Supermax posts record net profit of RM399m in 4Q, beats market expectation

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KUALA LUMPUR (Aug 10): Supermax Corp Bhd posted record quarterly net profit of RM399.62 million for its fourth financial quarter ended June 30, 2020 (4QFY20), up 27 times from RM15.06 million a year ago.

This brought its annual net profit to its highest level of RM525.58 million for the financial year ended June 30, 2020 (FY20), a 327% jump from RM123.11 million in FY19.

The board is proposing a share dividend payout that entails one treasury share for every 45 shares held for FY20, subject to its proposed bonus issue announced earlier to be approved at an upcoming extraordinary general meeting on Aug 18.

Glove demand continued to be robust during the quarter, the group said, which saw revenue for 4QFY20 jump 147% to RM929.12 million from RM375.96 million a year ago.

Annual revenue breached the RM2 billion mark to a record RM2.13 billion versus RM1.54 billion in FY19.

The group's annual earnings beat market consensus by 37.52%. According to Bloomberg, analysts are expecting Supermax to double its annual profit to RM1.05 billion in FY21.

In a statement, Supermax said the demand for gloves as personal protective equipment has heightened, resulting in a rapid rise of average selling prices (ASPs).

"We are seeing the emergence of new consumers and new consumption not previously seen prior to Covid-19. Currently, the group is in an oversold position," it said.

However, Supermax said the highest ASP was not reflected in 4QFY20 and it is therefore optimistic that its own brand manufacturing cum distribution business model will exhibit even healthier performance in the coming quarters.

The group plans to invest RM1.3 billion in new plants to provide more capacity.

"In terms of capacity expansion, we have put in place expansion plans of building a total of five glove manufacturing plants between now and until 2022, with additional production capacity of 22.25 billion. This will bring total capacity to 48.42 billion gloves by end-2022," it said.

The counter shed RM1.72 or 7.5% to close at RM21.20 today, valuing the company at RM27.35 billion. Supermax's share price has soared 15 times year to date.