Supermax jumps after reporting record profit

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KUALA LUMPUR (Aug 11): Supermax Corp Bhd’s share price pared gains at Bursa Malaysia’s afternoon break today after jumping as much as RM3.20 or 15% to reach RM24.40 on the rubber glove manufacturer’s profit rise and proposed share dividend.

At 12:30pm, Supermax shares settled at RM22.66 after rising to their highest so far today at RM24.40.

At RM22.66, the company is valued at about RM29.34 billion. 

Supermax, the best performing stock across Bursa, saw around 25 million shares traded.

As a glovemaker, Supermax is seen as a beneficiary of higher glove demand, sparked by the Covid-19 pandemic. 

Yesterday, Supermax announced that its net profit rose to RM399.62 million in the fourth quarter ended June 30, 2020 (4QFY20) from RM15.06 million a year earlier. For the full year, Supermax said cumulative net profit climbed to RM525.59 million from RM123.11 million a year earlier.

Supermax also proposed a share dividend.

"The board of directors of Supermax is pleased to propose a final dividend via the share dividend distribution on the basis of one treasury share for every forty-five ordinary shares held in the company on the premise that new bonus shares pursuant to the proposed bonus issue of shares, which was announced earlier, are approved at the upcoming extraordinary general meeting on Aug 18, 2020 and duly allotted in respect of FY20 for the approval of the shareholders at the forthcoming company's 23rd annual general meeting,” Supermax said.

Supermax said the proposed entitlement and payment dates for the share dividend will be determined at a later date and announced accordingly.

Today, analysts said Supermax’s FY20 core net profit had beaten expectations.

RHB Investment Bank Bhd analyst Alan Lim wrote in a note today Supermax’s FY20 core net profit of RM526 million trumped expectations, as the figure makes up 126% and 132% of RHB’s and street’s estimates respectively.

"We have increased FY21F-22F earnings (by) 6%-12% to reflect higher ASPs (average selling prices). This is in line with industry trends.

“(Maintain) BUY (call) with a higher RM24 TP (target price). The higher TP is in line with the better earnings estimates. In the long run, Supermax is a beneficiary of the long-term uptrend in global gloves consumption,” Lim said. 

He said RHB’s previous TP for Supermax shares was RM21.80.

TA Securities Holdings Bhd analyst Tan Kong Jin wrote in a note today that there was no change in TA's earnings estimates for Supermax at the time of writing the research note, pending updates from today's analyst briefing by Supermax.

"We place our TP (RM19.72/share) and recommendation for Supermax (hold) under review, awaiting more details from analyst briefing today.

"Supermax's FY20 net profit of RM525.6 million (+326.9% year-on-year) was above our and consensus estimates at 109.6% and 131.2% respectively," Tan said.