18.0kav

SEEAPPENDIXIFORIMPORTANTDISCLOSURESANDANALYSTCERTIFICATIONSPP1505(12242)/08/2008(010136)MALAYSIAMalaysiaManufacturing&Trading10March2009BUYSupermaxCorporationBerhadFY08ResultsDistressedValuationsAnalystYEWCheeYoon&ResearchTeamcheeyoon@kimengkl.
com(603)21411555PriceRM0.
86TargetRM1.
23KLCIIndex858HistoricalChart010002000300040005000600001/00/190004/27/200608/23/200612/19/200604/16/200708/10/200712/06/200704/02/200807/29/200811/24/20080.
000.
501.
001.
502.
002.
503.
00Vol(,000)PriceRMPerformance1m3m6mAbsolute(%)-12.
8-13.
3-17.
5Relative(%)-9.
4-15.
72.
4StockInformationTickercodeSUPM.
KLSUCBMKMarketcap(US$m)62.
352-weekhigh(RM)1.
7852-weeklow(RM)0.
78Sharesissued(m)265.
276mavgd.
vol(US$)61,199Freefloat(%)40.
0Majorshareholders(%)ThaiKimSee/TanBeeGeok(50.
4)EmployeeProvidentFund(7.
1)KeyIndicatorsROE(%)13.
5Netgearing(%)72.
5NTA(RM)1.
46Interestcover(x)3.
4CoreFY08resultswerewithinexpectationsFY08EPSof17.
5sencameinat100%ofourFY08forecastand94%ofconsensusestimates.
Pretaxprofitfell12%YoYona45%increaseinrevenueasthegroupprovidedforfullimpairmentofitsinvestmentinassociateAPLIndustriesamountingtoRM16.
7m.
Excludingtheimpairment,pretaxprofitwouldhaveamountedtoRM68.
3mor16.
7%higherthanFY07'spretaxprofitofRM58.
6m.
Meanwhile,FY08revenuerose45%asthegroupincreaseditsaveragesellingpricesby~12%duringtheyeartocoverhigherproductioncostswhilstsalesvolumerose30%YoYwiththeinstallationof10newlinesatSealPolymer'sKamuntingplantwhichadded8%ofnewcapacity.
However,EBITmarginsfellfrom9.
6%to8.
6%duetovolatilelatexpricesandexchangeratesandhigherenergycostsduringtheyear.
Netprofitfellalarger17%YoYastheeffectivetaxrateincreasedfrom4.
4%to10%followingtheimpairmentcharge.
Managementindicatedthatafinaltax-exemptdividendof1.
75senwillbeannouncedpriortotheAGM,bringingthetotalfortheyearto3.
25sentax-exempt,similartoFY07.
ProfittoreboundinFY09onlowerlatexpriceandstrongerUS$Demandforrubberglovescontinuestoberobustdespitetheglobalrecession,withglobalconsumptionof~120bglovesexpectedtogrowby~10%p.
a.
ExportsofrubberglovesfromMalaysiarose20%YoYtoRM7.
05bin2008fromRM5.
88bin2007.
Supermax'scorenetprofitisexpectedtorise7%inFY09asEBITDAmarginsrecoverto10.
8%from9.
4%inFY08duetolowerlatexpricesandastrongerUS$.
LatexiscurrentlytradingatRM4.
36/kgwetfromahighofRM7.
20/kgwetinJuly2008andisexpectedtoaverage~RM4.
50/kgwetin2009.
TheRinggitisalsomuchweakeratRM3.
72:US$versusRM3.
20:US$inearly2008.
Furthermore,itwillceaseequity-accountingAPLI'slossesinFY09andhasdeferredtheinstallationofnewcapacityof1.
7mgloves(costingRM35m)to2010.
Byend-2010,itsinstalledcapacitywillincreaseto16.
2bglovesfrom14.
5bglovescurrently.
Undemandingvaluations;BUYFollowinga51%dropinitssharepricefroma52-weekhighofRM1.
78inApril2008,SupermaxnowtradesataPERof3.
5xFY09and3.
3xFY10.
WereiterateourBUYrecommendationwithapricetargetofRM1.
23,basedon5xFY09EPSof24.
5sen.
YearEndDec31200620072008F2009F2010FSales(RMm)389.
1582.
1833.
4906.
01023.
0Pre-tax(RMm)47.
267.
251.
670.
075.
5Netprofit(RMm)40.
859.
446.
565.
169.
8EPS(sen)18.
125.
617.
524.
526.
3EPSgrowth(%)11.
341.
7-31.
639.
77.
3PER(x)4.
83.
44.
93.
53.
3EV/EBITDA(x)7.
16.
87.
75.
95.
1Yield(%)5.
25.
15.
15.
05.
0SupermaxCorporationBerhad10March20092Table1:QuarterlyResults(RMm)Q407Q108Q208Q308Q408%chgQoQ%chgYoYRevenue180.
9191.
5193.
3244.
3204.
4-16.
313.
0Operatingprofit12.
716.
115.
119.
121.
411.
868.
0Interestexpense-5.
3-5.
0-6.
4-5.
6-5.
1-10.
3-4.
6Associates8.
25.
24.
92.
46.
2160.
7-24.
2ImpairmentofInvinAssociate(APLI)-16.
7PretaxProfit15.
716.
413.
515.
95.
9-62.
9-62.
4Taxation-1.
1-0.
60.
3-0.
4-4.
4942.
1298.
9NetProfit14.
615.
713.
815.
51.
5-90.
1-89.
4EPS(sen)6.
35.
95.
25.
80.
6-90.
1-90.
8Output(mpieces)255026552445278529154.
714.
3EBITmargins(%)7.
08.
47.
87.
810.
5TaxRate(%)7.
03.
8-2.
02.
673.
9Sources:Companydata,KEestimatesTable2:3Q08SalesbyProducts(%)PowderedglovesLatexexamination26Nitrilesynthetic1Sterilesurgical3Powder-freeglovesLatexexamination45Nitrilesynthetic25Total100Source:CompanydataTable3:Salesbygeographicalregions(%)FY06FY07FY08Americas(north/central/south)65.
064.
060.
5Europe23.
523.
026.
5Asia/Australasia5.
56.
06.
5Africa/MiddleEast6.
07.
06.
5Source:CompanydataTable4KeyAssumptions20062007200820092010Installedcapacity(mpieces)10,70613,51614,47614,47616,204Prod'noutput(mpieces)*9,31511,73612,05013,00013,900Utilisationrate(%)87%87%83%90%86%ForexrateUS$/RM3.
603.
403.
503.
603.
50Avglatexprice/kgwet(RM)5.
125.
205.
504.
505.
00*SupermaxandSealPolymerTable5:RelativevaluationsCompanyTopGloveKossanSupermaxHartalega*FYEAug-09Dec-09Dec-09Mar-09Shareprice(RM)4.
722.
940.
862.
09Sharecapital(mshrs)295.
0159.
9265.
3242.
3Marketcap(RMm)1303.
9498.
8261.
3445.
9InstalledCapacity(mpieces/annum)300001110086326200NetProfit129.
273.
665.
156.
0EPS(sen)43.
846.
024.
523.
1PER(x)10.
86.
43.
59.
0NTA/share(RM)2.
281.
871.
460.
87Price/book(x)2.
11.
60.
62.
4Netdebt(RMm)38.
0185.
5349.
349.
0Netgearing(%)5.
354.
072.
123.
3Revenue–gloves(RMm)1577.
0877.
0906.
0427.
0Marketcap/revenue(x)0.
830.
570.
291.
04Sales/share(RM)5.
355.
483.
421.
76*basedonconsensusestimatesSupermaxCorporationBerhad10March20093ProfitandLossYEDec(RMm)200620072008F2009F2010FSales389.
1582.
1833.
4906.
01023.
0Costofgoodssold298.
0453.
3663.
4725.
0823.
0GrossProfit91.
1128.
8170.
0181.
0200.
0Operatingexpenses48.
164.
298.
3107.
0122.
0OperatingProfit43.
164.
771.
774.
078.
0Netinterest-13.
7-15.
1-22.
1-22.
0-21.
0Interestincome0.
00.
00.
20.
00.
0Interestexpense-13.
7-15.
1-22.
3-22.
0-21.
0Netinvestmentincome/(loss)0.
00.
00.
00.
00.
0Netothernon-op.
JV+Assoc.
17.
817.
618.
718.
018.
5Netextraordinaries0.
00.
0-16.
70.
00.
0Pretaxincome47.
267.
251.
670.
075.
5Incometaxes-6.
4-7.
8-5.
1-4.
9-5.
7MinorityInterest0.
00.
00.
00.
00.
0Netprofit40.
859.
446.
565.
169.
8EBITDA53.
881.
178.
398.
1104.
8EPS(sen)18.
125.
617.
524.
526.
3Sources:Companydata,KEestimatesCashflowYEDec(RMm)200620072008F2009F2010FOperatingcashflow55.
483.
149.
893.
199.
8Netprofit40.
859.
446.
565.
169.
8Depreciation&amortisatn13.
021.
731.
933.
035.
0Changeinworkingcapital-3.
4-3.
0-50.
4-10.
0-10.
0Others5.
05.
021.
95.
05.
0Investmentcashflow-48.
1-30.
0-52.
6-15.
0-35.
0Netcapex-25.
6-30.
0-33.
9-15.
0-35.
0ChangeinLTinvestment-22.
50.
0-18.
60.
00.
0Changeinotherassets0.
00.
00.
00.
00.
0Cashflowafterinvt.
7.
353.
1-2.
878.
164.
8Financingcashflow-19.
1-24.
5-1.
3-37.
5-37.
1Changeinsharecapital1.
51.
5-5.
91.
21.
6Netchangeindebt-12.
8-18.
013.
2-30.
0-30.
0ChangeinotherLTliab.
-7.
8-8.
0-8.
6-8.
7-8.
7Netcashflow-11.
828.
6-4.
140.
627.
8Sources:Companydata,KEestimatesBalanceSheetYEDec(RMm)200620072008F2009F2010FTotalassets522.
0869.
6959.
6985.
01020.
6Currentassets221.
8359.
0419.
1419.
0426.
6Cash&STinvestment28.
723.
232.
723.
832.
0Inventories42.
1103.
6128.
5123.
0128.
0Accountsreceivable149.
0224.
6246.
2269.
0263.
0Others2.
07.
611.
73.
23.
6Otherassets300.
2510.
6540.
4566.
0594.
0LTinvestments126.
991.
2117.
4112.
0113.
0Netfixedassets173.
2379.
5383.
9416.
0446.
0Others0.
039.
939.
138.
035.
0Totalliabilities282.
1478.
4543.
7503.
2466.
9Currentliabilities123.
5309.
7358.
8306.
8291.
6Accountspayable55.
194.
9114.
8113.
0115.
0STborrowings67.
5212.
2236.
6188.
7172.
0Others0.
92.
67.
35.
14.
6Long-termliabilities158.
6168.
7184.
9196.
4175.
3Long-termdebts147.
9156.
3172.
6184.
4165.
0Others10.
712.
412.
312.
010.
3Shareholder'sequity239.
9391.
2415.
9481.
8553.
7Paid-incapital113.
2132.
6132.
6132.
6132.
6Reserve129.
3258.
6289.
1355.
1427.
0Others-2.
50.
0-5.
9-5.
9-5.
9Sources:Companydata,KEestimatesKeyratiosYEDec200620072008F2009F2010FGrowth(%YoY)Sales36.
749.
643.
28.
712.
9OP25.
050.
310.
93.
25.
4EBITDA26.
350.
9-3.
425.
26.
9NP12.
545.
6-21.
840.
07.
3EPS11.
341.
7-31.
639.
77.
3Profitability(%)Grossmargin23.
422.
120.
420.
019.
6Operatingmargin11.
111.
18.
68.
27.
6EBITDAmargin13.
813.
99.
410.
810.
2NetProfitmargin4.
64.
42.
12.
72.
6ROE7.
86.
84.
86.
66.
8ROA17.
015.
211.
213.
512.
6StabilityGrossdebt/equity(%)89.
894.
298.
477.
460.
9Netdebt/equity(%)77.
988.
390.
572.
555.
1Int.
coverage(X)3.
14.
33.
23.
43.
7Int.
&STdebtcoverage(X)0.
50.
50.
50.
50.
5Cashflowint.
coverage(X)4.
15.
52.
24.
24.
8Cashflowint.
&STdebt(X)0.
50.
60.
60.
60.
6Currentratio(X)1.
71.
61.
61.
61.
6Quickratio(X)0.
70.
70.
70.
70.
7Netdebt(RMm)186.
8345.
3376.
5349.
3305.
0PersharedataEPS(sen)18.
125.
617.
524.
526.
3CFPS(sen)24.
635.
918.
835.
037.
5BVPS(RM)1.
071.
691.
571.
812.
08SPS(RM)1.
732.
513.
143.
413.
85EBITDA/share(RM)23.
935.
029.
536.
939.
4DPS(sen)4.
54.
44.
44.
34.
3Sources:Companydata,KEestimatesANALYSTS'COVERAGE/RESEARCHOFFICES4TAIWANGaryCHIACo-HeadofGreaterChina+886235187900gary.
chia@yuanta.
comTi-shengYOUNGCo-HeadofGreaterChina+85229736988ti-sheng.
young@yuanta.
comKevinCHANGHeadofRegionalTechStrategy+886235187901kevin.
chang@yuanta.
comJohnBREBECKHeadofTaiwanStrategy+886235187906john.
brebeck@yuanta.
comVincentCHENHeadofDownstreamTech+886235187903vincent.
chen@yuanta.
comJackCHANGHeadofNon-Tech&Cyclical+886235187905jack.
chang@yuanta.
comTeyiKUNG,Ph.
D+886235187921teyi.
kung@yuanta.
comHealthcareCeliaWANG+886235187925celia.
wang@yuanta.
comFinancialJeffPU+886235187936jeff.
pu@yuanta.
comTFT-LCDTHAILANDDavidBELLER+6626586300x4740david.
b@kimeng.
co.
thBanksShippingNaphatCHANTARASEREKUL+6626586300x4770naphat.
c@kimeng.
co.
thEnergyPiyaORANRIKSUPHAK+6626586300x4710piya.
O@kimeng.
co.
thPropertySupattraKHONGRUNGPHAKORN+6626586300ext4800supattra.
k@kimeng.
co.
thElectronicsAutomotiveTourismKanchanKHANIJOU+6626586300x4750kanchan@kimeng.
co.
thConstructionKELIVEThailand(forretailclients)GeorgeHUEBSCHHeadofResearch+6626586300ext1400george.
h@kimeng.
co.
thVIETNAMLEHuyHoangHeadofResearch+84838386636x160hoang.
le@kimeng.
com.
vnStrategyNguyenThiNganTuyen+84838386636x163tuyen.
nguyen@kimeng.
com.
vnPharmaceuticalConfectionaryandBeverageOilandGasNgoBichVan+84838386636x164van.
ngo@kimeng.
com.
vnBankInsuranceNgoThucVu+84838386636x167vu.
ngo@kimeng.
com.
vnFisheriesPowerNguyenDoanQuang+84838386636x168quang.
nguyen@kimeng.
com.
vnPortandLogisticsTransportationRecommendationdefinitionsSINGAPOREStephanieWONGHeadofResearchRegionalHeadofInstitutionalResearch+6564321451swong@kimeng.
comStrategySmall&MidCapsGregoryYAP+6564321450gyap@kimeng.
comConglomeratesTechnology&ManufacturingTransport&TelcosRohanSUPPIAH+6564321455rohan@kimeng.
comAirlinesMarine&OffshorePaulineLEE+6564321453paulinelee@kimeng.
comBank&FinanceConsumerRetailWilsonLIEW+6564321454wilsonliew@kimeng.
comHotel&ResortProperty&ConstructionAnniKUM+6564321470annikum@kimeng.
comIndustrialsREITsJamesKOH+6564321431jameskoh@kimeng.
comInfrastructureResourcesDavidLOOMIS+6564321417dloomis@kimeng.
comSpecialSituationsKELIVESingaporeONGSengYeowHeadofResearch+6564321832ongsengyeow@kimeng.
comTANChinPoh+6564321859chinpoh@kimeng.
comGOHHanPeng+6564321857gohhanpeng@kimeng.
comKenTAI+6564321412kentai@kimeng.
comHONGKONG/CHINAEdwardFUNGHeadofResearch+85222680632edwardfung@kimeng.
com.
hkPowerConstructionIvanCHEUNG+85222680634ivancheung@kimeng.
com.
hkPropertyIvanLI+85222680641ivanli@kimeng.
com.
hkBank&FinanceTAMTszWang+85222680636tamtszwang@kimeng.
com.
hkSmallCapsEmilyLEE+85222680631emilylee@kimeng.
com.
hkSmallCapsJacquelineKO+85222680633jacquelineko@kimeng.
com.
hkFood&BeverageINDIAJigarSHAHHeadofResearch+912266232601jshah@kimeng.
comOil&GasTransportationAnubhavGUPTA+912266232605agupta@kimeng.
comPropertyCapitalgoodsUrmilSHAH+912266232606urmil@kimeng.
co.
inSoftwareTelecomMediaAnkitTHAKKAR+912266232606ankit@kimeng.
co.
inHealthcareConsumergoodsMALAYSIAYEWCheeYoonHeadofResearch+60321411555cheeyoon@kimengkl.
comStrategyBanksTelcosPropertyConglomerates&othersLIEWMeeKien+60321411555meekien@kimengkl.
comGamingMediaPowerConstructionResearchTeam+60321411555Oil&GasFood&BeverageManufacturingPlantationsTobaccoTechnologyINDONESIAKatarinaSETIAWANHeadofResearch+622125571125ksetiawan@kimeng.
co.
idConsumerInfraShippingStrategyTelcosOthersRicardoSILAEN+622125571126rsilaen@kimeng.
co.
idAutoEnergyHeavyEquipmentPropertyResourcesTeguhSUNYOTO+622125571127tsunyoto@kimeng.
co.
idCementConstructionPharmaceuticalRetailAdiN.
WICAKSONO+622125571130anwicaksono@kimeng.
co.
idGeneralistArwaniPRANADJAYA+622125571129apranadjaya@kimeng.
co.
idTechnicalanalystPHILIPPINESEdBANCODHeadofResearch+6328498848ed_bancod@atr.
com.
phStrategyBankingLauraDY-LIACCO+6328498843laura_dyliacco@atr.
com.
phUtilitiesConglomeratesLovellSARREAL+6328498871lovell_sarreal@atr.
com.
phConsumerCementMediaRobinSARMIENTO+6328498831robin_sarmiento@atr.
com.
phPortsMiningRicardoPUIG+6328498846ricardo_puig@atr.
com.
phPropertyTelcosREGIONALLuzLORENZOEconomist+6328498836luz_lorenzo@atr.
com.
phEconomicsOurrecommendationisbasedonthefollowingexpectedpriceperformancewithin12months:+15%andabove:BUY-15%to+15%:HOLD-15%orworse:SELLSupermaxCorporationBerhad10March20095APPENDIXI:TERMSFORPROVISIONOFREPORT,DISCLOSURESANDDISCLAIMERSThisreport,andanyelectronicaccesstoit,isrestrictedtoandintendedonlyforclientsofKimEngResearchSdnBhd.
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SupermaxCorporationBerhad10March20096Additionalinformationonmentionedsecuritiesisavailableonrequest.
JurisdictionSpecificAdditionalDisclaimers:THISRESEARCHREPORTISSTRICTLYCONFIDENTIALTOTHERECIPIENT,MAYNOTBEDISTRIBUTEDTOTHEPRESSOROTHERMEDIA,ANDMAYNOTBEREPRODUCEDINANYFORMANDMAYNOTBETAKENORTRANSMITTEDINTOTHEREPUBLICOFKOREA,ORPROVIDEDORTRANSMITTEDTOANYKOREANPERSON.
FAILURETOCOMPLYWITHTHISRESTRICTIONMAYCONSTITUTEAVIOLATIONOFSECURITIESLAWSINTHEREPUBLICOFKOREA.
BYACCEPTINGTHISREPORT,YOUAGREETOBEBOUNDBYTHEFOREGOINGLIMITATIONS.
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BYACCEPTINGTHISREPORT,YOUAGREETOBEBOUNDBYTHEFOREGOINGLIMITATIONS.
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