Many people had argued that the current share price has already factored in SUPERMAX's future earning capability already, since it had went up around 900% since 2020. But based on the latest quarterly report, it netted more than RM1billions of net profit in one quarter (almost 3000% yoy), and the management had stated clearly that the highest Average Selling Price (ASP) is yet to reflect in the current quarter, plus more capability is coming online in the upcoming months and quarter. Plus, SUPERMAX is currently at an OVERSOLD position, the lead time go up to at least 12 months, and more order is coming in.

Given the Current Price of RM6.80, it gives Supermax a total market cap of around RM17.5 Billions. Currently SUPERMAX stood at a net cash position of around RM3.5 Billions, it generated around RM3billions of positive operating cash flow in 1HFY2021.

Assuming SUPERMAX is able to generate around:

2HFY2021 - RM3.5billions operating CASH FLOW

FY2022 - around RM5 billions operating CASH FLOW (it is highly unlikely to report lesser earning that FY2021, but let's just be more conservative in our estimation of profits)

FY2023- around RM2billion operating CASH FLOW. (NORMALIZED PROFIT, although the production capacity will be doubled, but the ASP might be dropping slowly but not sharply as guided by the management and most of the others glove bosses from the industry, I assume by FY2023, the profit they make is 40% of FY2022, again a very conservative figures).

Assuming that SUPERMAX does not distribute any dividends or share buyback, by the end of FY2022, it should have at least RM12 billion of net cash (up until FY2022) in bank.

Based on the current market cap of RM17.5Billions, RM12billions of it will be net cash, hence in order for the interested party to take SUPERMAX private, they just need to fork out roughly RM5.5 billions to do so.

It is able to generate an estimation of RM2.5 billions (post-covid), it only take them at most 3 years (Based on EV/EBITDA ratio) to get back the amount of invested capital they spent to take SUPERMAX private. Not to mentioned that with the billions of ringgit in bank, if the management utilized the money well to build more factory, it will yield greater return, or even put into Fixed Deposit also able to generate at least RM200 millions of interest income, which is almost doubled their entire year of earning for FY2019 (estimated RM12 billions x 2% = RM240 Millions)

As a conclusion, despite being so conservative in the profit estimation, I really don't get it when others are saying SUPERMAX is overvalued. Please comment below if I am wrong.

*Disclaimer, just an orang utan sharing his opinion, not a buy or sell call ya.