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Thursday, October 27, 2011

SUPERMX - Time to Jump on The Bandwagon! (OSK)

At our invitation, Supermax gave an update on Tuesday on the natural rubber glove industry and the progress the company is making, from which we gather that the worst may be over on both fronts. This is because latex price is expected to dip further while demand for natural rubber gloves is anticipated to spring back as selling prices retrace owing to lower latex prices, and as the company has begun to produce thinner gloves. Maintain Buy.

Our fair value for Supermax remains unchanged at RM5.50 based on the existing PER of 13x FY12 EPS. We continue to like the stock’s attractive single-digit PER valuation, as well as the industry’s resilience to recession.

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