KLCI Stock - SUPERMX / 7106 - 2010 Quarter 4

Company Info

Market Capital (Capital Size)	1,499,741,510 (Large)
Par Value	RM 0.50

My Analysis

Forecast P/E now	(4.41-0.075)/0.3848 = 11.27 (High)
Target Price	3.85+0.075 = 3.92 (PE 10.0, EPS 0.3848, DPS 0.075)
Decision	NOT BUY unless latex price decrease or USD strengthening
Comment	Revenue slightly decreased but still higher than preceding year corresponding quarter, eps third consecutive quarter decreasing and also largely lower than preceding year corresponding quarter, free cash flow increasing and turn into positive net cash flow from , liquidity ratio largely decreased from moderate to low level now, gearing ratio increased at moderate level now, receivables and payables period largely increased, USD remaining weak, latex price remaining high, Group expanding, switching part of production lines to produce more Nitrile Powder Free gloves
First Support Price	4.0
Second Support Price	3.8
Risk Rating	MODERATE

Research House

TA Target Price	6.3 (2011-02-11)
Kenanga Target Price	6.8 (2011-02-16)
OSK Target Price	7.84 (2011-02-16)
CIMB Target Price	6.37 (2011-02-17)

Accounting Ratio

Return on Equity	23.82%
Dividend Yield	1.70%
Profit Margin	14.10%
Tax Rate	0.31%
Asset Turnover	0.7949
Net Asset Value Per Share	2.08
Net Tangible Asset per share	1.99
Price/Net Tangible Asset Per Share	2.14
Cash Per Share	0.36
Liquidity Current Ratio	1.8882
Liquidity Quick Ratio	1.4876
Liquidity Cash Ratio	0.4206
Gearing Debt to Equity Ratio	0.6449
Gearing Debt to Asset Ratio	0.3921
Working capital per thousand Ringgit sale	27.9%
Days to sell the inventory	55
Days to collect the receivables	122
Days to pay the payables	63

My notes based on 2010 quarter 4 report (number in '000):-
- The Group revenue for the quarter under review compared to the previous year corresponding quarter was 18.4% higher but profit before tax was 34.7% lower, mainly due to continuous high latex prices and unfavourable exchange rates

- The Group revenue for current quarter versus the preceding quarter was decreased 1% and profit before tax was decreased 20.8%

- Supermax Global Limited will enable the Group to earned new income stream from the trading of gloves from other manufacturers as well as other healthcare and medical devices such as masks and surgical gowns

- The Group has switched more of its production lines to produce nitrile gloves, from 24% to 30% and possibly up to between 40%-45% of total installed capacity

- The Group is well placed to meet the market demands as up to 70% of the Group's production lines are built to be inter-switchable between natural rubber and nitrile rubber

- The Group has been actively adjusting selling prices to mitigate the impact of increased raw material prices as well as the unfavourable foreign exchange rates

- Estimate next 4Q eps after 2010 Q4 result announced = 0.0962*4 = 0.3848, estimate PE on current price 4.41 = 11.27(DPS 0.075)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.1124*4*1.1 = 0.4946, estimate highest/lowest PE = 9.31/7.77 (DPS 0.135)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.1351*4*0.9 = 0.4864(correction), estimate highest/lowest PE = 10.82/7.43 (DPS 0.135)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.6576+0.0253 = 0.6829, estimate highest/lowest PE = 10.38/8.77 (DPS 0.11)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1644*4 = 0.6576, estimate highest/lowest PE = 11.16/8.24 (DPS 0.11)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1514*4 = 0.6056, estimate highest/lowest PE = 10.15/5.3 (DPS 0.0325)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0972*4 = 0.3888, estimate highest/lowest PE = 8.74/5.14 (DPS 0.0325)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0743*4 = 0.2972, estimate highest/lowest PE = 6.52/5.01 (DPS 0.0325)
- Estimate next 4Q eps after 2008 Q4 result announced = 0.2499, estimate highest/lowest PE = 6.67/3.07 (DPS 0.0325)

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