Period 1QFY12/3MFY12
Actual vs. Expectations
Within our estimate and the consensus expectation.
The 1QFY12 net profit made up 22% and 21% of ours and the consensus' forecasts of RM127.1m and RM146m respectively.
Dividends No dividend was declared.
Key Result Highlights
QoQ, the EBITDA margin remained the same at 12% while earnings were slightly lower by 1%. This was mainly attributable to the higher average latex cost, which increased by 3% QoQ to RM7.50/kg.
YoY, the turnover increased by 3% and earnings increased by 15% as the net profit margin improved from 10% to 12%. The higher margins were mainly due to a lower latex cost, which had dropped by 27% YoY as well as stronger demand from customers taking advantage of the lower average selling prices now (-20% YoY) after a spike last year.
Outlook Maintain Neutral. Higher competition from the glove segment may erode Supermax's margins. However, as most players are expecting a lower latex price, this should limit the negative impact on its margins above.
Change to Forecasts
We are maintaining our earnings forecasts for FY12 and FY13.
Rating UPGRADE to OUTPERFORM
We are upgrading our rating to an OUTPERFORM from MARKET PERFORM as the current share price now implies a 15% upside for the stock as measured against our TP of RM2.06.
Valuation We maintain our targeted PER valuation multiple of 11.0x on Supermax, as it is currently trading at its average historical PERs of 11.0x-13.0x. Hence we are keeping our existing Target Price of RM2.06.
Risks Higher latex price, and Stronger ringgit against US dollar.