Icon8888 Gossips About Stocks
(Icon) Supermax (2) - Brokers Expect Huge Jump In Earnings Soon. Why Not Bottom Fish ?
1. Introduction
Supermax shocked the market by announcing a weak set of result on 29 August 2016 (EPS of 1 sen). As a result, share price nosedived the moment the stock started trading the next day.
Supermax used to trade as high as RM3.50 back in January 2016. At current price of RM2.10, the stock looked attractive. I am curious about its earning prospects.
For convenience sake, I relied on analyst reports extracted from klsei3investor.com. To my surprise, almost all analysts expect Supermax to register strong earning growth in the coming financial year.
Even though their calls differ, ALL analysts forecast Supermax to report EPS of approximately 22 sen in coming financial year (which starts from September 2016 quarter onwards).
They differ only in the PER they apply to the forecast EPS. Some apply Supermax's traditional average PER of 13 to 14 times while some decided to be conservative by applying PER of 10 times.
I am sure the unanimous EPS forecast of 22 sen is no coincidence. They must have got it through Company's guidance.
The expected jump in earning is primarily due to targeted full commissioning of Plant 10 and 11 in Meru, Klang by second half of 2016, which will result in 17% increase in production volume (from 19.8 billion gloves at end 2015 to 23.2 billion gloves).
(There are further plans to increase capacity to 55 billion gloves by 2020. Land has been acquired for that purpose and planning is in progress. However, I think for the moment, it suffices for us to just focus on the existing expansion plan and factor in the second phase only when there are proofs of more concrete development)
(Supermax share price declined from RM3.50 to RM2.10 within a period of 8 months. This kind of severely beaten down stocks are Icon's favorite hunting ground for recovery play)
2. Brokers' Recommendations
(TA Securities)
Recommendation : Sell
Target Price : RM2.20, based on FY2017 EPS of 22 sen and PER of 10 times
(MIDF Research)
Recommendation : Buy
Target Price : RM3.02, based on FY2017 EPS of 21.6 sen and PER of 14 times
(K&N Kenanga)
Recommendation : Outperform
Target Price : RM2.83, based on FY2017 EPS of 21.8 sen and PER of 13 times.
(JF Apex)
Recommendation : Hold
Target Price : RM2.21, based on FY2017 EPS of 22 sen and PER of 10 times
3. Concluding Remarks
As most of my readers would have noticed by now, I am a big fan of earnings growth and turnaround play. Supermax's recent correction from RM3.50 to RM2.10 was due to "A Series Of Unfortunate Events" - temporary shut down of existing plants, delay in commissioning of new production lines, exceptionally high taxation charges, etc.
At current price, the stock looked like it has reached rock bottom. If the Company really delivers the earnings growth going forward, I am sure that even those analysts that apply conservative valuation metrics will change their stance.
With such favorable risk and reward balance, I once again stick my neck out to call for...
BUY
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Discussions
14 people like this. Showing 50 of 58 comments
U dun play play.. Kossan harta topglov, i dun underestimate them.. But supermax u dun over confident.. Gud luck
2016-09-01 22:02
Can kindly enlightened me why c18 is a bargain? For example if i buy c18 at rm0.1, theoretically i buying supermax at rm2.45 right? Expiry on april 2017. If black swan happened next few months, this warrant confirmed is total capital lost right? Can we exchange for mother on expiry date if c18 is worthless during expiry? In this context, would mother share be a safer bet? .thx
2016-09-01 22:05
The right way to do it is to match let's say 2 or 3 Call Warrants for every one mother share. That way you limit your exposure and at the same can enjoy more sexy return. It is like adding spice to your cooking to make it taste more yummy
For your information, I match 7 Call Warrants for every 1 Supermax mother share. I am quite a high risk taker
2016-09-01 22:10
Oh sorry you didn't talk about KESM, it was muscle
But anyway thanks for your well wishes. I couldn't care less what nasty things people told to me
2016-09-01 22:18
Thanks sifu Icon. Next time I try this strategy. ..hehe
Posted by Icon8888 > Sep 1, 2016 09:48 PM | Report Abuse
i have learned a lesson from my CIMB Call Warrants. If you find it attractive (long tenure, low premium, etc), don't hesitate, whack kow kow. It is safer than keep topping up at later stage (unless there are further developments that provide super good visibility)
2016-09-02 00:31
Icon8888, thanks for another post. I get a lot of my stock ideas from your posts.
2016-09-02 07:51
Hi Icon, thanks for sharing... wish to ask about an accounting item in its quarterly report... noticed that its trade receivables and trade payables increase substantially... what usually means? it increases against QOQ and YOY... here's the YOY data:- Trade receivables 340,545 182,101 Trade payables 180,110 74,876 hope you can shed some light on this... many thx
2016-09-02 08:59
Icon, for your info... new business website launched... they are ready to launch a new product... http://www.supervision.com.my/
2016-09-02 09:11
kyou, you might want to wait for correction, enter at this price is a bit risky liao
2016-09-02 14:12
wao...sifu tkp2 and sifu icon8888 all here
I come n curi curi info curi tips also
2016-09-02 14:13
huuhuhuhu
jz found that super=c18 better than topglove-c6
me lambat several steps liao.... rugi opportunity
2016-09-02 14:18
Thx sifu tkp2 ...i juz wait for correction... Any suggestion of Wht price range of c18 shld enter..?
2016-09-02 14:21
wait for correction lor, but this C18 really sui lah. difficult to find this kind CW for glove counter, other all exercise price very high
2016-09-02 14:21
kyou, follow mother price movement, after 2 days rally, mother might take a rest or drop a bit before move up (if happen), buy during mother stabilize a bit after correction
2016-09-02 14:23
Once it hit 2.22 than we will see more the bright sky. Soon or later. Good Luck!
2016-09-02 14:27
Appreciate sifu tkp2 for the lesson...i will keep an eye on this counter n enter at another right timing ...XD
2016-09-02 14:30
this C18 seem like have high demand, CIMB try to control it at lower price, but always got eat up by buyer aggresively
2016-09-02 14:30
I aldy bought some mother share and of coz will oso buy more cw but juz wait for correction ..
2016-09-02 14:47
Dear brother ICON8888, can you kindly please go back to AIRASIA and write a blog of the minimum effect of ZIKA virus on AIRASIA.
2016-09-02 17:53
Zika virus is getting very serious. Gloves company like Supermx, will gain tis strong momentum in these few weeks.
2016-09-03 15:00
FIRST ZIKA VIRUS SPREAD IN MALAYSIA! gg...Time to IN glove stocks like supermx!
2016-09-03 17:31
Dig out small head kuku pls. If you still have one con con!
Last t8me this low life said if Tony will do private placement j AirAsia he will dupiok kuku. Not my surprise he delete later on when Tony really announce that, and he quickly change tone to buy AirAsia. Typically, low life
2016-09-03 17:50
paperplane later will change ID to maomaochong to kiss his own ass, wakakaka, 不要脸，all his so called supporter is actually he himself lah
2016-09-03 18:05
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Icon, I tot glove counter normal PE is 20, why analyst give only lower PE for Supermx?
2016-09-01 21:52