The sequentially lower turnover was attributable to:
1) Reduced capacity to meet orders for powder gloves as Supermax Group has stopped outsourcing of gloves from APLI Group since November 2008.
2) Reduced average selling prices during the current quarter in tandem with lower latex prices.
Supermx explained the drop in the "current quarter’s profitability in absolute terms was impacted by the full impairment made on its investment in APLI amounting to RM16.7 million resulting in PBT and PAT deteriorating by 62.9% and 90.1% respectively. Without the impairment, the Group would have maintained its strong track record of recording profit growth over each preceding quarter. PBT and PAT would have increased by 42.0% and 17.7% respectively on the back of increased output from 10 new lines and cost savings from greater operating efficiencies and lower latex prices."
Where is disappointing is that the company has stated on January 9, 2009 that "the total impairment (of the Company’s investment in APLI ) amounting to RM16,687,192 had been fully provided" (go here). One would have thought that by this statement, the impairment was provided for in previous accounting periods (or, quarters), but it turned out that it was only provided for in the 4Q2008, which was not announced yet as at January 9, 2009. This misleading statement would not endear Supermx to investors.
I am quite disappointed with Supermx and I would ignore this stock in the future.
would like to seek your opinion whehter its fundamentals are still intact as APLI won't influence its results next quarter?
ReplyDeleteany comments on KNM? lately i have been hearing rumours of its results to be very bad but it just released results that is still not that bad. tq
Hi Maxwealth88,
ReplyDeleteSupermx's 4Q2008 accounts states that "the full impairment made on its investment in APLI amounting to RM16.7 million" has been included therein; thus resulting in a lower bottomline. I hope that there will be no further impairment to come.
With regards to KNM, I agree that the latest results is very good. However, you will note that its financial position has deteriorated, with current ratio dropping from 1.3 times as at 31/12/2007 to 1.0 time as at 31/12/2008 and gearing ratio increasing from 0.5 time to 0.8 time on the same dates. The concern that a portion of the goodwill of RM926 million (arising from the acquisition of Borsig) may have to be written off remained.
Hi Alex,
ReplyDeleteI would agree with you to an extent that the statement by Supermax on its impairment was misleading. However, for a follower of Supermax's results, it is understood that the impairment will arise in its 4Q08 results as other past quarterly results did not account for this impairment. The way the statement was phrased, at first reading, was pretty vague even for a follower! Poor phrasing should not exists for such public listed companies.
If the management's misleading statement is to be ignored, would you still say that Supermax is a company to watch given the discrepancy between its value and its current unjustified price now?
I have read the other article of yours on Supermax lagging behind its peers. Could you provide some ideas why so?
Your opinion and experience in stock analysis is very much appreciated.
Aaron.Hee.Wy
*Just stumbled across your blog lately. To be honest, I am impressed with the diversity of your industrial coverage and generosity in sharing your expertise and experience in the industry with your readers! Slick effort! =)