Opinion

Story : Malaysia Supermax Corp Company & Founder Stanley Thai Kim Sim – USD 1.1 Billion Net Worth & Share Price Could Reach RM24.19

According to the Bloomberg Billionaire Index, Datuk Seri Stanley Thai KIm Sim of Supermax Corp was the latest Malaysian listed as billionaire with an estimated net worth RM 4.2 billion.

Supermax Corp which manufacturers and exports latex gloves to over 160 countries has see a five-fold increase in profit. The company declared that it meets 12% of the global demand for latex examination gloves.

Supermax was founded in 1987 together with his wife

Supermax does it own brand manufacturing while others are mainly suppliers. Founded in 1987 with Thai’s wife, it became the first manufacturer to come up with its own glove label, Supermax.

Thai and his family member own 38% of Supermax
According to the company’s fillings, Thai and his family members own 38% of Supermax

Thai Kim Sim is the group managing director of Supermax, one of the largest rubber glove makers in the world.

He has been a member of Supermax’s board since June 2000.

He was the trustee of the Malaysian Rubber Glove Manufacturers Association (2013-2016)

He sat on the board of the Malaysian Rubber Export Promotion Council from 2010 to 2015 and was trustee of the Malaysian Rubber Glove Manufacturers Association from 2013 to 2016.

Supermax Beats Analysts’ Expectations

Supermax Corporation Bhd’s core earnings of RM525.6 million for the year ended March 31 2020 are above expectations, said MIDF Research.

The firm said Supermax’s core net earnings of RM525.6 million made up 136 per cent and 131 per cent of its and consensus full-year estimates respectively.

“The positive deviation can be attributed to the stronger than expected average selling price (ASP) of gloves and better than expected margin.”

SUPERMAX SALES To End Users To Government In 165 Countries

MIDF Research said Supermax had been able to increase sales to end users including sales to governments and government agencies in 165 countries.

The firm said Supermax exported 55 per cent of production under its own and 40 per cent through independent distributors.

Only five per cent is allocated for original equipment manufacturer (OEM) production.

“We opine that it is able to leverage on its own distribution to build a direct relationship with the end users so that they will remain sticky and continue to purchase through Supermax’s own distribution channel even post-pandemic,” it said.

MIDF Research expects Supermax to log in stronger subsequent quarters.

This is based on higher ASPs, high profit margins due to its high OBM proportion, its own distribution network and net cash of RM825.6 million, which allows it to expand its capacity and distribution network.

The firm said Supermax’s cashflow was expected to remain strong as customers had been paying deposits of up to 50 per cent in advance to secure supply.

“Due to its own distribution, we believe that it will have an advantage in managing its selling prices going forward since it has established relationships with its end users,” it said.

MIDF Research increased its FY21-22 earnings forecast on Supermax by 439.3 per cent/291.0 per cent backed by its higher margins due to its own distribution as well as higher volume from the additional production capacity.

Supermax Target Price : RM 24.19

It upgraded Supermax to a “buy” with a revised target price of RM24.19.

“Post our positive earnings revision, we upgrade the stock to ‘buy’ due to a bright outlook in the coming quarters.

“Topping that is a strong balance sheet and better control of distribution, which is expected to allow it to have more room to manage its selling prices going forward,” it added.

Supermax Corp Stock Remains A Favourite

While most analysts are positive on Supermax – eight of the 10 tracked by Bloomberg recommend buying the stock, and none advises to sell – some are saying Malaysian glovemakers are at risk should countries such as China expand their production, according to a Maybank Investment Bank report by Lee Yen Ling last week. Their shares gave up some gains on Monday, with Supermax losing 13 per cent for its biggest slump since August 2018. It regained 7.4 per cent at 10.50am in Kuala Lumpur.

But for now, Supermax remains a favourite. The fact that the company manufactures its own brand of gloves means it may be able to sell at higher prices directly to end-customers, according to CGS-CIMB’s Mr Aw, who expects the industry boom to last past the immediate effect of Covid-19.

For Kenanga Research analyst Raymond Choo Ping Khoon, too, Supermax has more good days ahead – not just because of the “abnormal demand and acute supply tightness,” he wrote in a June 10 note, but also thanks to the “scrupulous execution of its expansion plans.” And the recent land acquisitions showed the company’s commitment toward future growth, the analyst said.

Supermax Corp Stock Remains A Favourite

While most analysts are positive on Supermax – eight of the 10 tracked by Bloomberg recommend buying the stock, and none advises to sell – some are saying Malaysian glovemakers are at risk should countries such as China expand their production, according to a Maybank Investment Bank report by Lee Yen Ling last week.

Their shares gave up some gains on Monday, with Supermax losing 13 per cent for its biggest slump since August 2018. It regained 7.4 per cent at 10.50am in Kuala Lumpur.

But for now, Supermax remains a favourite. The fact that the company manufactures its own brand of gloves means it may be able to sell at higher prices directly to end-customers, according to CGS-CIMB’s Mr Aw, who expects the industry boom to last past the immediate effect of Covid-19.

For Kenanga Research analyst Raymond Choo Ping Khoon, too, Supermax has more good days ahead – not just because of the “abnormal demand and acute supply tightness,” he wrote in a June 10 note, but also thanks to the “scrupulous execution of its expansion plans.” And the recent land acquisitions showed the company’s commitment toward future growth, the analyst said.

Supermax (Malaysia)

Supermax Corporation Berhad (MYX: 7106) started as a trader and exporter of latex gloves in 1987 before venturing into manufacturing in 1989. It is Malaysia’s largest Own Brand Manufacturer and the world’s second largest producer of rubber gloves.

Supermax has succeeded in establishing its own brands with a strong presence in Canada, the U.S., the United Kingdom and Brazil. Almost 100% of its production is exported to medical and dental buyers.

Its main competitors are Kimberly-Clark, Ansell, Allegiance and Microflex.

In 2020 during the COVID-19 global pandemic, strong demand for rubber gloves sent Supermax’s share prices on a five-fold jump. Founder Thai Kim SIm recorded an estimated net worth of $1 billion at the stock high in early June 2020.

Subsidiaries

Supermax Glove Manufacturing Sdn Bhd
Maxter Glove Manufacturing Sdn Bhd
Maxwell Glove Manufacturing Bhd
Supermax Latex Products Sdn Bhd
Supermax International Sdn Bhd
Supermax Energy Sdn Bhd
Supermax Global Ltd (Bermuda)
White Oak Global Property Ltd (USA)

But with a 394 per cent stock surge in 2020 through Monday, Supermax’s ascent is unparalleled.

The company reported a 24 per cent increase in revenue to 447m ringgit for the three months through March, partly driven by an “exponential surge in demand due to the Covid-19 pandemic,” it said in its quarterly release.

The company churns out 24 billion gloves annually and is looking to expand that to 44 billion by 2024, according to its 2019 annual report. It bought additional land to increase manufacturing capacity this month.

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