SUPERMAX FY2010 Result

This is the news on Supermax FY2010 Result from The Edge Malaysia website:e

TITLE: Supermax 4Q earnings fall 24.8pct on high latex prices, unfavourable forex

Supermax Corp Bhd saw its earnings decline by 24.8% from RM43.54 million to RM32.72 million in the fourth quarter ended Dec 31, 2010 due to the continuous high latex prices and unfavourable exchange rates.


The rubber glove maker said on Monday, Feb 14 its revenue rose 18.4% from RM196.42 million to RM232.67 million. Its earnings per share were 9.62 sen versus 16.22 sen. It proposed a dividend of five sen per share.... "

Analysis and extra information:
1. The full year FY2010 result was 5.2% below market expectation with EPS of 49.45 sen, vs concensus estimate of 52.2 sen.
2. This quarter of 4Q2010 is the consecutive 3rd q-o-q drop in net income from the highest in 1Q2010 of RM51.47m to 4Q2010 of RM32.72m.
3. Consensus average target price as of today (before incorporating this worse than expected result) from analyst is RM6.23.

My view:
The result is worse than expected but share price drop before the result release may indicate that almost all negative news has been priced in. With RSI of 42.0 as of time of writing, downside seems limited in the short term. However, longer term outlook depends on USD outlook and raw material cost (latex price).