Supermax rises to all-time high on KLCI inclusion bets

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KUALA LUMPUR: (July 20): Supermax Corp Bhd’s share price rose as much as RM1.38 or 7.8% to RM19.08 in morning trade today to an all-time high amid expectations of stronger demand for rubber gloves due to the global Covid-19 pandemic and as investors bet on the rubber glove manufacturer’s potential inclusion into the 30-stock FBM KLCI.

At 10.26am, Supermax had pared gains to RM18.70, with 24.58 million shares traded. At RM18.70, the company had a market capitalisation of RM24.12 billion.

“With a strong expected year-end finish for the glove sector, there is a fair chance the KLCI will see one or two new inclusions — the ground rules state that a non-component stock will be included if it has risen to at least the 25th position by market cap.

“As of closing on July 17 (last Friday), Supermax at RM17.70 already ranked 20th. Although Kossan Rubber Industries Bhd at RM13.50 ranked only 26th, it might still be admitted by default as the largest non-constituent to replace an outgoing component if any has fallen to the 36th place or below,” Kenanga Investment Bank Bhd analyst Koh Huat Soon wrote in a note today.

CGS-CIMB Securities Sdn Bhd analyst Walter Aw also wrote in a note today that its channel checks with Supermax indicated that Supermax expected global glove demand to remain robust up to at least the end of 2020’s first half owing to Covid-19.

“This was on the back of its current strong order book visibility (10 to 12 months from June 2020 with deposits collected) and higher demand from existing customers and spot buyers. Supermax also believes the acute shortage of gloves globally will be further worsened by prospects of a second wave of Covid-19 given the recent rise in the number of new Covid-19 cases globally.

“We reiterate ‘add’ (the call for Supermax shares), with a higher TP (target price) of RM19.60,” Aw said.


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