Friday 29 Mar 2024
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KUALA LUMPUR (June 22): Superlon Holdings Bhd shares retreated as much as 31 sen or 20% to RM1.21 after the company reported that net profit fell to RM12.27 million for financial year ended April 30, 2018 (FY18) from RM23.72 million a year earlier.

Superlon is a nitrile butadiene rubber-based insulation manufacturer, according to the company's website. At Bursa Malaysia today, Superlon shares were traded at RM1.24 at 11:54am with some three million shares transacted. The counter was among Bursa Malaysia top decliners.

MIDF Amanah Investment Bank Bhd analyst Ng Bei Shan wrote in a note: "Superlon's FY18 earnings of RM12.3 million came in below our expectations, making up 80% of our full-year forecast. The recovery in 2HFY18 had been weaker than expected. This was due to higher than anticipated raw material costs and also from lower ASP (average selling price)."

"Downgrade to NEUTRAL with adjusted TP (target price) of RM1.58 (from RM1.82 previously). The lower TP is a result of lower EPS estimate for FY19. Our valuation method of 13x PE is unchanged. While we expect FY19 to be better than FY18, we are turning more cautious in view of the heightened competition globally while raw material prices remain elevated. Locally, we expect demand to recover following the conclusion of the general election," Ng said.

She said MIDF revised downward its Superlon FY19 earnings estimate by 13.1% as raw material prices remain elevated.

"We also believe that it will be challenging to increase selling prices in the near term due to the more intense competition regionally. As a result, our estimate for FY19F net profit is cut to RM19.3 million from RM22.2 million previously," Ng said.

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