Supercomnet Technologies Bhd

(SCOMNET, 0001)

Supercomnet Technologies Bhd (Fundamental BUY with TP 2.18)

• We continue to be positive on Supercomnet Technologies Bhd ("Scomnet") for their multi-year growth story
on the back of robust demand for its medical cables, new clients and strong pipeline of products. We are
raising our earnings estimates by 7% and 20% for FY20 and FY21 respectively.
• Recommend BUY with revised target price of RM2.18 premised on 33x PER FY21 Bursa Malaysia Healthcare
Index which is justified for its impressive 5-year net profit CAGR of 45% and Main Board transfer catalyst.
• Scomnet's multi-year growth story lies in its trump card being its wholly owned subsidiary Supercomnet
Medical Products Sdn Bhd which will anchor its multi-year growth trajectory from increased spending in
healthcare globally amidst the Covid-19 pandemic and beyond.
• Scomnet's long standing relationship with key clients of US based Edwards Lifesciences and Denmark based
Ambu, both major players in different segments of cardiovascular medical devices space globally. It has
been supplying European Medical Agency (EMA) and US Food & Drug Administration (FDA) approved
components for over 10 years rendering them key partner for long term growth.
• Its latest product catheter for cardiovascular use has also recently obtained FDA approval and will see it
supplying to its newly secured key client Mermaid Medical Group based in Denmark.
• Scomnet has earmarked RM7-RM10m for capex to ramp up production to support its key growth driver in
medical products segment while its OEM automotive cables segment is expected to see green shoots in
2H20 and 2021 with Proton and Perodua registering improving sales.
• Medical segment will be the main driver for profit and revenue as management targets 70% contribution
from medical segment and automotive 30%.
• Balance sheet remains solid with zero borrowings and growing cash pile of RM50m. Stable margins of 15%
is expected to improve to 18% by FY20 and 20% in FY21 anchored by its FDA and EMA certified products with
high entry barrier. Scomnet is on track to deliver record earnings with accelerated growth in EPS of 59% in
FY20 and 41% in FY21.
This document has been prepared for general circulation based on information obtained from sources believed
to be reliable but we do not make any representations as to its accuracy or completeness. Any
recommendation contained in this document does not have regard to the specific investment objectives,
financial situation and the particular needs of any specific person who may read this document. This document
is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by
addressees and further shall not be re-distributed to any other third party. Rakuten Trade Sdn Bhd accepts no
liability whatsoever for any direct or consequential loss arising from any use of this document or any
solicitations of an offer to buy or sell any securities. Rakuten Trade Sdn Bhd and its associates, their directors,
and/or employees may have positions in, and may affect transactions in securities mentioned herein from time
to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings
with respect to these companies.
The Contra Trade account allows clients to buy shares based on available cash and/or collateral shares value
after hair cut at a higher multiplier. The multiplier varies according to the type of counters clients intend to buy.
Outstanding purchase(s) in the Contra Account need to be paid and/or settled within 2 (two) trading days after
the transaction date (T), failing which it will be force-sold on T+2.
Published:

RAKUTEN TRADE SDN BHD

Registration No: 199301011963 (266701-P) Kenny Yee Shen Pin
Level 7, Kenanga Tower, 237, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia Head of Research