Supermax Down 1.5%; 1Q Net Profit Below View

Supermax (7106.KU) is down 1.5% at MYR3.90 after the latex glove maker says its 1Q net profit halves to MYR24.4 million from MYR51.5 million a year earlier as high latex prices and a stronger MYR eroded profit margins as its products are denominated in USD. Supermax says it may need to review its 15%-20% earnings growth target for 2011 after 2Q "in view of the significant volatility of foreign exchange rates and latex prices." A local dealer tips next support at MYR3.80. OSK Research says the results are below expectations but it's keeping its Buy call with a target of MYR6.91 as its valuation remains attractive compared with its glove-maker peers. "Within a 6 to 12 months horizon and provided the latex price does not break its recent high of about MYR11.00/kg and continues its recent uptrend, we think Supermax's earnings stand a strong chance to re-rate as it can then pass on the latex cost increase to its customers in a more accurate and timely manner," the house says.