KUALA LUMPUR (Feb 8): Supermax Corp Bhd could potentially benefit from the US government's plan to increase local production of personal protective equipment (PPE) including surgical gloves.
The US government recently said it plans to use the Defence Production Act (DPA) to produce 12 billion gloves per annum by the end of 2021 to reduce its reliance on imported PPE.
In a research note today, RHB Investment Bank said Supermax stands a great chance of participating in this initiative given that it has distribution channels through Aurelia Gloves in the US.
"From its website, Aurelia Gloves stated that it has been the top provider of examination gloves in the North American market since 2000.
"As Supermax is also the glove manufacturer with a 26.2 billion pieces per annum capacity, it could be able to participate in this DPA initiative," RHB research analyst Alan Lim wrote.
Lim is keeping a "buy" call on the stock with an unchanged target price of RM10.60, and maintains his FY21 to FY23 earnings projections.
"We also expect positive news flow on this matter in the next three to six months. The company's stronger earnings growth prospects in 3QFY21 and investors' expectation of a special dividend should support its share price performance, as well," said Lim.
In a separate news report, the group's Canadian unit Supermax Healthcare Canada said it has ventured into the medical equipment manufacturing segment.
According to a Canadian online news portal article dated Feb 3, Supermax Healthcare Canada created a new division called Supermax Medical which produces surgical masks of ASTM levels 1, 2 and 3 standards. ASTM is an international standard formerly known as American Society for Testing and Materials.
"In order to support the Canadian effort in the manufacturing of personal protective equipment, Supermax Medical is proud to announce the creation of quality jobs at our Longueuil facility," Supermax Healthcare Canada was quoted as saying.
The portal said the Supermax Medical division will be led by executive vice president, M Sylvain Bergeron.
At the midday break today, Supermax fell 4.95% or 33 sen to RM6.34, valuing it at RM17.25 billion.