Standard & Poor's Increases Supermax's 2009 & 2010 Margin Assumptions

January 28, 2010 18:31 PM

KUALA LUMPUR, Jan 28 (Bernama) -- Standard & Poor's Equity Research Services has increased Supermax Corporation's 2009 and 2010 margin and associate contribution assumptions, resulting in new net profit forecasts.

In a research report, Standard & Poor's said in view of continued strong glove demand, it upgraded Supermax's 2009 and 2010 net profit forecasts to RM121.1 million (from RM118.7 million) and RM141 million (from RM134.6 million) respectively.

Increasing sales and expanding margins over the medium term, according to the report, will provide catalysts for Supermax's share price outperformance.

"2009 have been a strong year for Supermax and this positive momentum will likely carry through into 2010, when the group brings on-stream an additional 1.7 billion glove pieces in new capacity," said Standard & Poor's.

"Cost-wise, latex pricing has also been rising but we believe the recent rise to almost RM7 per kg is due to wintering and monsoon period and should normalise when the season ends in March," it said.

Risks to Standard & Poor's recommendation and target price include a sudden upturn in latex prices and an appreciating ringgit, as revenue is predominantly derived from exports.

-- BERNAMA