SUPERMAX Corp Bhd’s impressive RM1.06 bil (+3,412% year-on-year) net profit has prompted CGS-CIMB Research to adjust upward its target price by 9.25% to RM11.80 from RM10.80 previously.
Maintaining its “add” stance on the glove maker, the research house said this follows its expectation of stronger quarters ahead with higher average selling prices (ASPs) in the pipeline.
“With 1H FY2021 results beating expectations, we raise our FY2021-2023 earning per share (EPS) by 0.5-37.8%,” justified analyst Walter Aw in a results review. “This is mainly to input higher ASPs of US$81/US$57/US$36 per 1,000 glove pieces for FY2021F/2022F/2023F.”
Moving forward, CGS-CIMB Research also expects Supermax to record stronger results in 2H FY2021F, driven by an increase in production capacity and higher sales volumes.
“We continue to view Supermax as an attractive play, backed by (i) strong global glove demand owing to COVID-19; (ii) higher-than-average margins in the sector (due to its original brand manufacturing model); and (iii) solid dividend yields of 4.0-9.0% (FY2021-2023F),” opined the research house.
To re-cap, Supermax’s 2Q FY6/2021 net profit which came in at RM1.06 bil brought its 1H FY6/2021 net profit to RM1.85 bil (>3,719% yoy) which is above the research house’s expectations at 57.2% and that of full-year Bloomberg consensus forecast of 55.6%. –
“In total, we expect Supermax’s production capacity to rise by 85% to 48.4 billion pieces per annum by end-FY6/2023F (assuming no delays in its expansion plans),” added CGS-CIMB Research. – Feb 1, 2021
