Supermax (SUCB) annoounced that it has been awarded one of the licenses (out of 4) to the National Health Service (NHS) over the next four years. NHS covers all hospitals in the United Kingdom (UK) which is estimated to consume about GBP50m worth of medical gloves yearly. (Source: Bursa Announcement)

Comments: We believe this is a positive for the group as SUCB is able to capture more market share in the UK through the award of this license. While there are no near term earnings impact from this license, we believe that this would contribute positively to the group earnings beginning FY17. Assuming that SUCB supplies up to a quarter of GBP 50m worth of medical gloves, this will translate to a topline increase of RM83.3m for the group yearly. As a result, we expect the group’s net profit is to increase by RM8.3m (6.4% of FY17 estimates). We make no changes to our earnings forecast for now pending further details from management. Maintain HOLD with TP RM2.20.

Source: Affin Hwang Capital Research - 13 Nov 2015