SUPERMX net profit triple jump
>> Monday, April 19, 2010
Company Profile
Supermax Corporation Berhad is an investment company engaged in manufacturing, distribution and marketing of medical and latex glove. Its products are exported to over 145 countries, such as US, Euro Union, Middle East, Asia and South pacific countries.
Financial Result
Compare to 1Q09, group revenue increase 14.6% to RM220.6, from RM192.4. Net profit saw a whopping triple jump, from RM19.7m same quarter preceding year to RM51.5m. Strong global demand coupled with the limited capacity expansion from major glove player has driven glove prices up. Strong revenue growth and cost saving from higher efficiency and productivity from improved processes and refurbished lines has push the net profit margin to a high of 23%
Future Prospect
1. Global demand and consumption of rubber glove has been growing between 8%~10% per annum, no sign of slowing down.
2. US, which already the largest consumer of rubber gloves(40% of global consumption), is expected to hit a new high when US Health Reform Bill implement. China has start talking about healthcare reform too.
3. Issues surrounding us lately about the concern of oversupply is unfounded. Non availability of natural gas supply to new plan and inability to deliver on time from support industries, show revoke our concern.
4. Increase in latex price will be neutralize with ringgit appreciation against USD. Glove maker can pass on cost increase to consumers by adjusting average selling price.
Technical Outlook
Chartwise, it still have room to drop with RM6.30 as support. However, stochastic and RSI show some reversal after a few days sell off. With the promising result announced today, there will be more upside to come.
Stock Valuation
With today closing price RM6.90, it is trading at P/E 11.5x (EPS RM0.60 ttm).It is deemed attractive with more upside to come. Revaluation with P/E14x will give us target price of RM8.40, easy!. Don't forget the proposed 0.04TE for FY09 to be paid on 28/06/2010, subject to shareholder approval.
Overall
I think SUPERMX shareholder will restore their confident now, given a good 1Q10 result. As i said before, long term investor should take this opportunity to ACCUMULATE. Read more...
