FIGURE 1: SUPERMAX
CORPORATION BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL INTRO: SUPERMAX is an international manufacturer, distributor, and marketer of high-quality medical gloves. The Supermax Group has twelve factories manufacturing various types of nitrile latex and natural rubber gloves, which are exported to over 165 countries around the world, such as the United States of America, European Union, Middle East, Asia and South Pacific countries. The Group distributes its gloves through 8 distribution centres set up around the world as well as in collaboration with a wide network of over 1,200 distributors globally. The company's largest end market by revenue is the America.
2.
NOTABLE
POINTS:
a. In
FY 2020, the Group reported its highest ever level revenue. This stellar
performance was achieved on the back of the Covid-19 pandemic outbreak which
skyrocketed the average selling prices of gloves due to the exponential growth
in demand and acute shortage in supplies of gloves worldwide. The Group’s
revenue and profit before tax (PBT) has increased 38.6% and 294.5% to RM2.132
billion and RM680.2 million respectively in FY2020, compared to RM1.538 billion
and RM172.4 million last year.
b. Currently,
Supermax has production capacity of about 24.0 billion pieces of gloves per
annum and by end of 2020 will achieve just over 26 billion pieces in installed
capacity. The Group has responded by accelerating its expansion program and is
currently constructing 5 factories simultaneously whereby production lines will
be commissioned progressively at each plant over next two years.
c. The
Supermax Group has recently also diversified into contact lens manufacturing.
It is gradually building up its production capacity. It has also made good
progress in terms of obtaining the necessary licenses and approvals which have
allowed it to build up its product presence in over 60 countries.
d. The
global outbreak of the Covid-19 pandemic has highlighted the importance of face
masks as a PPE and this has boosted demand for face masks globally. In 2020,
the Group has started its venture into the face mask manufacturing with the
acquisition and commissioning of 2 high-capacity production lines in Malaysia and
another 2 in Canada.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (RM million): 2131.8 million as reported in 2020 annual report, this is a
high revenue company.
b. SHARE
PRICE: from 2016-2021, share price surged from around RM1.50 to a peak of more
than RM20.00 at the start of the COVID-19 pandemic and then subsequently
dropped back to current level of around RM6.20.
c. EARNING
PER SHARE (EPS): earning per share in last 5 years was overall steady, which
ranged from 7.99 to 17.85 sen, except for FY2021, the increased gloves demand
brought about by the COVID-19 pandemic enabled SUPERMAX to realise an earning
per share of up to 107.72 sen.
d. PRICE
TO EARNINGS (P/E) RATIO: current P/E ratio is at 7.25, which indicates that the
current share price is undervalued and worthy of investment.
e. FUTURE
POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
f.
CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 191.1
million, which is around 6% of total assets.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2020 financial year, SUPERMAX did not declare a dividend payout to
shareholders.
b. DIVIDEND
PAYOUT RATIO: N/A
c. CONSISTENCY:
the dividend payout was fairly consistent, the dividend paid to shareholders four
out of five years in the last five years ranged from 0 to 8 sen.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2020 financial year, SUPERMAX reported a good return of
shareholders’ equity, at 34.49%. This was significantly increased to 67.67% in
FY2021 due to the increase in earnings.
b. COST-TO-INCOME
RATIO: the cost-to-income ratio is 213%, which is relatively low compared to
other manufacturers in the same category.
6.
OTHER
INDICATORS:
a. CASH
FLOW: cash flow is positive, at around RM 1186.1 million, equivalent to RM 0.46
per share.
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is well supported by institutional investors, there are 15 institutional
investors at top 30 major shareholders list, including both investment funds
and insurance funds. Its major shareholders are DATO’ SERI THAI KIM SIM (21.98%)
and DATIN SERI TAN BEE GEOK (16.27%).
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