Analysts expect continuous five-year growth from Superlon
KUCHING: The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) is expecting a continuous five-year growth in earnings from Superlon Holdings Bhd (Superlon) alongside expected record higher earnings this year (FY17) from the insulation manufacturer.
According to the research arm, this highly optimistic prediction for Superlon is supported by the company’s efforts in market expansion into IndoChina markets and production capacity expansion with the completion of its new warehouse.
To recap, Superlon recently setup a wholly- owned Vietnamese subsidiarywithplanstostrengthen its presence in Vietnam and utilise to new subsidiary as a platform to penetrate its business into other Indo- China markets.
“The move is commendable as Vietnam is already one of its top three markets and having a more significant presence there could further boost customers’ confidence, provide better after sales service as well as adapt to change in demand more quickly,” commented the research arm.
Superlon’s newly completed new warehouse are also expected to compliment these aspirations and expectations of the group as it is estimated that the warehouse will further boost output by another 10 to 20 per cent once its new layout plan is carried out.
“The shorter lead time to serve customers from the additional floor space could also lead to higher sales and once the warehouse has been capitalised, we also expect Superlon to remain in its net cash position of RM9.6 million,” added the research arm.
Besides this, Superlon’s liquidity is also set to improve at the company recently unveiled a proposed share split exercise of 1 to 2 in a filing with Bursa Malaysia last Friday.
Based on the current existing issued share capital of 80 million shares of Superlon, the proposed share split exercise will increase the number of shares by two fold to 160 million shares without any change to the absolute amount in the issued share capital of the group.
Management has guided that rationale for this exercise is to enhance liquidity of the company by lowering the trading price of Superlon Shares on Bursa Malaysia, and to promote a wider shareholder base for the company with this new increased marketability of its shares.