Review

• Supercomnet Technologies Berhad’s (Scomnet) 1H24 net profit of RM16.5mn accounted for 42.0% of our full-year forecast and 42.1% of consensus estimates. We consider this to be within expectation as we expect stronger sales in 2H24.

• QoQ, 2Q24 PBT improved by 7.2% to RM10.8mn in tandem with higher sales of 5.9% to RM38.3mn. The better performance was driven by the medical segment, particularly Ambu endoscopy video cables. As such, the PBT margin improved 0.3%-pts to 28.2%.

• In terms of revenue breakdown, the medical segment remained as the main contributor to Scomnet, accounting for 81% (vs. 76% in 1Q24) of sales while automotive and industrial segments accounted for 2% (vs. 5% in 1Q24) and 17% (vs. 19% in 1Q24) of 2Q24 revenue respectively.

• 1H24 net profit rose by 14.9% to RM16.5mn, ahead of revenue growth of 5.3% to RM74.4mn. We attribute the solid performance to higher sales of medical products, which have better profit margins. The demand for endoscopy video cables and gastroscope has increased as customers place more orders. The higher sales in the medical segment cushioned the impact of weaker orders from the automotive segment. Note that the automotive segment was hit by lower orders from Stellantis (restructuring production lines).

Impact

• No change to our FY24-26 earnings projections, pending management guidance at an analyst briefing on Thursday.

Outlook

• Moving into 2H24, we expect the medical segment sales to improve driven by new products. In addition, we anticipate that the auto segment would recover as Stellantis would resume its production.

Valuation

• We reiterate our Buy recommendation on the stock with an unchanged TP of RM1.73/share based on 30x CY25 EPS.

Source: TA Research - 28 Aug 2024