Tuesday, February 15, 2011

Supermx's bottom-line slipped again

Results Update

Supermx has just announced its results for 4Q2010 ended 31/12/2010. Its net profit for QE31/12/2010 dropped 14% q-o-q or 26% y-o-y to RM32.7 million while turnover was marginally lower q-o-q but still grew by 18.5% y-o-y to RM233 million. The drop in its net profit was attributable to higher latex cost & weakening US dollar. See the table below & Chart 1 & 2 for the movement in Supermx's top-line & bottom-line as well as the decline in its profit margin over the past 3 quarters.


Table: Supermx's last 8 quarterly results



Chart 1: Supermx's last 17 quarterly results



Chart 2: Supermx's profit margin for the last 17 quarterly results

Valuation

Supermx (closed at RM4.25 yesterday) is now trading at a PE of 8.5 times (based on last 4 quarters' EPS of 50 sen). At this PE multiple, Supermx is deemed fairly attractive.

Technical Outlook

Supermx peaked at RM6.60 in July 2010. After a short decline, its price movement over the past 4 months is trapped within a symmetrical triangle, with support & resistance presently at RM4.10 & RM4.70. Given the continued slide in its bottom-line, we are likely to see a test of the RM4.10 support on Wednesday (when the market re-opened). A break below this support could send the share price to the horizontal support at RM3.70 or even RM3.25. However, the attractive valuation of the stock should give investors some incentive to slowly nibble into the stock. I believe the stock would be well-supported at RM4.00-4.10. A momentary drop to RM3.70 is possible & that could be a good entry level for the stock for now.


Chart 3: Supermx's daily chart as at Feb 14, 2010 (Source: Tradesignum)

Conclusion

Despite the continued slide in its bottom-line, I would rate Supermx as a HOLD due to its fairly attractively valuation.
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12 comments:

  1. MaxWealth88Tuesday, February 15, 2011 5:13:00 PM

    hi alex,

    any comment on success transformer? notice it hit year low. has its fundamentals worsen? i notice its PE is very low and the most under researched stock. can't find a recent analyst report on this stock.

    thanks
    maxwealth88

    ReplyDelete
  2. redbearTuesday, February 15, 2011 10:47:00 PM

    hi Alex

    How do you think its recent over-the-counter listing in US will affect its share price here in near future? Thanks.

    Andy

    ReplyDelete
  3. Alex LuWednesday, February 16, 2011 12:03:00 PM

    Hi redbear

    I don't think its recent over-the-counter listing in US will have any effect on its share price here. The share performance in the home base normally determines the share price performance on the secondary board.

    ReplyDelete
  4. Alex LuWednesday, February 16, 2011 12:13:00 PM

    Hi MaxWealth88

    Success transformer has been a disappointment. Its share price has been trading sideway for many months. Since October last year, it has been sliding. It may test the strong horizontal support at RM1.00 soon.

    Its financial performance has deteriorated marginally but it is not too significant to cause any worry yet. For 9-mth ended 30/9/2010, its net profit dropped to RM17.3 mil from RM19.1 mil previously while turnover dropped to RM140 mil from RM145 mil. However, it's fairly attractive as it's trading at a PE of 5.2 times. I would rate it a HOLD.

    ReplyDelete
  5. MaxWealth88Wednesday, February 16, 2011 12:49:00 PM

    hi alex,

    i guess the listing of SEB didn't do any good to Success as its earnings got diluted.

    thanks
    maxwealth88

    ReplyDelete
  6. Alex LuWednesday, February 16, 2011 3:46:00 PM

    Hi MaxWealth88

    The listing of SEB was a very timely exercise for Success because after the listing, Seremban's financial performance deteriorated sharply. For 9-mth ended 30/9/2010, its turnover dropped to RM28 mil from RM52 mil while net profit dropped to RM562k from RM6 mil. The poor performance of Seremban still affected Success's performance but the impact is smaller as Success's stake in Seremban has declined.

    ReplyDelete
  7. ppfooThursday, February 17, 2011 2:56:00 PM

    Hi Alex ,
    Can u comment on AMMB & Coastal?

    Thanks,
    ppfoo

    ReplyDelete
  8. UnknownThursday, February 17, 2011 4:04:00 PM

    Hi Alex

    Can you pls comment on AirAsia and Leader? Some fund managers mentioned that AirAsia target price is above RM3.00. With the current high fuel price, do you think this is possible.


    Thx

    ReplyDelete
  9. stThursday, February 17, 2011 7:17:00 PM

    Hi Alex,
    I recently bought in Metro Kajang, Maybank & CIMB. What's ur view on above counters' price & prospect now. Thank you.

    ReplyDelete
  10. Alex LuMonday, February 21, 2011 3:32:00 PM

    Hi st

    Maybank is trading at its 2 years' old uptrend line [support at RM8.50]. If this level is not violated, it is a good entry level to this stock.

    CIMB broke its uptrend line support at RM8.35 at the end of January. To recover above that uptrend line, it has to go above the RM8.65-70 mark.

    MetroK is trading near the line connecting the peaks over the past 11 years. Can it surpass this level? This resistance could be a good level to exit the stock.

    ReplyDelete
  11. Alex LuMonday, February 21, 2011 4:09:00 PM

    Hi Mohd

    I am more than a bit suspicious about the rally in AirAsia. While I have been an early believer in this stock, its pathetic performance has left me very cold towards it. Everyone knows that Airasia's problem is its high gearing & overly aggressive fleet expansion program. Guess what, the management decided to scale back the expansion program & the fund managers cheered & jumped onto the band wagon. Is it that simple?

    Anyway, I think Airasia has just broken its medium-term uptrend line at RM2.75 in early February. To recover above this uptrend line, it needs to surpass the RM2.83-2.85 mark.

    Leader is still in a downtrend with resistance at RM0.95. Better to buy after it has achieved a breakout.

    ReplyDelete
  12. Alex LuMonday, February 21, 2011 4:14:00 PM

    Hi ppfoo

    AMMB tested its 2 years old uptrend line support at RM6.00 two weeks ago. If it does not break below RM6.00, the stock is still okay.

    Coastal has broken above its medium-term downtrend line at RM2.55 last Friday. It may go & test its recent high of RM3.00 in the present rally.

    ReplyDelete