Supermx has just announced its results for QE30/9/2011 where its net profit increased by 26.5% q-o-q but declined by 18.9% y-o-y to RM30.9 million. Its turnover increased by 14% q-o-q or 15% y-o-y to RM271 million. Supermx's top-line improved due to increased sales of rubber & nitrile gloves. Bottom-line improved due to favorable forex rate movement (as USD strengthened against RM) & 11%-decline in rubber latex prices. However, one input item, nitrile saw an increase in prices of 12% but its impact is less significant than the decline in prices of rubber latex as the output of nitrile gloves is lower than the output of rubber gloves.
Table: Supermx's last 8 quarterly results
It is significant to noted that Supermx's top-line, bottom-line & profit margin have all hooked up. See Chart 1 & 2 below. The last time we saw the same pattern was in QE31/12/2008 which was followed by a strong rally in the share price.
Chart 1: Supermx's last 20 quarterly results
Chart 2: Supermx's profit margin for the last 20 quarterly results
Valuation
Supermx (closed at RM3.25 last Friday) is now trading at a PE of 10 times (based on last 4 quarters' EPS of 32.55 sen). Based on this PE multiple, Supermx is deemed fairly attractive.
(Note: I have earlier stated that the EPS was 41.55 sen & the PE was 7.8 times. That was incorrect. The error has been amended above. Hat tip to reader, winterad99 for bringing this error to my attention.)
Technical Outlook
Supermx may have broken above its intermediate term downtrend line at RM3.10. Its next resistance is at RM3.70 & thereafter at RM4.70.
Chart 3: Supermx's weekly cahrt as at Oct 24, 2011_4.00pm (source: Quickcharts)
Conclusion
Based on improved financial performance, attractive valuation & good technical outlook, Supermx is now rated a BUY.
10 comments:
Today supermx closed at 3.19 (decreasing) . Izit Its next trend up is at RM3.70 & thereafter at RM4.70 within this week ?
Hi Alex,
It this a right time to gather some supermax stock because of improve financial outlook due to USD appreciation and increse in production of rubber latex worldwide?
Any comment or information to share on Success Transformer? Trading around RM0.85 to RM 0.90 with low PE ratio and low gearing?
Hi Alex,
My calculation of the last 4 quarters EPF is
9.09+6.66+7.18+9.62=32.55
The PE is 10 times based on RM3.25.
Did I miss anything in my calculation?
Hi winterad99
Your calculation of the last 4 quarters EPF is correct. Thanks for the hat tip.
Hi chanhoo
I think it is a good time to buy rubber glove stocks, such as Supermx.
Success Transformer is trading very near its intermediate term uptrend line support of RM0.83-0.85. This is a good time to get into the stock.
Hi Evan
Supermx has broken above its downtrend line but the uptrend has yet to commence. If the share price can surpass the RM3.40 or 3.60 level, the uptrend would begin.
Thanks for the information
Hi Alex,
Today, CIMB has a technical sell on Supermax based on weaken MACD and RSI. It comment the price likely to down RM3.20-RM2.80 after hitting RM3.80-RM4.00. Any comment on that?
Thanks.
Hi chanhoo
Supermax has risen quite a bit. It is now pressing against the downward sloping "horizontal" line at RM3.83-3.85. This "horizontal" resistance may cap the stock for a while.
Hi Alex,
Thanks for the information. Yes, the share price is range between RM3.75-RM3.85 this 2 days.
It's looked like having some difficulty to break above RM3.90.
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