Valuation

Initiate coverage with a BUY and target price of RM12.40, pegged to 15.0x FY21F PE. While its peers are trading at an average of 34.7x FY21F PE, Supermax should be pegged to +0.5SD of its 5-year historical mean. While this is still a discount to peers, valuations are based on the peak earnings cycle. However, our blue sky scenario entails Supermax potentially trading at 21.3x or +2SD of its 5-year mean on a potential entry to the FBMKLCI Index. It implies a target price of RM17.60.