Superlon Holdings Berhad (Superln - 7235) had a history dated back to 1992, where the company started it's venture dealing with nitrile butadiene rubber (NBR) foam, a core insulation material. In 2007, Superlon became public listed in the second board, raising RM 8.9 million from the IPO. Till date, Superlon is carrying a market capitalization of approximately RM 160 million after 9 years of public listing.
However, a detailed analysis on Superlon saw the company started to pick up on revenue during 2014, which had lasted throughout 2015, and doesn't seem to see any stop in 2016 as well. While the global market remain challenging due to volatile raw material prices as well as currency fluctuation, what is the strategy that Superlon is going to employ to ensure the continuation of the growth of the company ?
Growing with the Asian Market
The Asian market had saw much accelerated growth for the past 5 years. Emerging market continue to boost industrial output and consumption due to rapid infrastructure development. According to Transparency Market Research, the insulation (fiberglass, plastic foam, mineral wool) market for residential construction, industrial, HVAC as well as non residential construction appliances will see a CAGR of 8% between 2014 to 2020. The market is projected to rise to USD 64.91 billion in 2020, in which much of the growth will be focused in the Asian, especially the emerging market. While Fiberglass will account for more than 42% of the overall insulation material, following tightly behind will see Plastic Foam, which is almost 40%.
One of the proven beneficiaries from the rising development of property and construction sector is United U-Li Corporation Berhad (Ulicorp), which offers cabling system for buildings and infrastructure.
Ulicorp had been rising since middle of 2014 from a price range of RM 1.00 to the current price of RM 5.49 at 3rd of June 2016, with a total dividend of RM 0.25 per share paid back to investor during the 2 year period.
Superlon - a potential replication of Ulicorp
There are much potential to see Superlon repeating the feat of Ulicorp. Several similarities that are identical includes :
- Adequate share base to provide liquidity without huge dilution in the earning of the share. (Ulicorp 145.2 million shares, Superlon 80million shares)
- Beneficiaries from the rapid development of property and construction in the Asian market region
- Good dividend policy that reward shareholder with at least 2 dividend per financial year.
- Strong and solid management
- Net cash company
According to technical reading, Superlon will continue to trade with the uptrend line due to solid and consistent growth. The current pricing of Superlon could be attractive after a few months consolidation at the price range of RM 2.00. Another point to note is that Superlon is also intersecting with the support line of the uptrend, which will possibly suggest a upward push.
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| Superlon Global Distribution Network |
Moving forward, Superlon will continue to expand it's foothold in the Asian region, targeting on emerging market segment. The penetration into the India market will be a great opportunity for push Superlon into a greater growth in the future.
Bone's Mid Term TP : RM 2.40
SUPERLN (7235) - Superlon - Emerging Star Player
http://bonescythe.blogspot.my/2016/06/superlon-emerging-star-player.html
