PETALING JAYA: Thermal insulation materials manufacturer Superlon Holdings Bhd could be gearing up for a record year in 2017, based on the company’s nine-month earnings performance, according to MIDF Research.
In a report yesterday, the research house said the expected earnings performance for 2017 meant that the company was set for a steady five-year growth trajectory.
“We expect 2018 to be a positive year as the company reaps fruits from its new warehouse and market expansion plans.
“We also expect Superlon to remain in net cash position as RM9.6mil for the new warehouse has been capitalised,” said MIDF.
The research house pointed out that the new warehouse could lead to better sales for the company.
“The company is able to further boost its production capacity through the new warehouse, which is now completed through optimising its layout plan.
“We estimate that the company may further boost output by another 10% to 20% once the new plan is carried out.
“The shorter lead time to serve customers from the additional floor space could also lead to higher sales.”
For its third quarter ended Jan 31, 2016, Superlon’s net profit rose to RM6.25mil from RM4.30mil in the previous corresponding period, while revenue during the quarter grew to RM25.80mil from RM22.34mil a year earlier.
In its notes accompanying its third quarter earnings, Superlon said the higher income was mainly due to the increase in total gross profit generated from higher volume of sales.
“The higher other income recorded also contributed to increase in net profit before tax.”
For the nine-month period ended Jan 31, 2016, net profit increased to RM17.34mil from RM12.96mil in the previous corresponding period, while revenue improved to RM73.72mil from RM66.81mil.
On its prospects, Superlon said it expected to achieve satisfactory results for the remainder of its current financial year.
MIDF also noted that Superlon plans to strengthen its presence in Indochina with a recently set-up wholly-owned Vietnamese subsidiary.
“It plans to strengthen its presence in Vietnam and also to use it as a base to penetrate into other IndoChina markets.
“The move is commendable as Vietnam is already one of its top three markets and having a more significant presence there could further boost customers’ confidence, provide better after sales service as well as adapt to change in demand more quickly.”
Separately, MIDF also highlighted that Superlon had announced a proposed share split of one to two, which was one of the very few since its listing since 2007.
“The exercise is expected to be completed by December.
“Its share base will be enlarged to 160 million shares from the 80 million shares currently.
“This should improve its share liquidity in the market.
“Upon completion of the exercise, our ex-target price will be adjusted to RM1.82 accordingly.”
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