Supermax’s FY28 results missed expectations

KUALA LUMPUR: Results of glovemaker Supermax Corporation Bhd (Supermax) missed the mark for its financial year 2018 (FY18) as its net profit of RM107 million was off from consensus full-year forecasts by 16 per cent.

In a results note, Kenanga Investment Bank Bhd (Kenanga research) saw that the deviation was mainly due to higher-thanexpected costs of which they were unable to ascertain as it was not explained in the company’s quarterly results’ note.

Researchers with MID FA man ah Investment Bank Bhd (MIDF Research) said in a results review believed these costs were higher operating expenses, mainly incurred in the last quarter of FY18 (4QFY18).

Despite missing expectations, Supermax’s net profit in Fy18 was still an increase by 59 per cent year over year (y-o-y) and is understood to stem from stronger revenue of 16 per cent underpinned by higher output achieved from newly commissioned production lines from Plant 10 and Plant 11 in Klang, refurbishment work of older lines and better operational efficiencies.

“Profitability improved on efforts taken to improve efficiency and productivity, including the refurbishment of the older lines and streamlining of work processes. As a result, FY8 profit before tax (PBT) margin was higher by 3.2 points to 12.8 from 9.6 per cent in FY17,” said Kenanga Research.

In addition, MIDF Research also guided that revenue was supported by higher demand and average selling prices (ASP) coming from countries such as those in Easter Europe which are currently in the midst of upgrading their healthcare quality, and a reduction in effective tax rate to 51.0 from 73.0 per cent in 4QFY17 that surged in PATAMI.