Thursday, October 22, 2009

Supermx in a super rally

Supermx recently announced its results for QE30/9/2009. Its net profit increased by 56% q-o-q or 155% y-o-y to RM40 million. Its turnover increased by 26% q-o-q to RM238 million but was 2.7% lower than the previous corresponding quarter, QE30/9/2008.

Table 1: Supermx's 8 quarterly results

From the chart of the last 12 quarterly results, we can see the improvement in Supermx's performance for the past 3 quarters. This sharp recovery in its bottom-line should lead to further re-rating of this stock.

Chart 1: Supermx's 12 quarterly results

In August, I have posted on Supermx's long-term expanding triangle pattern which might capped the rise in the share rise (go here). However the strong rally in the past 3 weeks has blown away the resistance posed by that pattern (see Chart 2 below).

Chart 2: Supermx's daily chart from 2000 to Oct 21, 2009(source: Tradesignum)

From Chart 3 below, we can see that the strong rally since March this year can be viewed as an imperfect upward channel. The share price is now pushing against the resistance from the upper boundary of that channel at RM4.00. Can Supermx surpass this medium-term resistance?

Chart 3: Supermx's daily chart as at Oct 22, 2009_10.50am (Source: Quickcharts)

For traders, you may take the opportunity to take some profit on this stock after a strong rally from RM2.50 to RM4.00 over the past 3 weeks. Long-term investors can choose to hold onto this stock as this stock may still have more upside.

Note: CIMB has a year-end target of RM6.40 for Supermx which pegged the stock to a PE of 10.5 times its 2010 earning. The date of the report is Oct 21.


jef said...

What's your advice on ruberex ? The stock looks attractive from the NTA and dividend

Alex Lu said...

Hi Jefrey,

Ruberex's core business is the production of household & industrial rubber gloves. Its involvement in examination rubber glove business is very small.

Chartwise, it will have strong resistance at RM1.80-2.00.


Nice information on SuperMax, I have been a large buyer all the way up, buying and taking profits, re-entering on small dips. I like it and Top Glove for the mid term. SuperMax declares a 5% dividend soon, giving you a .20 cushion, and Top Glove is delcaring two dividends of 9 sen and 6 sen subject to co. approval so good luck on playing the rubber sector. This has given sparks to companies like Adventa and Latexx which reported superb earnings, Harta earnings due out soon, thinly traded but could have room to move as well.

cheer said...

Appreciate if you can show Technical Analysis and Financial Analysis the comparison between Supermx and Latexx

Alex Lu said...

Hi Cheer,

Briefly, Latexx has surpassed a strong resistance area of RM2.35-45. Its next strong resistance is at RM2.90-3.00.

For 1H2009, Latexx reported an EPS of 10.6 sen. As such, Latexx (closed at RM2.75 on Friday) is now trading at a PE of about 13 times. Supermx reported an EPS of 32.3 sen for 9-month ended 30/9/2009. As such, Supermx (closed at RM3.82 on Friday) is now trading at a PE of about 9 times.

As such, Supermx is trading at a lower PE multiple than Latexx.