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Overview
Financial Highlight
Headlines
Business 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.
  Jonathan Keung The board { supercomnet } more gear towards running factory operations. AGM discussion not their cup of tea. Just my own observation. 07/09/2021 6:35 AM wallstreetrookie JP Morgan - Overweight on Supercomnet and sees greater upside in Mid-2021 Malaysia Small and Mid Cap Companies report 10/09/2021 6:04 PM  Mr.Sm Invest123 *SCOMNET 2Q21 Briefing Notes* *2Q21 Results* - 2Q21 revenue +36% yoy, PAT -9% yoy due to lower margin products and factory closure of 7days(Covid). PAT margin - Revenue breakdown: SMP 69%,STB 26%, SAC 5% - Restricted workforce capacity due to MCO3.0 resulted in revenue -13% qoq, but PAT +11% on effective cost savings and resolved freight/raw material cost hike in 1Q21. - SMP and STB only allowed to operate on a 60% workforce from 24 May to 31 Aug, SAC 10%. But able to achieve 80% to 90% of total output despite lower workforce. - Orders made by Edward Lifesciences and Ambu have been increasing steadily. - Able to complete second dose of vaccination for all employees by mid-Sept. Miti has also granted Scomnet to run on 100% workforce from 1st Sept as the vaccination rate has already reached over 85%. - Cost structure: Raw material 71% (1Q:76%), labour 16% (1Q14%), overhead 13% (1Q:10%) *Key Reviews* - Net margin: SMP: 25-35%, STB: 8-15%, SAC: 12-18%, currently implementing Lean Manufacturing for effective cost control, and introducing new automation to replace existing manual processes and reducing quality rejects. - Current production capacity: SMP 95%, STB %, SAC 35% fuel tank & 50% harness. (Assuming 100% workforce) - Cost issues resolved in 2Q21. For copper prices, customers agreed to charge based on monthly LME quote instead of quarterly. For freight cost, customers agreed to pay for extra container allocation cost. - For freight cost, talked to Edwards as one to two container/week send to Dominican. Initial quotation is USD2800/container until last month USD13k. Edwards took up all. If the parts are sent by air shipment, all paid by customer as well. - For copper, ApTIV use a lot copper, and margin for aptiv quite low. For aptiv start with monthly adjustments, cost transferred to clients. - About 20-25% production is currently under automation process. In the midst of shifting towards higher automation. *Expansion Plan* - Current capacity at 32392 sqm, housed in 4 factories with total BU of 17308 sqm, STB 40%, SAC 15% and 45% respectively. - 5-storey Building: RM10m capex, completion 3 years from commencement date. 2nd floor Expansion: Completed in Feb, added 360 spm. Further expansion on 2nd floor: Completing Jan 2022, +15-20% production capacity. *Business Outlook* - SMP affected due to halted orders of Mermaid, expect to commence their new product orders again in September. D*Clot HD, is now cleared by FDA and pending CE approval for the European markets. Expect a five figures' orders per annum for this D Clot HD. D Clot OTW pending both CE and FDA approval (better sales than HD, starting late 2022). - Plass expected to obtain FDA approval in Q4, thus the orders will show in 4Q21 or 1Q22 onwards. Once they get it, 1st customer for Plass are the US special forces. Even if FDA approval not cleared, they’ll purchase 5-figures unit, regardless. - If Plass cleared FDA, Defence Department of US will purchase millions units as it is the new standard of care in military medicine. Plass’ 2nd customer will be US Navy Marines. Every purchase of 3k Plass bullets, will require 1 Plass device. Group’s tooling setup is 40k units per month. - Plass also approached by European Automotives to have 1 Plass device inside every car’s first-aid box. Didn’t get actual forecast, Plass keeps as secret and will only reveal once they obtained the FDA approval. - STB remain unchanged. - SAC will move after success of Fuel Tank and Wire Harness 1st localization mass production. Peugeot signed and delivered fuel tank. Expect to start the mass production of Fuel Tank in Dec 2021 and Wire Harness in Jul 2022. Nevertheless, LVA project(import from China) will continue until mass production success. LVA Project: Currently import from Wuhan (Peugeot approved vendor), and SAC assembles whatever Wuhan can produce. - For SAC, can’t see the contribution in 2Q21 because of MCO, only customer for SAC is PSA. There is big potential for SAC to easily overtake STB revenue, because SAC ASP for wire harness is almost RM4k per vehicle, fuel tank is RM1-2k per vehicle. - As per agreement, there is total 5 models with SAC. Currently initial stage on localization Stage 1 for Peugeot 3008 and 5008 fuel tanks and wire harness. Coming in addition will be 308 model right after this localization stage 1 complete and 1 more model which is due to Pakistan exports assembled in Naza. 10/09/2021 6:33 PM Mr.Sm Invest123 *2021 Outlook* - Expecting to see another double digit growth for FY2021. - Catalyst 1: Production for new products such as Rotational Thrombectomy Device, Fuel Tank localization, oximetry sensors, wound occluder and Insertion Tube. - Catalyst 2: Increased orders from existing customers, orderbook received mid-2022. More demand from clients not just for cardiovascular, stroke and respiratory devices, but also tactical military medical devices ad Tubing delivery system. - Catalyst 3: Main board transfer by Oct this year and complete within 12 months *Q&A:* 1. Discussed with APTIV, at this moment continue to supply for both proton and perodua until feb/march next year. From there onwards, will switch 45% of their PO (proton) to Tawin, only doing Perodua. For PSA, wire harnessing localisation starting July 2022 due to technical assistant in China not allowed to come Malaysia(Covid & MCO). For PSA, role wire sold to SAC is about 15% compared to APTIV 5-8% margin. 2. For Mermaid’s D Clot, initial projection 4000/month, then 10k/month followed by 40k/month. Production capacity of 10k/month in clean room is ready, but due to pandemic Mermaid unable to introduce its product. 2Q21 only 1000 pieces instead of 4k/month. - Proceeded to obtain CE certification for D Clot HD as Europe demand higher than US. (CE mark know more detail in 7th Oct). FDA cert received earlier but CE cert was screwed previously, and they changed the new PIC and regulatory PIC for CE. Confident to receive in Oct. 3. For Ambu, Falcon CI and GI to Jan 2022, as they are facing issued with Falcon D (produced in German, faced technical issue in producing, thus have to improved all CI,GI, DI together, change the tooling). The testing quantity is still there, but commercial launching delayed to Jan 22.Ambu already become largest customer mainly due to insertion tube. 4. For Edwards, there’s a new product Oximetry sensor, took almost 2 years for design input. Official PO received, submitted to FDA and completed validations. The whole project about 5 years for 100k units. Every unit about USD125. 5. Orderbook: For SMP, on hand PO about 30% more than 2020 for until end of 2021. For SAC, PSA resumed back, will start to deliver fuel tank and harness, will have something there. STB remain unchanged. 6. Ambu became biggest revenue contributor to SMP, mainly due to endoscope’s insertion tube where demand increased. Besides in Penang, Ambu has second plant that produce complete endoscope in Mexico(new factory), and have to purchase their part from SMP as tied to FDA. Secondly, Although Falcon’s insertion tube extended launching to Jan 2022, SMP started delivering some to Ambu. The PO received until end of this year. 7. For Ambu endoscope increased, ASP +5% price on end-March to cover copper price surge. Edwards DPT price also increased(Sept/3Q21 onwards). Volume for Ambu endoscope 10k/day until March next year, then 13-14k/day start from April next year. - In 1Q21, say ambu contribute 35% of revenue, about 10% of it is from endoscope. Even though without covid, this product continues to run and Ambu mentioned that this volume will be remained although no covid as it is used in other parts of body. 8. SMP revenue breakdown: Ambu about 56%, Edwards 42%, others: 2%. Plass will wait for FDA approval in 4Q21, and mermaid waiting commercial production in 2022. 9. Much stronger 2H coming forward, Ambu and Edwards much stronger. A few new products that are going to be introduced in 3Q, obtained another new FDA and CE, high demand. Secured another new client for SMP from US, sample stage completed, nearly have this in pipeline(Oct?). 2nd new product submitted to CE and FDA(new technology). 3rd new product: heat cutting knife? 10. New Customer: US customer moving out from HK due to China affiliated. Forecast will only announce in 3Q. Tooling and machinery are consigned, most technology are already being used by Scomnet. Parts require high precisions, tried other companies but only Scomnet achieved it. Scomnet will do full assembly with label. 10/09/2021 6:33 PM kwcheong3888 good growth prospect ahead, company has a management of unquestionable integrity and wide economic moat 10/09/2021 11:02 PM gohfredd Thanks Mr.Sim Invest123 for the valuable information… just curious where you got all those information:> 11/09/2021 10:36 AM Mr.Sm Invest123 R&D >>>>>> Samples >>>>>>FDA approval. Normally It take over 2-5 years for Medical devices samples approval. Scomnet really endured/patients in the past & FINALLY fruitful 11/09/2021 2:54 PM wallstreetrookie Don't miss out. This company is both healthcare and electronic small cap company. 13/09/2021 9:13 AM wallstreetrookie If the company does well, it will soon be listed in the Main Market. Then the stock will literally skyrocket 13/09/2021 9:15 AM cherry88 If we refer to UOB research dated 6/9, its TP is RM2.15. This is based on 32x PE of next year PE. However, if you can hold a little longer, say 2 more years, and based on Healthcare Index's 5-year mean of 44x, you could expect RM4.40 (Based on FY2023 EPS of 10sen with PE of 44x). Although this company is a small little company, if you look at its Top30 shareholdings, other than the directors' holdings, other top 30 shareholders are all institutional funds (mainly Public, Affin, Kenanga). Top30 accounted 74% of the total issued shares. UOB is rather conservative as it did not take in the additional 100% capacity expansion on its 5-floor buiding which to be completed in 3 years. Again, if you can even longer, I can expect its TP to hit RM8.80 ! Why, because this company product is almost "monopoly" and only can produce by them (with FDA approval). And the single-use endoscope will be the "future trend" due to the COVID risk. Hospital will be replace this single-use from re-useable endoscope. The company profile will be highlighted again once it transfer to Main Board in the 2nd half of the year later....So, BUY while still cheap 13/09/2021 9:40 AM cherry88 Correction : The company is scheduled to transfer to Main Board in 2nd half of next year ! 13/09/2021 9:46 AM wallstreetrookie Don't just buy a company because of the institutional holdings. This is bad habit for investing lmao. High institutional ownership like Top Glove last year is a harbinger of bad things to come. When institutions own the majority of the float, there is not much upside. This company, however, has this unique moat. 13/09/2021 9:52 AM calvinfong_them Mr. Sim Invest123 May i know what is the price you bought 3 years ago? 14/09/2021 8:52 AM  FreshNoob @mr.sm invest. Wah. Then u must be really frustrated.. see it climb all the way up to 2 plus and drop back all the way down so many times already . Haha 14/09/2021 9:29 AM Jonathan Keung Go for long term growth stocks but buy and hold strategy might not work for everyone.unless you have 2-3 years holding power. This applies to most retailers { short term in nature } 15/09/2021 10:58 AM cherry88 guys n gals.....start to look excited....next immediate TP should be RM2.00 22/09/2021 2:57 PM cherry88 Haha....Cherry is very conservative....Anyway, this cherry remains fresh and will still hold on 23/09/2021 8:41 AM cherry88 Cherry still green, and isn't ripe yet. Please buy back and keep before it is sold out 23/09/2021 10:45 AM cherry88 Pls refer to my comment dated 13/9, and do your own research. It is still "on the ground", just floating a bit only 27/09/2021 12:36 PM cherry88 Every current price level is the support level, as it is already "floating on the ground". the only direction is up. 01/10/2021 10:08 AM cherry88 Refer to my earlier comments dated 13/9, UOB has given a TP of RM2.15 based on 32x PE. However, I expect a higher TP if you can hold a bit longer, to achieve a TP of RM4.40 (based on industry PE of 40x) 20/10/2021 2:20 PM  | |
