KUALA LUMPUR – Research houses have maintained a “buy” call on Supermax Corporation Bhd despite a halt in operations at its production facility in Meru, Klang, for three days following the detection of Covid-19 cases.
RHB Research, in a note, said the news has a negative impact on the company’s stocks, signalling operational risks.
However, it said, the long-term earnings outlook is unaffected, as the impacted facility will eventually resume operations.
It lowered the target price to RM8.75 from RM10.60 previously, and imputed a 10% operational risk.
“Despite the reduction in the target price, Supermax is still undervalued. At the current RM6.20 share price, prices have declined 48% from their August 2020 peak.”
Meanwhile, CSG-CIMB said Supermax’s net profit for the financial year 2021 (FY21) is expected to be negatively impacted by 0.4%.
However, it is retaining its “add” call and target price of RM11.80.
“We continue to view the glovemaker as an attractive play, backed by strong global glove demand owing to Covid-19, its higher-than-average margins in the sector due to its original brand manufacturing model, and solid dividend yields of between 3.8% and 10.6% for FY21-23F.”
At 11.53am, Supermax shares were up three sen to RM6.23, with 3.50 million units traded. – Bernama, February 10, 2021
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