Supermax rises 8.1% after earnings beat

  • Stock on the Move
  • Tuesday, 11 Aug 2020

KUALA LUMPUR: Shares in Supermax Corp Bhd rose more than 8% in early trade Tuesday, making it the top gainer on Bursa Malaysia after its fourth quarter earnings beat analyst estimates.

The glovemaker rose 8.11%, or RM1.72 to RM22.92 with over 14 million shares done.

Supermax’s net profit for its fourth quarter ended June 30 surged more than 26-fold to RM399.62mil from RM15.06mil a year ago, its best-ever quarterly financial performance since its incorporation.

The better earnings are mainly due to an exponential rise in demand for medical gloves and other personal protective equipment (PPE) on the back of the Covid-19 pandemic.

Its revenue surged 147.1% to RM929.12mil compared with RM375.96mil in the corresponding quarter a year ago.

For the full year, Supermax’s net profit quadrupled to RM525.59mil from RM123.11mil, while revenue jumped 39% to RM2.13bil from RM1.54bil.

MIDF Research has upgraded Supermax to buy with a revised target price of RM24.19.

“Supermax’s FY20 core net earnings of RM525.6mil came in above our and consensus expectations, making up 136% and 131% of our and consensus full year estimates respectively,” it said, adding that the positive deviation can be attributed to the stronger than expected average selling price (ASP) of gloves and better than expected margin.

The company has announced a share dividend of one treasury share for every 45 shares held pursuant to the proposed bonus issue.

Kenanga Research said Supermax’s FY20 core net profit of RM526mil beat expectations by 35%/31% of the house/consensus full-year forecasts.

“The positive variance compared to our forecast was due to higher-than-expected ASP and margin.

“We raise our FY21E/FY22E net profit by 57%/58% taking into account higher ASP and margin. Target price is raised from RM17.10 to RM25.45 based on 20.8x CY21E EPS. Reiterate outperform,” Kenanga said.

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