Medical segment to drive Supercomnet earnings


TA Research said it expects the medical segment to continue to grow this year, as the group is pursuing opportunities in expanding sales to existing customers.

PETALING JAYA: Supercomnet Technologies Bhd is anticipated to see improvement in earnings for the financial year 2024 (FY24), driven by its medical segment.

TA Research said it expects the medical segment to continue to grow this year, as the group is pursuing opportunities in expanding sales to existing customers, progressing towards commercial production of new products and shifting to producing whole devices to enhance the group’s margins.

Key customers such as New York-listed Edward Lifesciences Corp (ELC) and Denmark-based Ambu are expected to increase their orders.

“For ELC, we expect sales to increase by 8.2% in FY24, driven by smart cables. As for Ambu, the sales recovery in the fourth quarter of 2023 (4Q23) to RM12.5mil revenue (orders back to 95%-98% of pandemic levels) will likely persist in FY24, while Ambu is ramping up its Mexico Plant.

“Also, contributions from its customer, IHS, would likely begin in the second half of the year. The current issue with the flow controller has been resolved with promising results approved by the supplier and the United States Food and Drug Administration (FDA).

“The current issue with the flow controller has been resolved with promising results approved by the supplier and the FDA. Note that Supercomnet has received FDA approval for four of its IHS products (intravenous IV controller, fixed rate tubing, subcutaneous needle set and OneSett subcutaneous administration set),” the brokerage said.

On the flip side, orders from another of its notable customers, Mermaid Medical, would be halted in April this year and would only resume by September the same year when the internal dispute is settled. The impact to Supercomnet is insignificant as Mermaid contributed less than 5% of FY22/23 revenue.

“The company’s FY23 net profit declined 9.6% to RM29.7mil, in tandem with weaker revenue of 12.8% to RM138.1mil.

“We attribute the weaker results to lower revenue from the industrial and automotive segments. In addition, net profit was impacted by higher electricity tariffs, share-based compensation for Esos (RM1.6mil) and RM1mil one-off expense related to the Main Market transfer,” the research house said.

The brokerage is maintaining its “buy” recommendation on the stock with an unchanged target price of RM1.46 per share.

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