KUALA LUMPUR (Feb 15): CIMB IB Research has maintained its “Hold” rating on Supermax Corp Bhd (SUCB) at RM2.20 with a higher target price (TP) of RM2.35 (from RM2.03) and said SUCB’s 1HFY6/18 net profit of RM63.8 million was above expectations at 66% of our and 62% of Bloomberg consensus full-year estimates.
In a note today, the research house said the stronger performance was driven by: i) strong demand for gloves, ii) higher sales volume from an increase in production capacity and iii) better cost control.
It said the group highlighted that it has managed to commercialise all lines in Plants 10 and 11, while revamp works on older plants are already ongoing.
“We raise our FY18-20F EPS by 12.4-19.0% to account for: i) higher sales volume, ii) increasing operating efficiencies and iii) lower raw material prices.
“Maintain Hold with a higher TP of RM2.35 based on 12x CY19F P/E. We remain concerned about reputational risks surrounding SUCB,” it said.