in an industry that is resilient against downturns. ' OSK Research, Nov 14
This article appeared in The Edge Financial Daily, November 15, 2011.
October 28, 2011
Supermax has plans to deal with overcapacity
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Supermax Corp
(Oct 27, RM3.56)
Maintain outperform with target price of RM4.38: A strengthening distribution platform will ensure that the world's second largest glovemaker emerges unscathed from the next one to three years of overcapacity. In addition, We gather that a bonus issue may be in the works.
Supermax's results briefing left us feeling more positive about its prospects as it is beefing up its distribution platform. We maintain our 'outperform' call and target a forward price-earnings ratio (PER) of 9.8 times. The stock would be catalysed by better earnings from easing costs and widening margins.
During the briefing, Supermax talked about initiatives that will take the company through the next one to three years of overcapacity. These include enhancing its distribution in Germany and North America while cautiously expanding into China. Supermax said it has exceeded internal sales targets in Germany and has qualified as a preferred supplier for some multinational companies. In the US, Supermax is purchasing warehouses as it expands into the US hospital market in 2012. Also in 2012, Supermax intends to start its distribution network in China.
Supermax indicated that the demand for nitrile gloves is declining due to the narrowing cost of production between nitrile and natural rubber. Even so, it is prepared to sell both types of gloves as 70% of its production lines are interchangeable. Without elaborating, it also said that it intends to make an announcement on an exercise to enhance shareholder value in the next few months.
Despite Supermax's comments that demand for nitrile gloves is on the wane, we believe that demand for nitrile remains strong. Our analysis suggests that the cost of producing nitrile gloves is 20% lower than natural rubber gloves, which we believe will incentivise distributors and hospitals to use nitrile gloves.
We gather that Supermax's announcement may be a bonus issue. While this is a positive surprise, for a company as liquid as Supermax the impact of the exercise will be less.
Investors should accumulate Supermax shares. At just 8.7 times FY12 PER, the stock trades at half the valuation of Top Glove Bhd, making it a cheaper play on the sector where earnings have bottomed out on the back of more stable rubber prices. ' CIMB IB Research, Oct 27
This article appeared in The Edge Financial Daily, October 28, 2011.
Company Name: SUPERMAX CORPORATION BHD
| Research House: CIMB | Price Call: BUY | Target Price: 4.38 |
Supermax Corp
(Oct 27, RM3.56)
Maintain outperform with target price of RM4.38: A strengthening distribution platform will ensure that the world's second largest glovemaker emerges unscathed from the next one to three years of overcapacity. In addition, We gather that a bonus issue may be in the works.
Supermax's results briefing left us feeling more positive about its prospects as it is beefing up its distribution platform. We maintain our 'outperform' call and target a forward price-earnings ratio (PER) of 9.8 times. The stock would be catalysed by better earnings from easing costs and widening margins.
During the briefing, Supermax talked about initiatives that will take the company through the next one to three years of overcapacity. These include enhancing its distribution in Germany and North America while cautiously expanding into China. Supermax said it has exceeded internal sales targets in Germany and has qualified as a preferred supplier for some multinational companies. In the US, Supermax is purchasing warehouses as it expands into the US hospital market in 2012. Also in 2012, Supermax intends to start its distribution network in China.
Supermax indicated that the demand for nitrile gloves is declining due to the narrowing cost of production between nitrile and natural rubber. Even so, it is prepared to sell both types of gloves as 70% of its production lines are interchangeable. Without elaborating, it also said that it intends to make an announcement on an exercise to enhance shareholder value in the next few months.
Despite Supermax's comments that demand for nitrile gloves is on the wane, we believe that demand for nitrile remains strong. Our analysis suggests that the cost of producing nitrile gloves is 20% lower than natural rubber gloves, which we believe will incentivise distributors and hospitals to use nitrile gloves.
We gather that Supermax's announcement may be a bonus issue. While this is a positive surprise, for a company as liquid as Supermax the impact of the exercise will be less.
Investors should accumulate Supermax shares. At just 8.7 times FY12 PER, the stock trades at half the valuation of Top Glove Bhd, making it a cheaper play on the sector where earnings have bottomed out on the back of more stable rubber prices. ' CIMB IB Research, Oct 27
This article appeared in The Edge Financial Daily, October 28, 2011.
October 27, 2011
Supermax advances, CIMB keeps Buy, TP RM4.38
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
KUALA LUMPUR: Shares of Supermax Corp Bhd advanced on Thursday, Oct 27 on the positive outlook for the glove maker while CIMB Equities Research maintained a Buy on the stock at a target price of RM4.38.
At 9.50am, it was up 16 sen to RM3.42 with 1.49 million shares done.
The FBM KLCI rose 5.24 points to 1,463.04. Turnover was 309.44 million shares valued at RM248.12 million. There were 226 gainers, 105 losers and 197 stocks unchanged.
CIMB Research said investors should accumulate Supermax shares. At just 8.7 times FY12 P/E, the stock was trading at half the valuation of Top Glove, making it a cheaper play on the sector where earnings have bottomed on the back of more stable rubber prices.
'A strengthening distribution platform will ensure that the world's second largest glove maker emerges unscathed from the next one to three years of overcapacity.
'Also, we gather that a bonus issue may be in the works. Supermax's results briefing left us feeling more positive about its prospects as it is beefing up its distribution platform,' it said.
Company Name: SUPERMAX CORPORATION BHD
| Research House: CIMB | Price Call: BUY | Target Price: 4.38 |
KUALA LUMPUR: Shares of Supermax Corp Bhd advanced on Thursday, Oct 27 on the positive outlook for the glove maker while CIMB Equities Research maintained a Buy on the stock at a target price of RM4.38.
At 9.50am, it was up 16 sen to RM3.42 with 1.49 million shares done.
The FBM KLCI rose 5.24 points to 1,463.04. Turnover was 309.44 million shares valued at RM248.12 million. There were 226 gainers, 105 losers and 197 stocks unchanged.
CIMB Research said investors should accumulate Supermax shares. At just 8.7 times FY12 P/E, the stock was trading at half the valuation of Top Glove, making it a cheaper play on the sector where earnings have bottomed on the back of more stable rubber prices.
'A strengthening distribution platform will ensure that the world's second largest glove maker emerges unscathed from the next one to three years of overcapacity.
'Also, we gather that a bonus issue may be in the works. Supermax's results briefing left us feeling more positive about its prospects as it is beefing up its distribution platform,' it said.
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