KUALA LUMPUR (May 26): Kenanga Research has maintained its "underperform" (UP) rating on Supermax Corporation Bhd at RM1.03 with a lower target price (TP) of 75 sen (from 90 sen) and said Supermax’s 9MFY22 PATAMI of RM699 million (-76% y-o-y) came in at 89%/91% of house/consensus full-year forecasts.

In a note on Thursday (May 26), the research house said it considers the results to be below expectations due to the lower-than-expected margins in 3QFY22.

“We highlight that the sharp fall in margin in 3QFY22 due to its overseas distribution unit having to sell high-priced inventory at falling market prices could impact the next two quarters.

“Earnings in subsequent quarters are expected to be impacted by: i) potential revenue loss from the US CBP WRO which accounts for 20% of sales; and ii) impact from the one-off prosperity tax in FY22.

“This prompted us to downgrade our FY22E/FY23E net profit by 21%/17%.

“Our TP is reduced from RM0.90 to RM0.75 based on 11 times FY23E EPS. Reiterate 'UP',” it said.