CIMB Research keeps Supermax as Outperform, TP RM2.64 (7106)

KUALA LUMPUR: CIMB Equities Research is keeping glove maker Supermax as an Outperform and raised the target price from RM2.13 to RM2.64.
It
said on Wednesday that the first half (H1, 2012) ended June 30 earnings
were broadly in line at 46% of its and consensus full-year estimates,
as lower raw material costs should lead to a better H2.
“In
addition to expanding glove its operations in Malaysia, Supermax is
venturing into North and South America. We raise our target CY13 P/E to
10.6 times, still a 25% discount to our target price-to-earnings for Top Glove which has been revised upwards.
“Supermax
remains an Outperform as we expect falling natural rubber prices and
additional revenue streams to catalyse its share price,” said CIMB
Research.
The research house said Supermax is setting up a
national distribution headquarters in Chicago, Illinois. The project
will be completed by Q2, 2013 and will cost RM20mil.
CIMB
Research said the headquarters would include a 90,000 sq ft warehouse
and 6,000 sq ft of office space. The enhanced storage capability would
enable it to carry new products to accommodate its US business growth.