Wednesday, October 21, 2009

Supermax (RM3.60) in the headlines again! Yeah!!!


Supermax Corp Bhd (7106), the world's second largest rubber glovemaker, plans to pay its first-ever special dividend this year and set a higher dividend policy next year.

It will return whatever it makes above its recently revised net profit target of RM117 million. This means that if Supermax posts RM127 million in net profit, RM10 million will be returned to shareholders.

"I'm confident that the company can hit the minimum of RM117 million net profit by year-end. Any extra profits will be declared as special dividends," group managing director and executive chairman Datuk Seri Stanley Thai told a media briefing in Kuala Lumpur yesterday.

The special dividend will include extraordinary gains like capital gains on sale of treasury shares, which Thai estimates at about RM15 million currently.

Supermax, which has a policy of returning 20 per cent of net profit to shareholders, aims to improve this next year. Thai did not elaborate.
Malaysia's rubber glove manufacturers are enjoying a good run currently mainly because of the influenza A (H1N1) pandemic. The viral outbreak has fuelled strong demand for rubber gloves used by doctors and nurses.

Thai, during a briefing to the media and research analysts, also said that Supermax did not have any merger and acquisition (M&A) plans.

"We have done two M&As. One was bad and gave us so much headache. So it's enough. No more acquisition. We will focus on organic growth, on the GloveCity project for expansion. Instead of adopting a child, you now have a biological son," he said.

Supermax is expecting annual revenue to reach RM1.5 billion by 2011, which is almost double what it made last year.

"We believe the target is achievable based on our expansion plans as well as the demand outlook for gloves," Thai said.

The company will spend RM130.5 million from now until 2011 to increase production capacity by 50 per cent to 21.7 billion gloves a year by the end of 2011. It can produce 14.5 billion gloves a year currently.

Over the next two to three years, it will replace several production lines as well as start work on the first phase of GloveCity.

The first phase involves 32 new production lines with installed capacity of 4.2 billion pieces a year.

Supermax has bought the land for the project and construction is scheduled to start in the second half of next year. The facility will be operational as early as the first quarter of 2011.

Supermax is expecting global demand for gloves to increase steadily at about 8-10 per cent a year. The world used about 125 billion pieces of gloves last year and the number could hit 155 billion pieces in 2011.

The company is also looking at various measures to cut its finance cost, which was RM20.34 million last year. In the nine months ended September 30 2009, finance cost was about RM13.66 million.

Thai said Supermax was in talks to buy back bonds from its bondholders.

"The bondholders have basically agreed in principle," he said.

Updated 21Oct2009: Another news:

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