Supercomnet Technologies Bhd

(SCOMNET, 0001)

Supercomnet Technologies Bhd

• BUY with target price of RM0.98 premised on 25x PER FY20 against Bursa Malaysia healthcare sector
of PER 30x.
• Scomnet medical cable to see 30% earnings growth with increased spending in healthcare amidst the
Covid-19 pandemic on the back of improved demand.
• Since February, it has seen a surge in orders for disposable bronchoscope which is the main component
used in the first in line lung treatment for patients with respiratory infections and critical care
monitoring cable for the use in intensive care units.
• Its cables are approved by the European Medical Agency (EMA) and Food & Drug Administration (FDA)
for Europe and North and Central America with key clients such as Edwards Lifesciences and Ambu,
both major players in different segments of cardiovascular medical devices space globally.
• Scomnet is set to benefit from the stronger USD as it exports over 70% of its products. In addition,
copper which accounts for more than 50% of its raw materials has seen price fall to a 4-year low.
• Balance sheet remains solid with net cash of RM46m and zero borrowings.
• Current net margins of 15% is set to improve to 18% by FY20 and FY21. This would catapult the group’s
earnings to a new high and expect EPS to chart double digit growth of 35% and 20% for FY20 and FY21
respectively.
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Published:

RAKUTEN TRADE SDN BHD (266701-P) Kenny Yee Shen Pin

Level 7, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Head of Research