KUALA LUMPUR (April 26): CIMB IB Research has upgraded Supermax Corporation Bhd (SUCB) to “Add” at RM2.85 with a higher target price of RM3.47 (from RM2.35) and said it now was more positive on SUCB’s current operations and future capacity expansion plans following a meeting with the company.
In a note April 25, the research house said SUCB’s glove production capacity will grow by 16.1% to 27.2 billion by end-2019.
It said this was thanks to ongoing rebuilding works on older plants and the addition of two new plants.
“We raise our FY18-20F EPS by 12.2-17.1% to account for higher glove sales and improved efficiencies.
“Moving forward, the valuation gap should narrow vs. the sector given better earnings visibility and more compelling risk-reward profile.
“Upgrade to Add, with target price raised to RM3.47 (15.2x CY19 P/E),” it said.