Supermax Corporation Bhd (-ve)

SHARES of Supermax (Fundamental: 1.0/3, Valuation: 0.8/3) have risen by 21.8% since it was recommended by InsiderAsia on July 10.

Nevertheless, Supermax is a laggard compared to its peers which had chalked up strong gains due to the stronger USD. For the past one year, shares of Hartalega, Top Glove and Kossan have soared between 33.1% and 85.0% while that of Supermax have increased by only 16.4%.

Supermax operates in a fairly defensive sector with steady global demand growth. Besides being a good proxy for the healthcare industry, its valuations are comparatively undemanding — at a trailing 12-month P/E of 15.4 times, compared to its prospective growth of 15%.

Going forward, earnings growth will be driven by its two new plants in Klang, which will expand its total production capacity by 38% or an additional 6.9 billion pieces of nitrile gloves per annum. Once fully operational by end-2015, nitrile gloves will account for 53% of its total installed capacity.

This article first appeared in Digital Edge Daily, on August 3, 2015.