KUALA LUMPUR: CIMB Equities Research said lower costs should provide some bounce to Supermax’s earnings, which have already hit trough.
It said on Tuesday, Oct 25 that it was upgrading the stock as its established brand and own distribution network will help it ride out the next one to three years of excess capacity better than its peers.
“At 72% of our FY11 forecast, 9MFY2011 core net profit was in line with our expectations as well as that of the market. We fine-tune our EPS for a lower dividend payout. Our target price (9.8x forward P/E) rises from RM3.64 to RM4.38 as we roll forward to end-2013,” it said.
To recap, Supermax’s net profit fell 18.9% to RM30.91 million in the third quarter ended Sept 30, 2011 from RM38.11 million a year ago, affected by the higher natural rubber and nitrile latex prices.
However, it said although profitability is lower than last year, it is seeing positive signs for a rebound after recording a second consecutive quarter of core profit growth. Supermax’s revenue was however higher at RM271.42 million, up 15.4% from RM235.10 million.
For the nine-month period, earnings fell 42.5% to RM77.86 million from RM135.44 million. Revenue rose 8.7% to RM750.71 million from RM690.58 million.
It said on Tuesday, Oct 25 that it was upgrading the stock as its established brand and own distribution network will help it ride out the next one to three years of excess capacity better than its peers.
“At 72% of our FY11 forecast, 9MFY2011 core net profit was in line with our expectations as well as that of the market. We fine-tune our EPS for a lower dividend payout. Our target price (9.8x forward P/E) rises from RM3.64 to RM4.38 as we roll forward to end-2013,” it said.
To recap, Supermax’s net profit fell 18.9% to RM30.91 million in the third quarter ended Sept 30, 2011 from RM38.11 million a year ago, affected by the higher natural rubber and nitrile latex prices.
However, it said although profitability is lower than last year, it is seeing positive signs for a rebound after recording a second consecutive quarter of core profit growth. Supermax’s revenue was however higher at RM271.42 million, up 15.4% from RM235.10 million.
For the nine-month period, earnings fell 42.5% to RM77.86 million from RM135.44 million. Revenue rose 8.7% to RM750.71 million from RM690.58 million.
