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Overview
Financial Highlight
HeadlinesBusiness Background Supercomnet Technologies Bhd is principally involved in the manufacturing of Polyvinyl chloride (PVC) compound and cables and wires for electronic devices and data control switches. The firm’s product portfolio comprises automobile plug-in cables, copper and jumper wires, cords and cord sets, LAN cable assemblies, and a full range of computer data cables. The company’s operations are located in Malaysia.
  Plantermen Business diversified and moved into medical healthcare related segments 07/01/2021 7:49 PM Newbie318 Supercomnet Technologies (SCT MK) Staging For A Stronger Comeback 3Q20 was an uneventful quarter dragged by forex losses, cost overrun and higher raw material cost for a new project start-up. That said, we understand these were just temporary setbacks which should not recur after the improvement in learning curve. Scomnet is staging for a stronger comeback,backed by strong orderbook visibility from its broad spectrum of key clients. Maintain BUY with target price of RM2.40. RESULTS HIGHLIGHTS A temporary blip. Supercomnet Technologies (Scomnet) recorded a dismal 3Q20 core net profit of RM5.5m (+3.5% qoq, +19.6 yoy), bringing 9M20 core net profit to Rm13.8m which only made up 51% of our full-year estimate. Nevertheless, 3Q20 revenue grew 7.8% yoy to RM37.8m, backed by stronger sales from both the medical and automobile segments. Bottom-line shortfall and margin downtick on exceptional outflows. Despite stronger revenue in the quarter, we noticed a plunge in net margin that impacted the bottom-line numbers. On a yoy basis, the slight decline in net margin (-1.1% yoy) was mainly due to labour and raw material cost overrun, driven by one of its key medical clients’ urgent demand surge for its endoscope cable. The rejection rate of this product spiked during the quarter, causing higher wastage of raw materials as well as overtime shifts to fulfil the overwhelming demand. All that being said, we understand that all these are non-recurring items as management has taken the necessary steps to achieve better efficiency with cost normalisation expected from 4Q20 onwards. More clarity on SMP’s robust orderbook guidance... Our recent channel check with management revealed that orderbook volume for Scomnet’s medical segment, Supercomal Medical Products (SMP), remains strong, with orderbook visibility until 2Q21 and 1Q22 for key clients – customer E and customer A respectively. Note that both customers made up about 90% of SMP’s revenue in 2019. …but slight disruption from COVID-19 impact. Due to the COVID-19 disruption, there are some reduction in orders volume from its customer M. Vis-à-vis the decent sales projection from this customer which could boost its earnings by 25% from 3Q20 onwards, the mass production has been delayed on COVID-19 disruption. Nevertheless, the shortfall of revenue contribution from this customer was partially offset by stronger demand from customer A and customer E. 07/12/2020 6:25 PM  bigearl Multi-pronged catalysts to sustain supercharged growth beyond 2021. We believe Scomnet will emerge as one of the most prominent global healthcare proxies in Malaysia and poised to deliver explosive earnings in FY21. This will be mainly driven by: a) resilient earnings visibility from its strong medical orderbooks on hand; b) incremental revenue from new medical products (D’Clot Catheter, Colonoscopy GI and Gastroscopy GI which will begin mass production in 1Q21; customer M’s D’Clot and new clients’ blood clotting product); c) near-term capacity expansion to fulfil explosive demand for medical segment’s products; d) significant contribution from new automobile client – customer P from 3Q21 onwards; and e) transfer to healthcare sector and mainboard listing which could catalyse a potential valuation rerating. Maintain BUY with a target price of RM2.40. Post meeting, we have trimmed our 2020- 21 revenue forecasts by 12% and 10% respectively to reflect lower contributions from Mermaid Medical and PSA on the slower orderbook projections. We are also assuming a full conversion of existing warrants into our valuations, factoring in share base of 857.3m shares and theoretical cash increment of RM140m. In terms of valuation (refer RHS valuation table), we have pegged our target price to 35x 2021F PE, its 3-year mean and at a discount to Bursa Malaysia Healthcare Index of 43x. INVESTMENT HIGHLIGHTS Medical segment: SMP will see its full potential in FY21. SMP’s growth will be fuelled by several new products which are poised for com 07/01/2021 8:00 PM Newbie318 on from 2021 onwards. a) For customer A, the spotlight will be on its Colonoscopy GI, Gastrocopy GI and Duodenoscopy GI which is expected to contribute about 15-20% of incremental group revenue from 2021 onwards. The overwhelming demand for its endoscopy cables, which has seen a tremendous sales leap of several folds compared to pre-MCO levels, will also significantly enhance earnings. b) For customer E, SMP will continue to benefit from the expansion of medical orderbook with organic yoy growth of at least 10-16% for its existing products, while there are also about seven projects with customer E on hand. c) For customer M, the mass production of its D’Clot HD Catheter has been pushed back due to the delays in product training processes amid COVID-19 disruptions. That said, this is just a temporary setback and production should be able to start immediately once the doctors are able to conduct physical training and complete the production requirements. d) We also understand that SMP has secured a new client with a prominent new blood clotting product for dialysis. While Scomnet recently presented the product to FDA in Los Angeles, the approval results should be announced in Feb/Mar 21. Notably, the US Navy Force has signed an agreement to receive supply of this blood clotting product. We believe this product can contribute positively to SMP’s earnings as early as 2Q21 next year immediately after FDA approval, given that SMP has already allocated the facilities and equipment required for commercial production. Automobile segment: Growth trajectory from customer P. The emergence of Supercomal Advanced Cables’ (SAC) latest key customer P will enhance the growth of Scomnet’s automobile segment. The agreement from this customer, which allows SAC to supply wire harnessing and fuel tanks (higher margin), is expected to contribute about 20- 30% incremental revenue to SAC’s current revenue base in 2021, with subsequent years to see higher revenue contributions. 2021’s earnings growth will be backed by new revenue streams from this customer. We also understand that customer P has recently put in another RM6.6m capex into SAC to purchase wire harness and fuel tank production equipment. 07/12/2020 6:25 PM 07/01/2021 8:02 PM Toplove888 Still steady Abit boring no movement this few weeks... price still vry stable need to put more gas to 2.00 above 20/01/2021 6:29 PM t_nike2002 https://simplywall.st/stocks/my/capital-goods/klse-scomnet/supercomnet-technologies-berhad-shares/news/what-can-the-trends-at-supercomnet-technologies-berhad-klses 29/01/2021 8:10 PM t_nike2002 Based On Simplywall analysis (27/1/21) The trends we've noticed at Supercomnet Technologies Berhad are quite reassuring. The data shows that returns on capital have increased substantially over the last five years to 14%. The amount of capital employed has increased too, by 483%. This can indicate that there's plenty of opportunities to invest capital internally and at ever higher rates, a combination that's common among multi-baggers. In Conclusion... In summary, it's great to see that Supercomnet Technologies Berhad can compound returns by consistently reinvesting capital at increasing rates of return, because these are some of the key ingredients of those highly sought after multi-baggers. And with the stock having performed exceptionally well over the last five years, these patterns are being accounted for by investors. 29/01/2021 8:13 PM SIQ555 Was informed Qr strong and progressing soundly, especially with several FDA approvals in hand. 04/02/2021 8:54 PM Plantermen This supercomnet is not push and push counter. Slow moving but solid growth prospect 08/02/2021 8:44 AM oxfordtrader Watching this counter since they were 70cents. A very well managed and good FA company to keep. 13/02/2021 10:15 PM Sipekhuat https://klse.i3investor.com/blogs/THP/2021-02-16-story-h1541108475-Potentially_Super_Growth_in_2021.jsp 16/02/2021 12:55 AM VSLSB I don't agree with the analysis. The articles does not explain fully what will increase profit by another 14 mil as stated. Based on current margins made the company, you must at least record 50 mil in revenue which I feel is highly unlikely judging by their current performance. The author merely rehashed research reports by UOB and Rakuten and using a lot of "ifs", "possibly" etc. 18/02/2021 8:19 PM bearcomebullgone ini kompany not bad .. ada mixture of medical + barangan tech... hahahah tp ... kenapa ye dia suka sangat tu medical device???? skrg 5g .. buat la tu cable modem tu banyak sikit hahahah 19/02/2021 9:43 PM heyy08 u means will keep drop?? will not increase aldy?this month and next month 23/02/2021 10:50 AM johotin88 I bought 1.97. Will cut loss if it goes below 1.75. Now only a good QR can save it from continue going down. 24/02/2021 1:17 PM jinova546 I brought rm 2.....dunno wanna top-up or not. Hopefully, no need and up to 2.30 - 2.50 24/02/2021 6:04 PM  |
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