In December last year, the major shareholder of Supermx, Stanley Thai was charged for insider trading relating to the counter, APLI. As a result, the share price of Supermx took a dive from RM2.00 to RM1.60.
Supermx is one of the top 4 rubber glove manufacturers in Malaysia. At the current price (about RM1.84 at the time of writing this post), it is very attractively priced.
Table 1: Rubber Glove Manufacturers' valuation summarized
Table 2: Rubber Glove Manufacturers' key statistics (Source: ShareInvestorscom)
Recent Financial Performance
The company has a track record of financial performance, with steady growth in revenue & profits. The growth track record has slowed tremendously in the past 3 years due to fierce competition & relentless capacity expansion in the sector.
Diagram: Supermx's last 10-year P&L & 6-year CF (Source: ShareInvestorscom)
Financial Position
The company's financial positions are as follows:
1. Liquidity & leverage position is healthy
2. Management efficiency stagnated in the past 2 years due to over-capacity in the sector
3. Valuation multiples have eased off; thus making the stock more attractive
4. Revenue growth slowed while profit margin slid back
Chart 1: Supermx's Financial Ratios (Source: ShareInvestorscom)
Technical Outlook
Supermx has broken its long-term uptrend line. The stock could potentially test its next horizontal support at RM1.20.
Chart 2; Supermx's monthly chart as at Jan 13, 2015_11.00am (Powered by ShareInvestor.com)
Conclusion
Based on good financial performance & position, attractive valuation, Supermx could be a good stock for long-term investment. However, its bearish technical outlook could signal further downside to the stock ahead.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Supermx.
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