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CIMB Research downgrades Supermax from Buy to Hold
by hlk Tue 23 Aug 2011, 14:09
KUALA LUMPUR: CIMB Equities Research has downgraded glove maker Supermax Corp Bhd from Buy to Hold after the 1H11 net profit was below expectations.
It said on Tuesday, Aug 23, the six-months earnings made up 30% of its full-year forecast and 29% of consensus estimates.
The poor results were due to higher input costs and overcapacity. As expected, no dividends were declared.
“We now slash our FY11-13 EPS numbers by 13%-26% as we were overoptimistic about Supermax’s ability to pass on costs and maintain margins,” it said.
CIMB Research said Supermax has put its Glove City project on hold, which the research house believes would curbs its growth prospects. As a result, it raised its discount to Top Glove’s 13.1x benchmark P/E from 20% to 25%.
“Our target price falls from RM4.75 to RM3.64, prompting a downgrade of Supermax from Buy to HOLD. While valuations are cheap and input costs have moderated, this is offset by a lack of catalysts and lower growth prospects. We recommend Kossan for its balanced product mix,” it said.
It said on Tuesday, Aug 23, the six-months earnings made up 30% of its full-year forecast and 29% of consensus estimates.
The poor results were due to higher input costs and overcapacity. As expected, no dividends were declared.
“We now slash our FY11-13 EPS numbers by 13%-26% as we were overoptimistic about Supermax’s ability to pass on costs and maintain margins,” it said.
CIMB Research said Supermax has put its Glove City project on hold, which the research house believes would curbs its growth prospects. As a result, it raised its discount to Top Glove’s 13.1x benchmark P/E from 20% to 25%.
“Our target price falls from RM4.75 to RM3.64, prompting a downgrade of Supermax from Buy to HOLD. While valuations are cheap and input costs have moderated, this is offset by a lack of catalysts and lower growth prospects. We recommend Kossan for its balanced product mix,” it said.
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