Super interest in Superlon with attractive entry point

Superlon Holdings Bhdis showing bullish potential, having rebounded to close at RM1.11 on July 17. The counter is showing renewed buying interest with levels to watch including immediate resistance at RM1.12. Breaking above this level could propel the stock towards the next resistance at RM1.19 and further to RM1.26.

On the downside, support levels are at RM1.05, a recent low, and RM1.01, providing a solid foundation against further declines. There is potential for a trend reversal, and RM1.11 seems like a good entry price.

It is another Taiwanese-controlled company listed on Bursa with generous dividend payout. The company is backed by net cash and robust operating cash flows.

It is good business for Superlon as heatwave will spur higher demand for air conditioners. The company’s high-quality thermal insulation reduces the energy required to power air conditioner.

The rubber products manufacturer posted a net profit surge of more than threefold for the fourth quarter ended April 30, 2024 (4QFY2024), mainly due to higher gross profit. The company saw increased demand for its products and lower effective group taxation.

Net profit surged to RM2.05 million from RM608,000 a year ago on the back of a 26.4% jump in revenue to RM30.9 million from RM24.43 million. The increase in profitability is also attributable to lower material costs and favourable exchange rate movements. Going forward, demand will be influenced by global and local sentiment, logistic costs, as well as raw material costs.

Superlon is principally involved in the manufacturing of nitrile butadiene rubber foam insulation products mainly used to insulate heating, ventilation, air-conditioning and refrigeration systems. Over 60% of the company’s revenue was contributed by the export market in 2023, spanning across countries in the African, Asia, Europe, America and the Oceania markets.

For the full year, net profit jumped more than fivefolds to RM11.99 million from RM2.28 million, while revenue increased by 9% to RM118.17 million from RM108.45 million. It exports to more than 70 countries and its a beneficiary of strong US dollar.

Superlon is an appealing opportunity for investors looking to capitalise on its potential upward momentum.