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“We are upgrading the sector to Overweight, with our top picks being Top Glove, Supermax and Kossan,” it said.
Read The Edge
2 years ago
Showing posts with label supermax. Show all posts
Showing posts with label supermax. Show all posts
Friday, March 18, 2011
OSK Research: Worst over for rubber gloves sector
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“We are upgrading the sector to Overweight, with our top picks being Top Glove, Supermax and Kossan,” it said.
Read The Edge
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“We are upgrading the sector to Overweight, with our top picks being Top Glove, Supermax and Kossan,” it said.
Read The Edge
Tuesday, April 20, 2010
Supermax up higher price estimate to RM11.90
Supermax Corp, a Malaysian rubber glove maker, rose to its highest level in six days after CIMB Investment Bank Bhd increased its share estimate to reflect higher demand and capacity expansion.
The stock climbed 0.9 per cent to RM6.96 at 9:08 a.m. local time, set for its highest close since April 14.
The share price estimate was raised to RM11.90 from RM9.65, CIMB said in a report today. -- Bloomberg
Source: Supermax up higher price estimate
The stock climbed 0.9 per cent to RM6.96 at 9:08 a.m. local time, set for its highest close since April 14.
The share price estimate was raised to RM11.90 from RM9.65, CIMB said in a report today. -- Bloomberg
Source: Supermax up higher price estimate
Monday, April 19, 2010
Supermax 1Q net profit jumps 161% to RM51.47m
KUALA LUMPUR: SUPERMAX CORPORATION BHD []'s net profit for the first quarter ended March 31, 2010 jumped 161.2% to RM51.47 million from a year ago on the back of a 14.2% increase in revenue to RM220.65 million.
It said on Monday, April 19 the higher revenue was due to strong global demand for rubber gloves. Earnings per share were 18.97 sen versus 7.43 sen.
"The strong demand coupled with limited capacity expansion by the major glove players over the last two years have resulted in a supply demand imbalance which has driven glove prices up.
"The improvement in profitability is attributed to the strong revenue growth as well as cost savings from higher efficiency and productivity from improved processes and refurbished lines," it said.
Written by Surin Murugiah - Monday, 19 April 2010 13:50
It said on Monday, April 19 the higher revenue was due to strong global demand for rubber gloves. Earnings per share were 18.97 sen versus 7.43 sen.
"The strong demand coupled with limited capacity expansion by the major glove players over the last two years have resulted in a supply demand imbalance which has driven glove prices up.
"The improvement in profitability is attributed to the strong revenue growth as well as cost savings from higher efficiency and productivity from improved processes and refurbished lines," it said.
Written by Surin Murugiah - Monday, 19 April 2010 13:50
Wednesday, April 14, 2010
CIMB Research maintains Overweight on glove sector
KUALA LUMPUR: CIMB Equities Research has an Overweight call on the glove sector with Adventa and Supermax being its top picks.
"Rising incidence of pandemic diseases like H1N1, improving standard of living and a wider market reach continue to underpin the sector’s growth," it said on Wednesday, April 14.
On the performance of the glove makers share prices recently, it said the stocks took a beating recently, which it suspected was partly due to comments made by Green TECHNOLOGY [], Energy and Water Minister Peter Chin, who confirmed that an increase in electricity rates was imminent as well as downgrades by some brokers.
"While we reckon that the overall sentiment for glove makers is weak, any share price weakness is an opportunity to accumulate given that the recent selldown may have been overdone," it said.
CIMB Research said in general, energy makes up about 10% of glovemakers’ cost and out of the total energy cost, 80% is natural gas. Hence, the impact of higher electricity bills on the bottomline is meager. In addition, the companies can easily pass on the higher cost to its customers.
"Also, our power analyst sees no urgent need for a tariffs hike by the Tenaga Nasional. Fundamentally, we have an OVERWEIGHT call on the sector with Adventa and Supermax being our top picks," it said.
"Rising incidence of pandemic diseases like H1N1, improving standard of living and a wider market reach continue to underpin the sector’s growth," it said on Wednesday, April 14.
On the performance of the glove makers share prices recently, it said the stocks took a beating recently, which it suspected was partly due to comments made by Green TECHNOLOGY [], Energy and Water Minister Peter Chin, who confirmed that an increase in electricity rates was imminent as well as downgrades by some brokers.
"While we reckon that the overall sentiment for glove makers is weak, any share price weakness is an opportunity to accumulate given that the recent selldown may have been overdone," it said.
CIMB Research said in general, energy makes up about 10% of glovemakers’ cost and out of the total energy cost, 80% is natural gas. Hence, the impact of higher electricity bills on the bottomline is meager. In addition, the companies can easily pass on the higher cost to its customers.
"Also, our power analyst sees no urgent need for a tariffs hike by the Tenaga Nasional. Fundamentally, we have an OVERWEIGHT call on the sector with Adventa and Supermax being our top picks," it said.
Glove makers continue to slide
KUALA LUMPUR: Glove manufacturers were among the major losers on April 13, led by TOP GLOVE CORPORATION BHD [] and KOSSAN RUBBER INDUSTRIES BHD [], on concerns over raw material costs after rubber prices jumped to a 20-month high in Japan, and the ringgit’s appreciation against the US dollar.
Top Glove lost 60 sen or 4.4% to RM12.90, Kossan fell 35 sen or 4.4% to RM7.56 and SUPERMAX CORPORATION BHD [] shed 25 sen or 3.6% to RM6.64. LATEXX PARTNERS BHD [] gave up 22 sen to RM3.77, HARTALEGA HOLDINGS BHD [] 18 sen to RM7.60 and ADVENTA BHD [] eight sen to RM3.37.
The FBM KLCI slipped 5.09 points or 0.4% to 1,334.52 on April 13.
Analysts were mixed on glove makers’ prospects following the battering.
MIDF Research said the slump on April 13 was a healthy correction and investors should view any weakness in the share prices of the glove counters as an opportunity to accumulate for short-term trading.
It said the companies’ shares rebounded strongly after receding by 11.9% to 14.4% at end-February and early March, adding there was potential upside as the rubber glove makers’ 1Q10 results were expected to be favourable with potential bonus issues looming.
“We are maintaining our trading buy recommendation and all our target prices (TP) for the glove companies under our coverage. Our TP for Top Glove is RM14.68, based on 17 times EPS10, after factoring its net cash of 88 sen per share.
Kossan and Hartalega’s TPs are RM9.04 and RM8.80 respectively, derived from 14 times and 14.5 times PER,” it said in a note released on April 13 afternoon.
The research house said the outlook for the glove sector remained favourable, adding that with the current demand-supply disparity, glove manufacturers were enjoying better cost-passing power.
Top Glove indicated that it was able to pass on up to 90%-100% of the variance in costs to customers, it said.
“Besides, the time lag for glove producers to pass on the additional costs is shorter now compared with roughly two months previously.
“This is manifested by their sustainable strong earnings margin despite higher latex price and weaker US dollar. We believe that earnings margin should be safeguarded in 1H10 given higher plant utilisation rate and better pricing power,” it said.
MIDF Research said excess supply in 2H10 and beyond was its main concern, as the glove companies it had visited were on track with their expansion plans to cater for increasing global demand.
“Although we are positive on the consistent global glove demand growth, we are also concerned about the potential excess glove production capacity, which we believe will affect earnings margin, and hence lower earnings growth moving forward (we still expect positive growth rate).
“We gather from industry players that excess supply is a risk but it only affects a certain segment, namely the low-end products. This is due to the barrier of entry for the higher-value and R&D-focused products,” MIDF said.
The research house added, however, that its concerns might be eased by stronger-than-expected global glove demand and the delay in the expansion plans.
Other risks were valuation issues, as the three glove companies under its coverage were trading at above their respective five-year average PER, it said.
OSK Investment Research senior analyst Jason Yap maintained his overweight recommendation on the glove sector, and reiterated his buy calls on Top Glove, Supermax and Kossan.
He said the fall on April 13 was a correction, with punters taking profit as the share prices had reached high levels.
“The concerns about raw material costs will also dissipate, as latex price is seasonal and should taper down after May. The companies can also pass on the cost to end-buyers.
“We expect absolute figure of bottom line to be retained but margins to gradually decline because of the higher revenue base if glove makers increase prices to take into account raw material prices or currency exchange,” he said.
Meanwhile, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi said the rubber glove sector was generally already highly priced, as evident from the fluctuation in prices over the past few trading days.
“The stocks in the sector have had quite a lengthy positive run already. We would recommend investors to take profit and step aside for now,” he said.
Lee said the key support level for Top Glove was RM12.25, Supermax RM6.04, Kossan RM7.19 and Hartalega RM7.62. If prices went below these levels it would be critical, he added.
He said Latexx and Adventa were already trading below their key support levels of RM3.83 and RM3.49, respectively.
Last week, AmResearch downgraded the glove sector to underweight. It noted that demand growth had probably peaked and should decelerate going forward, thus shift of pricing power from manufacturers to consumers would accelerate, exacerbated by additional production capacity as early as mid-year.
AmResearch, which had downgraded Top Glove and Kossan to hold with fair values of RM12.50 and RM7.65, respectively, told The Edge Financial Daily on April 13 it was maintaining its recommendation on the sector and target prices for the two stocks.
Written by Surin Murugiah,Wednesday, 14 April 2010 00:18
Top Glove lost 60 sen or 4.4% to RM12.90, Kossan fell 35 sen or 4.4% to RM7.56 and SUPERMAX CORPORATION BHD [] shed 25 sen or 3.6% to RM6.64. LATEXX PARTNERS BHD [] gave up 22 sen to RM3.77, HARTALEGA HOLDINGS BHD [] 18 sen to RM7.60 and ADVENTA BHD [] eight sen to RM3.37.
The FBM KLCI slipped 5.09 points or 0.4% to 1,334.52 on April 13.
Analysts were mixed on glove makers’ prospects following the battering.
MIDF Research said the slump on April 13 was a healthy correction and investors should view any weakness in the share prices of the glove counters as an opportunity to accumulate for short-term trading.
It said the companies’ shares rebounded strongly after receding by 11.9% to 14.4% at end-February and early March, adding there was potential upside as the rubber glove makers’ 1Q10 results were expected to be favourable with potential bonus issues looming.
“We are maintaining our trading buy recommendation and all our target prices (TP) for the glove companies under our coverage. Our TP for Top Glove is RM14.68, based on 17 times EPS10, after factoring its net cash of 88 sen per share.
Kossan and Hartalega’s TPs are RM9.04 and RM8.80 respectively, derived from 14 times and 14.5 times PER,” it said in a note released on April 13 afternoon.
The research house said the outlook for the glove sector remained favourable, adding that with the current demand-supply disparity, glove manufacturers were enjoying better cost-passing power.
Top Glove indicated that it was able to pass on up to 90%-100% of the variance in costs to customers, it said.
“Besides, the time lag for glove producers to pass on the additional costs is shorter now compared with roughly two months previously.
“This is manifested by their sustainable strong earnings margin despite higher latex price and weaker US dollar. We believe that earnings margin should be safeguarded in 1H10 given higher plant utilisation rate and better pricing power,” it said.
MIDF Research said excess supply in 2H10 and beyond was its main concern, as the glove companies it had visited were on track with their expansion plans to cater for increasing global demand.
“Although we are positive on the consistent global glove demand growth, we are also concerned about the potential excess glove production capacity, which we believe will affect earnings margin, and hence lower earnings growth moving forward (we still expect positive growth rate).
“We gather from industry players that excess supply is a risk but it only affects a certain segment, namely the low-end products. This is due to the barrier of entry for the higher-value and R&D-focused products,” MIDF said.
The research house added, however, that its concerns might be eased by stronger-than-expected global glove demand and the delay in the expansion plans.
Other risks were valuation issues, as the three glove companies under its coverage were trading at above their respective five-year average PER, it said.
OSK Investment Research senior analyst Jason Yap maintained his overweight recommendation on the glove sector, and reiterated his buy calls on Top Glove, Supermax and Kossan.
He said the fall on April 13 was a correction, with punters taking profit as the share prices had reached high levels.
“The concerns about raw material costs will also dissipate, as latex price is seasonal and should taper down after May. The companies can also pass on the cost to end-buyers.
“We expect absolute figure of bottom line to be retained but margins to gradually decline because of the higher revenue base if glove makers increase prices to take into account raw material prices or currency exchange,” he said.
Meanwhile, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi said the rubber glove sector was generally already highly priced, as evident from the fluctuation in prices over the past few trading days.
“The stocks in the sector have had quite a lengthy positive run already. We would recommend investors to take profit and step aside for now,” he said.
Lee said the key support level for Top Glove was RM12.25, Supermax RM6.04, Kossan RM7.19 and Hartalega RM7.62. If prices went below these levels it would be critical, he added.
He said Latexx and Adventa were already trading below their key support levels of RM3.83 and RM3.49, respectively.
Last week, AmResearch downgraded the glove sector to underweight. It noted that demand growth had probably peaked and should decelerate going forward, thus shift of pricing power from manufacturers to consumers would accelerate, exacerbated by additional production capacity as early as mid-year.
AmResearch, which had downgraded Top Glove and Kossan to hold with fair values of RM12.50 and RM7.65, respectively, told The Edge Financial Daily on April 13 it was maintaining its recommendation on the sector and target prices for the two stocks.
Written by Surin Murugiah,Wednesday, 14 April 2010 00:18
Wednesday, March 31, 2010
Supermax raises after-tax profit target
Supermax Corp, a Malaysian rubber glove maker, said it raised its internal after-tax profit target to RM168 million for 2010 from RM136 million, to reflect higher demand for its products.
The company expects sales to increase by about RM300 million this year, it said in a statement today. It had sales of RM814.8 million last year, Supermax said.
The company’s exports of medical examination gloves to the US will increase by an additional 5 to 7 per cent this year following US healthcare reforms, it said.
Group managing director Stanley Thai said Supermax's production capacity will rise to 21.7 billion pieces by the end of 2011 from an expected 17.6 billion at the end of this year.
Its output capacity was at 14.5 billion pieces at the end of 2009, he said. -- Bloomberg
The company expects sales to increase by about RM300 million this year, it said in a statement today. It had sales of RM814.8 million last year, Supermax said.
The company’s exports of medical examination gloves to the US will increase by an additional 5 to 7 per cent this year following US healthcare reforms, it said.
Group managing director Stanley Thai said Supermax's production capacity will rise to 21.7 billion pieces by the end of 2011 from an expected 17.6 billion at the end of this year.
Its output capacity was at 14.5 billion pieces at the end of 2009, he said. -- Bloomberg
Wednesday, March 24, 2010
OSK maintains Overweight on Malaysian rubber glove makers
OSK maintains Overweight on Malaysian rubber glove makers, following approval of healthcare overhaul bill by U.S. congress; analyst Jason Yap estimates incremental demand from U.S. arising from approval of bill at 768 million gloves annually; says while additional demand "not big," this will add to further supply constraints as glove makers already running at maximum utilization rate and may not have room to ramp up production to meet any surge in demand. "The strong demand will reaffirm their ability to sell the gloves at a premium and pass on 100% of the cost increase to customers," Yap says; names Top Glove (7113.KU), Supermax (7106.KU) and Kossan (7153.KU) as Top Picks. Top Glove last traded +1.2% at MYR13.08, Supermax +1.3% at MYR6.46, Kossan +3.1% at MYR7.64
Sunday, March 21, 2010
A higher rating for branded glove firms?
Most gloves produced under OEMs sold to branded resellers. The rubber glove industry is one in which Malaysia is leading globally. However, on closer examination, it would appear the bulk of rubber glove companies like Top Glove Corp Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd and Latexx Partners Bhd are original equipment manufacturers (OEMs) that produce rubber gloves sold under the reseller’s brand name. Most of the resellers like Kimberley-Clark, McKesson Corp, Cardinal Health, Medline and Ansell provide a wide range of healthcare and hospital products.Increasingly, these companies are manufacturing less and outsourcing production to OEMs. Instead, they are focusing on research and development (R&D), brand development and distribution. Although, OEM rubber glove manufacturers in Malaysia can make reasonable returns due to the limited number of large rubber glove makers, the scope to increase margins is limited as resellers control the brand and can shift their orders to other OEM rubber glove manufacturers offering lower prices.The margins of OEM manufacturers are thus determined by the type of gloves they produce and their operational efficiency.
Hartalega enjoys the highest margin among OEM manufacturers due to its operational efficiency and a higher percentage of nitrile glove production which currently enjoys better margins. Latexx also enjoys good margins as its production facilities are concentrated in just one location, thereby minimising overheads and ensuring better quality control.
Among the listed rubber glove companies, the only two involved in selling rubber gloves under their own brands are Supermax Corp Bhd and Adventa Bhd. Around 55% of rubber glove sales by Supermax consist of its own brand of gloves. In 2008, Supermax’s dental brands achieved a commendable 7.1% share of the dental glove market in the US. Nevertheless, the challenge faced by Supermax is that large US hospital chains would normally like to simplify logistics by buying from companies that can provide a full range of healthcare and hospital products. Hence, Supermax sells mainly through distributors and dealers who target smaller establishments like nursing homes, clinics, dentists, laboratories rather than large hospital chains. Supermax enjoys operating profit margins of around 30% for gloves sold under its own brand, although margins are currently much higher in Mexico and Brazil where there is a shortage of gloves.
Adventa is the only listed company in Malaysia that is producing surgical gloves which require a more complicated process. Around 60% of surgical gloves are sold under its own brand throughout the world. To develop cutting-edge surgical gloves, Adventa has a R&D centre with eight chemists and six assistant chemists. Its gloves are also tested by three surgeons who provide invaluable feedback. Adventa is in the process of patenting some of its inventions. Operating profit margins for its own brand of surgical gloves are as high as 40%. Recognising the need to provide a full range of hospital products, Adventa has set up a distribution arm to sell a range of hospital and disposable products utilising its global network of distributors. Due to strong demand for its surgical gloves, Adventa is planning to expand its surgical glove capacity from 250 million gloves per annum currently to 350 million per annum by year-end and 450 million per annum by the end of 2010.
The current valuations of Malaysian rubber glove companies do not seem to reward companies that sell gloves under their own brands. In fact, Supermax and Advanta have among the lowest price-earnings ratio (PERs) among rubber glove companies (see table). Perhaps this could be partly due to company-specific factors. In the case of Supermax, it is still recovering from the financial burden arising from its failed investment in APL Industries Bhd, though it would appear that the company is on the road to recovery. In the case of Adventa, it is not a very well covered rubber glove company and its strong operating profits may be masked by its one-off foreign exchange losses. Kimberly-Clarke, which markets a wide range of consumer and disposable products globally under its own brand, is trading on a prospective PER of 13.5 times while both Supermax and Adventa are trading on PERs significantly below 10 times despite faster earnings growth. Branding has ensured better margins for Supermax’s and Adventa’s gloves sold under their own brands. The challenge is to enhance their brands and boost sales in the face of competition from multinationals. If they are successful, the potential earnings growth could be tremendous as they are starting from a lower base compared with the near-stagnant sales of multinationals such as Kimberly-Clarke.
Extracted from http://yangyang-yyyynyanggmailcom.blogspot.com
Hartalega enjoys the highest margin among OEM manufacturers due to its operational efficiency and a higher percentage of nitrile glove production which currently enjoys better margins. Latexx also enjoys good margins as its production facilities are concentrated in just one location, thereby minimising overheads and ensuring better quality control.
Among the listed rubber glove companies, the only two involved in selling rubber gloves under their own brands are Supermax Corp Bhd and Adventa Bhd. Around 55% of rubber glove sales by Supermax consist of its own brand of gloves. In 2008, Supermax’s dental brands achieved a commendable 7.1% share of the dental glove market in the US. Nevertheless, the challenge faced by Supermax is that large US hospital chains would normally like to simplify logistics by buying from companies that can provide a full range of healthcare and hospital products. Hence, Supermax sells mainly through distributors and dealers who target smaller establishments like nursing homes, clinics, dentists, laboratories rather than large hospital chains. Supermax enjoys operating profit margins of around 30% for gloves sold under its own brand, although margins are currently much higher in Mexico and Brazil where there is a shortage of gloves.
Adventa is the only listed company in Malaysia that is producing surgical gloves which require a more complicated process. Around 60% of surgical gloves are sold under its own brand throughout the world. To develop cutting-edge surgical gloves, Adventa has a R&D centre with eight chemists and six assistant chemists. Its gloves are also tested by three surgeons who provide invaluable feedback. Adventa is in the process of patenting some of its inventions. Operating profit margins for its own brand of surgical gloves are as high as 40%. Recognising the need to provide a full range of hospital products, Adventa has set up a distribution arm to sell a range of hospital and disposable products utilising its global network of distributors. Due to strong demand for its surgical gloves, Adventa is planning to expand its surgical glove capacity from 250 million gloves per annum currently to 350 million per annum by year-end and 450 million per annum by the end of 2010.
The current valuations of Malaysian rubber glove companies do not seem to reward companies that sell gloves under their own brands. In fact, Supermax and Advanta have among the lowest price-earnings ratio (PERs) among rubber glove companies (see table). Perhaps this could be partly due to company-specific factors. In the case of Supermax, it is still recovering from the financial burden arising from its failed investment in APL Industries Bhd, though it would appear that the company is on the road to recovery. In the case of Adventa, it is not a very well covered rubber glove company and its strong operating profits may be masked by its one-off foreign exchange losses. Kimberly-Clarke, which markets a wide range of consumer and disposable products globally under its own brand, is trading on a prospective PER of 13.5 times while both Supermax and Adventa are trading on PERs significantly below 10 times despite faster earnings growth. Branding has ensured better margins for Supermax’s and Adventa’s gloves sold under their own brands. The challenge is to enhance their brands and boost sales in the face of competition from multinationals. If they are successful, the potential earnings growth could be tremendous as they are starting from a lower base compared with the near-stagnant sales of multinationals such as Kimberly-Clarke.
Extracted from http://yangyang-yyyynyanggmailcom.blogspot.com
Monday, March 8, 2010
CIMB Bank to issue 50m CWs each on JCY, MAS, Supermax, MPHB
KUALA LUMPUR: CIMB Bank Bhd has issued 50 million European-style call warrants (CWs) each over the shares of JCY International Bhd, MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), Supermax Corp Bhd and MULTI-PURPOSE HOLDINGS BHD [] (MPHB).
According to several announcements made by CIMB Bank Bhd on Monday, the tentative listing date is Tuesday, March 9 and the expiry date is March 10, 2011.
The exercise ratio is two JCY CWs for every one shares while the exercise price is RM1.35, which is 92.47% of the closing price of the shares on the price-fixing date on Feb 25 of RM1.46. The issue price for the JCY-CW is 15 sen.
As for the MAS-CW, the exercise ratio is two CWs to one MAS share and the exercise price is RM2, being 96.15% of the closing price on the price-fixing date of Feb 25 of RM2.08. The issue price for the MAS-CW is 18 sen.
On the Supermax-CW, the exercise ratio is eight CWs to one Supermax share and the exercise price is RM5.60, which is 95.08% of the closing price on Feb 25. The issue price for the Supermax-CW is 17.5 sen.
It said the MPHB-CW's exercise ratio is two CWs to one share and the exercise price is RM1.80, which is 93.26% of the closing price on Feb 25. The issue price is 17.5 sen.
Folliwing the issuance of the four CWs, the number of CWs issued by CIMB Bank is 79.
According to several announcements made by CIMB Bank Bhd on Monday, the tentative listing date is Tuesday, March 9 and the expiry date is March 10, 2011.
The exercise ratio is two JCY CWs for every one shares while the exercise price is RM1.35, which is 92.47% of the closing price of the shares on the price-fixing date on Feb 25 of RM1.46. The issue price for the JCY-CW is 15 sen.
As for the MAS-CW, the exercise ratio is two CWs to one MAS share and the exercise price is RM2, being 96.15% of the closing price on the price-fixing date of Feb 25 of RM2.08. The issue price for the MAS-CW is 18 sen.
On the Supermax-CW, the exercise ratio is eight CWs to one Supermax share and the exercise price is RM5.60, which is 95.08% of the closing price on Feb 25. The issue price for the Supermax-CW is 17.5 sen.
It said the MPHB-CW's exercise ratio is two CWs to one share and the exercise price is RM1.80, which is 93.26% of the closing price on Feb 25. The issue price is 17.5 sen.
Folliwing the issuance of the four CWs, the number of CWs issued by CIMB Bank is 79.
Tuesday, March 2, 2010
CIMB Research keeps Malaysia's gloves sector as Overweight
CIMB Research keeps Malaysia's gloves sector as Overweight, underpinned by superior earnings growth to the market. "Prospects remain favourable for glovemakers as demand growth is sustainable," says CIMB. Adds, many rubber glove companies under house coverage are expanding their capacity in big way to meet current shortage supply. Rates all glove stocks under coverage at Outperforms; recommends Adventa (7191.KU), last off 2.3% at MYR3.42, Supermax (7106.KU) +1.3% at MYR6.17, as top sector picks. Says factors that could extend the re-rating include continuing uptick in demand from healthcare industry, ongoing capacity expansion, above-market earnings growth.
Monday, February 22, 2010
OSK Research upgrades Supermax, TP RM10
KUALA LUMPUR: OSK Research upgraded its FY10 earnings for Supermax Corp Bhd by 15% in line with the company’s solid performance, strong rubber glove demand and management’s internal net profit target of RM168 million.
"Maintain Buy with higher target price of RM10.00 from RM7.94 previously," said the research house on Monday, Feb 22.
It said Supermax's FY09 results were above expectations, mainly boosted by higher selling prices of gloves and persistently strong demand from the Latin American markets, especially Brazil.
Although the 4QFY09 numbers took a hit from a one-off interest expense of RM5.4m, Supermax’s net profit still sprang up by 10.0% q-o-q.
"We have upgraded our FY10 earnings by 15% in line with the company’s solid performance, strong rubber glove demand and management’s internal net profit target of RM168m. Maintain Buy with higher target price of RM10.00 from RM7.94 previously," it said.
"Maintain Buy with higher target price of RM10.00 from RM7.94 previously," said the research house on Monday, Feb 22.
It said Supermax's FY09 results were above expectations, mainly boosted by higher selling prices of gloves and persistently strong demand from the Latin American markets, especially Brazil.
Although the 4QFY09 numbers took a hit from a one-off interest expense of RM5.4m, Supermax’s net profit still sprang up by 10.0% q-o-q.
"We have upgraded our FY10 earnings by 15% in line with the company’s solid performance, strong rubber glove demand and management’s internal net profit target of RM168m. Maintain Buy with higher target price of RM10.00 from RM7.94 previously," it said.
Friday, February 19, 2010
Supermax full year profit jumps to RM152m
SUPERMAX Corporation Bhd registered a significantly increased pre-tax profit of RM152.139 million for the financial year ended Dec 31, 2009, compared with RM51.998 million in 2008.
In a statement here today, the glove manufacturing company said its net profit jumped almost three folds to an impressive RM129.7 million from RM47 million in the previous year.
Its revenue rose to RM814.836 million from RM811.823 million previously.
Supermax said the increase in manufacturing margins and the management's main focus on inventory management, receivable management, production efficiency management and financial management were main contributors to the higher profit level which rose over 176 per cent from previous year.
Profits from associate companies which increased substantially also contributed to the net profit, it said.
The company has proposed a final dividend of eight per cent tax exempt amounting to RM10.8 million to be paid out on June 28, 2010.
It also declared a special dividend of nine per cent tax exempt amounting to RM12.2 million.
The final dividend is subject to shareholders' approval at the company's annual general meeting on May 19.
For the fourth quarter ended Dec 31, 2009, Supermax's revenue increased by 7.4 per cent to RM196.417 million from RM182.825 million in the corresponding quarter of 2008 on the back of strong global demand, increased output from refurbished lines and higher prices for its rubber gloves.
Its pre-tax profit also advanced to RM50.602 million from RM4.092 million previously.
BERNAMA
In a statement here today, the glove manufacturing company said its net profit jumped almost three folds to an impressive RM129.7 million from RM47 million in the previous year.
Its revenue rose to RM814.836 million from RM811.823 million previously.
Supermax said the increase in manufacturing margins and the management's main focus on inventory management, receivable management, production efficiency management and financial management were main contributors to the higher profit level which rose over 176 per cent from previous year.
Profits from associate companies which increased substantially also contributed to the net profit, it said.
The company has proposed a final dividend of eight per cent tax exempt amounting to RM10.8 million to be paid out on June 28, 2010.
It also declared a special dividend of nine per cent tax exempt amounting to RM12.2 million.
The final dividend is subject to shareholders' approval at the company's annual general meeting on May 19.
For the fourth quarter ended Dec 31, 2009, Supermax's revenue increased by 7.4 per cent to RM196.417 million from RM182.825 million in the corresponding quarter of 2008 on the back of strong global demand, increased output from refurbished lines and higher prices for its rubber gloves.
Its pre-tax profit also advanced to RM50.602 million from RM4.092 million previously.
BERNAMA
Supermax - Distributing more angpows?
Potential profit jump; maintain BUY. Yesterday, Business Times penned an article on its interview with Supermax’s managing director, Dato’ Seri Stanley Thai. His comments were very much in line with our view but his forecasts of industry demand and supply differ from our estimates which are based on information gathered from our industry contacts. Also noteworthy was management’s confirmation of a special dividend if it exceeded its net profit target for FY09. We retain our earnings forecasts pending Supermax’s release of its 4Q results next week. We expect its core net profit to be stronger on both qoq and yoy basis. As industry prospects remain favourable, we maintain our BUY call on Supermax. Our target price remains intact at RM7.96, still pegged to a 20% discount to Top Glove’s target P/E of 16.5x. Potential re-rating catalysts include the anticipated strong 4Q results, continuing uptick in glove demand and upcoming capacity expansion. Supermax remains one of our top picks for the rubber glove sector.
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Thursday, February 18, 2010
Supermax (7106.KU) may post 4Q net profit of MYR46 million
Supermax (7106.KU) may post 4Q net profit of MYR46 million vs MYR1.5 million year earlier, says CIMB Research's analyst Terence Wong; cites robust demand, stronger margins as reasons for substantially improved 4Q earnings. "Although no new capacity came onstream for Supermax last year, excess demand has given glove manufacturers including Supermax pricing power and boosted their margins," says Wong; adds 4Q net profit forecast +15% on quarter; takes FY net profit to MYR132 million (vs MYR46.5 million year earlier), which exceeds glovemaker's target of MYR117 million. Wong thinks Supermax may also surprise with special dividend of 5-sen/share. Keeps Buy call with unchanged target of MYR7.96. Company expected to release 4Q earnings at 0500 GMT Monday.
Tuesday, February 16, 2010
Analysts: Rubber glove firms offer tremendous upside
STOCK analysts are staying bullish on the prospect of rubber glove makers this year after a sterling 2009, convinced that the strong demand seen last year can be sustained.
Rubber glove companies including Supermax Corp Bhd (7106) have far outperformed the FTSE Kuala Lumpur Composite Index last year, having soared between 94 per cent and 540 per cent compared to a 45 per cent gain in the local benchmark.
"Despite the strong performance, their price earnings multiples remain at a discount to the market instead of the premium that they historically traded at," CIMB Research wrote in a note on January 6.
The sector stands at an average financial year 2010 price earnings multiples of 9.4 times, or just half the valuations during their peak at the end of 2006 and early 2007, it noted.
"We believe that the rubber glove companies are still undervalued and offer tremendous earnings upside due to their expansion programmes," CIMB said.
The stockbroker kept its overweight stance on the sector, with Adventa and Supermax remaining its top picks in the industry.
Its target price for Supermax was pegged at RM7.96, representing a 56 per cent potential upside from its last traded price of RM5.12. Adventa's target price was put at RM5.44.
"Many of the companies under our coverage are undertaking major capacity expansion, which will ensure earnings growth that is superior to the market," CIMB said, adding that factors that could extend the re-rating for the sector include the continued rising demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.
Capital gains aside, Affin Investment Bank believes that shareholders may potentially be rewarded by another round of bonus issue or special dividends.
"Judging from past track record, glove manufacturers have been generous in rewarding shareholders via at least two to three rounds of bonus issues since their initial public offerings, backed by continued profitability and swelling retained earnings," Affin pointed out in a January 11 report.
Affin estimates that companies under its coverage, namely Kossan Rubber, Supermax and Top Glove, have enough share reserves to give out bonus shares.
"While this will not have any fundamental impact, any bonus issue exercise is positive to sentiment and share price," Affin said.
Rubber glove companies including Supermax Corp Bhd (7106) have far outperformed the FTSE Kuala Lumpur Composite Index last year, having soared between 94 per cent and 540 per cent compared to a 45 per cent gain in the local benchmark.
"Despite the strong performance, their price earnings multiples remain at a discount to the market instead of the premium that they historically traded at," CIMB Research wrote in a note on January 6.
The sector stands at an average financial year 2010 price earnings multiples of 9.4 times, or just half the valuations during their peak at the end of 2006 and early 2007, it noted.
"We believe that the rubber glove companies are still undervalued and offer tremendous earnings upside due to their expansion programmes," CIMB said.
The stockbroker kept its overweight stance on the sector, with Adventa and Supermax remaining its top picks in the industry.
Its target price for Supermax was pegged at RM7.96, representing a 56 per cent potential upside from its last traded price of RM5.12. Adventa's target price was put at RM5.44.
"Many of the companies under our coverage are undertaking major capacity expansion, which will ensure earnings growth that is superior to the market," CIMB said, adding that factors that could extend the re-rating for the sector include the continued rising demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.
Capital gains aside, Affin Investment Bank believes that shareholders may potentially be rewarded by another round of bonus issue or special dividends.
"Judging from past track record, glove manufacturers have been generous in rewarding shareholders via at least two to three rounds of bonus issues since their initial public offerings, backed by continued profitability and swelling retained earnings," Affin pointed out in a January 11 report.
Affin estimates that companies under its coverage, namely Kossan Rubber, Supermax and Top Glove, have enough share reserves to give out bonus shares.
"While this will not have any fundamental impact, any bonus issue exercise is positive to sentiment and share price," Affin said.
Friday, January 29, 2010
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
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
Wednesday, January 27, 2010
Merrill recommends specific stock picking
By Chong Pooi KoonPublished: 2010/01/27
MERRILL Lynch Wealth Management, which rates China and Hong Kong as its top markets for stocks this year, says it sees limited upside potential for Malaysian shares although selected companies like rubber glove makers can outperform.
"We think Malaysia is rather fully valued, so the strategy has to be specific stock picking," its chief investment officer for Asia Pacific, Stephen Corry, said in a media interview in Kuala Lumpur yesterday.
He said banks with exposure to the improving capital market activities as well as rubber glove makers are likely to perform this year. He did not name the stocks due to the bank's policy.
Merrill Lynch, now a unit of Bank of America following a merger, believes that overall, stocks and commodities will give better returns than bonds and cash this year.
A muted recovery in developed economies will lead to low core inflation and steep yield curves this year, acording to Merrill Lynch.
In contrast, rising longer-term interest rates will make government and corporate bonds less attractive.
"Retail investors are pursuing two strategies as we can see. They believe there could be deflation, so they bought fixed income, specifically A-grade corporate papers. They also thought there could be inflation, that's why they like emerging stocks and commodities.
"People are buying inflation and deflation but they are not buying low inflation and equity, so that's where we see opportunity. That's part of reasons why we think the MSCI All-Country World Index could reach 350 this year, roughly 15 to 20 per cent upside," Corry said.
The combination of huge policy stimulus from governments, a steep yield curve and low volatility are factors that contribute to its bullish view on shares.
Merrill Lynch likes stocks from Europe, Asia as well as emerging market consumer shares.
MERRILL Lynch Wealth Management, which rates China and Hong Kong as its top markets for stocks this year, says it sees limited upside potential for Malaysian shares although selected companies like rubber glove makers can outperform.
"We think Malaysia is rather fully valued, so the strategy has to be specific stock picking," its chief investment officer for Asia Pacific, Stephen Corry, said in a media interview in Kuala Lumpur yesterday.
He said banks with exposure to the improving capital market activities as well as rubber glove makers are likely to perform this year. He did not name the stocks due to the bank's policy.
Merrill Lynch, now a unit of Bank of America following a merger, believes that overall, stocks and commodities will give better returns than bonds and cash this year.
A muted recovery in developed economies will lead to low core inflation and steep yield curves this year, acording to Merrill Lynch.
In contrast, rising longer-term interest rates will make government and corporate bonds less attractive.
"Retail investors are pursuing two strategies as we can see. They believe there could be deflation, so they bought fixed income, specifically A-grade corporate papers. They also thought there could be inflation, that's why they like emerging stocks and commodities.
"People are buying inflation and deflation but they are not buying low inflation and equity, so that's where we see opportunity. That's part of reasons why we think the MSCI All-Country World Index could reach 350 this year, roughly 15 to 20 per cent upside," Corry said.
The combination of huge policy stimulus from governments, a steep yield curve and low volatility are factors that contribute to its bullish view on shares.
Merrill Lynch likes stocks from Europe, Asia as well as emerging market consumer shares.
Tuesday, January 26, 2010
We upgrade our recommendation on Supermax to Strong Buy
• We upgrade our recommendation on Supermax to Strong Buy (from
Buy) with a higher 12-month target price of MYR6.50 (from MYR4.60).
• We utilize a target PER of 12x (from 9x) against our projected 2010
EPS for Supermax and add our estimated tax exempt net DPS for
2010 of 9.9 sen. The higher target multiple is due to a higher peer
average and is a reflection of the strong demand-supply outlook of the
industry.
• In addition to a healthy demand outlook for gloves, Supermax’s OBM
products, which carry higher margins, have expanded in terms of
revenue contribution (to 63.9% from 60% in mid-2009). As such, we
believe increasing sales and expanding margins over the medium term
will provide catalysts for Supermax’s share price outperformance.
• Risks to our recommendation and target price include a sudden upturn
in latex prices and an appreciating MYR, as revenue is predominantly
derived from exports.
More here...
Buy) with a higher 12-month target price of MYR6.50 (from MYR4.60).
• We utilize a target PER of 12x (from 9x) against our projected 2010
EPS for Supermax and add our estimated tax exempt net DPS for
2010 of 9.9 sen. The higher target multiple is due to a higher peer
average and is a reflection of the strong demand-supply outlook of the
industry.
• In addition to a healthy demand outlook for gloves, Supermax’s OBM
products, which carry higher margins, have expanded in terms of
revenue contribution (to 63.9% from 60% in mid-2009). As such, we
believe increasing sales and expanding margins over the medium term
will provide catalysts for Supermax’s share price outperformance.
• Risks to our recommendation and target price include a sudden upturn
in latex prices and an appreciating MYR, as revenue is predominantly
derived from exports.
More here...
Friday, January 15, 2010
Supermax (7106.KU) at Buy with MYR6.41
Affin Research starts glove maker Supermax (7106.KU) at Buy with MYR6.41 target pegged to CY10 PE of 11X (30% discount to rival Top Glove's target PE of 16X); notes Supermax, despite being world's second largest rubber glove manufacturer after Top Glove, is only trading at 2010 PE of 6.9X vs 14.6X for Top Glove (7113.KU) and 7.4X for Kossan (7153.KU). "Historically, the valuation gap between Top Glove and Supermax has averaged around 4.3X. The current gap is a steep 7.6X, which we believe is unjustifiable in view of Supermax's stronger earnings growth trajectory and more attractive dividend yields," says Affin; projects Supermax earnings to grow at a FY09-11 CAGR of 42%, ahead of Top Glove's 20% and 29% for Kossan. Stock last +1.5% at MYR4.02. 16.12.09. noted.
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