PETALING JAYA: The prospects of Superlon Holdings Bhd are looking positive, underpinned by the global supply chain resumption and lower operating costs.
In its latest report, MIDF Research expects stronger earnings growth for the thermal insulation material manufacturer, moving forward.
The research house also envisaged an estimated dividend yield of 3.5% for financial year 2022 (FY22).
Superlon recorded a core net profit of RM2.11mil in the first quarter of FY22 on the back of lower revenue at RM19.2mil.
This was attributed to the nationwide movement restrictions, which halted the operations of Superlon’s factories.
The sales for both the manufacturing and trading segments were further weighed down as stricter restrictions were also imposed in the group’s key export markets following the surge of Covid-19 cases.
Besides the temporary suspension of its operations, factory-wide mandatory Covid-19 testing and vaccination programmes have lowered the efficiency of the group’s production, said MIDF Research.
The research house has also revised Superlon’s earnings estimate slightly downwards to RM13.9mil for FY22 to account for the disrupted operations in the first quarter.
However, it estimated that Superlon’s earnings to be higher at RM17.7mil for FY24.
It is maintaining a “buy” call on the stock with a revised target price of RM1.08 per share.
The research house noted that the downside risks include fluctuations in the exchange rates and continued rise in raw material costs.