Supermx: Earning Plummeted

Result Update

For QE30/6/2018, Supermx's net profit dropped 71% q-o-q but rose 18% y-o-y to RM9.8 million while revenue rose 1% q-o-q or 5% y-o-y to RM329 million. The company did not give much explanation on the decline in its profit. Its revenue increase was attributed to capacity increase from its 2 newest plants, i.e. Plants #10 and #11.


Table 1: Supermx's last 8 quarters' P&L


Table 2: Sipermx's revenue, EBITDA and PBT changes as compared to last year & immediate preceding quarter

Graph: Supermx's last 47 quarters' P&L

In place of an explanation for its weaker bottom-line, Supermx gave the readers something interesting - the amount owing by the government in term of GST & Tax refund.


Table 3: Amount owing by the government to Supermx for GST & Tax refund

This is more a political statement. I can't imagine every other listed companies giving similar information on the financial statements which would cast negative light on the government. In my opinion, this information is adequately presented in its Balance Sheet as at 30/6/2018.

Table 4: Supermx's Balance Sheet as at 30/6/2018

Financial Position

Supermx's financial position as at 30/6/2018 is deemed adequate with current ratio at 1.1 times while gearing ratio was at 0.6 times.

Valuation

Supermx (closed at RM3.36 last week) is now trading at a PER of 21x (based on last 4 quarters' adjusted EPS of 16.16 sen). At this PER, Supermx is deemed fully valued.

Technical Outlook

Supermx broke above its large and rising trading range at RM3.70 in June this year. Last week, it dropped back into the trading range. This trading range will likely cap its upside for the bear term.


Chart 1: Supermx's weekly chart as at Aug 20, 2018 (Source: Malaysiastock.biz)


Chart 2: Supermx's daily chart as at Aug 20, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on weaker financial performance, fully valuation and near-term technical weakness, I am revising my rating for Supermx from a BUY to a REDUCE or SELL INTO STRENGTH.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.