At the analyst briefing yesterday, Supermax shed more light on the glove industry
outlook and its earnings going forward. We gather that demand still outpaces supply,
mainly due to the lack of new capacity since mid-2008. Supermax has started on a
capacity expansion programme that will ramp up total annual capacity to 21.7bn
pieces by 2010 from 14.5bn pieces currently. Management has also guided for more
dividends in tandem with its fine performance. We have upgraded our FY10 earnings
by another 13% in line with guidance and hence raise our target price to RM5.30
(previously RM4.68).
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