INVESTMENT HIGHLIGHTS · Record earnings due to strong core EBIT margin · 4QFY16 earnings grew 14.2%yoy to RM3.7m · Net cash level still strong at RM24.35m · FY17 earnings estimate increased to RM16.16m from RM14.3m · Higher fair value of RM2.50 (previously RM2.16) based on 12x FY17F PER
We increase our fair value to RM2.50 from RM2.16 based on 12x FY17F PER. The higher fair value is in line with higher FY17 earnings estimate and unchanged valuation of 12x PE (mean valuation). We take comfort in the company’s ability to grow sales volume amid a challenging environment while it boosts its cost management efforts. All these factors should continue to bode well for Superlon’s core EBIT margin and earnings. We also like the management’s efforts to enhance efficiency while maintaining a strong balance sheet.