Superlon’s 1HFY18 results in line, with expectations of a better second half

KUCHING: Superlon Holdings Bhd’s ( Superlon) recently released first half of financial year 2018 (1HFY18) have come in within expectations, and a better 2H for the group is anticipated.

In a result review, MIDF Amanah Investment Bank Bhd ( MIDF Research) detailed that Superlon’s 1HFY18 earnings had made up 39 per cent of their full- year expectations; the results while rather tepid were still within expectations as a stronger 2HFY18 is anticipated to occur.

“High materials costs was the main reason for Superlon’s lacklustre 1HFY18,” explained the research arm in a separate briefing note.

The high material costs caused the group’s profit for the first six months of FY18 ( 6MFY18) to fall by 44.6 per cent year over year ( y- o- y) to RM7.12 million.

This is not expected to continue moving forward in the rest of FY18 as the group generally does not keep raw materials for more than 6 months while its inventories have also come down by 37 per cent to RM12.4 million from RM19.8 million in the previous quarter.

“Looking ahead, raw material prices have averaged at lower levels of US$1,700 to US$2,000 per tonne from over US$ 3,000 previously so we expect Superlon’s gross profit margin to normalise to above 35 per cent from 31.4 per cent in 1HFY18,” added the research arm.

For 2HFY18, Superlon is expected to perform marginally better as its trading division is showing signs of spurred growth.