Latexx to be privatised?
Written by Yantoultra Ngui Yichen
Thursday, 27 January 2011 11:43
KUALA LUMPUR: Talk of privatisation of Latexx Partners Bhd has surfaced amid the continuous rise in latex price and the weakening US dollar which have hit the once-favoured rubber gloves industry.
The counter has been actively traded recently, with an average daily transacted volume of some 1.3 million shares for the past 10 days, according to Bloomberg data.
Latexx closed 2.27% or six sen lower to RM2.58 yesterday with a total of 3.1 million shares traded. Its shares hit a 52-week high of RM4.25 on April 7, 2010 while its 52-week low was RM2.37 on Sept 24, 2010
A company official said she had no clue on the matter when contacted by The Edge Financial Daily, but said the rumour of possible privatisation had been going around for some time.
Latexx’s executive chairman and CEO Low Bok Tek was not available to comment at press time.
According to Bloomberg data, BT Capital Sdn Bhd is the major shareholder of Latexx with 49.57 million shares or a 22.55% stake, followed by Low with 15.47 million shares (7.04%) and Lembaga Tabung Haji with 11.68 million shares (5.32%).
Given that Low is a shareholder of BT Capital, his direct and deemed interest in Latexx amount to 29.59% stake.
Rubber glove manufacturers took a hit recently from the continuous rise in latex prices and a depreciating US dollar. But analysts said this was not the first time glove manufacturers were facing this situation.
According to an analyst, glove makers have shown they are able to pass on the cost of higher latex prices and weaker greenback to end-consumers, though at one to two months’ lag.
Despite the headwinds, rubber glove makers were still positive on the back of robust demand from traditional healthcare usage and new segments such as the food and services industry.
“The demand growth for gloves has remained healthy although the concern for H1N1 has faded,” Latexx said in notes accompanying its financial statements to Bursa Malaysia on Nov 10. “Upon normalising, the demand for gloves still grows at 10% to 12% annually, which indicates a remarkable upside for any industry.”
Latexx’s present undemanding valuation could be fuelling privatisation speculation and generating interest on the stock.
According to Bloomberg data, the counter is trading at a forward price-to-earnings ratio (PER) of 7.27 times, lower than prevailing average valuations for the rubber sector.
Its bigger peers such as Hartalega Holdings Bhd is trading at a forward PER of 10.91 times, Top Glove Bhd at 14.62 times, Kossan Rubber Industries Bhd at 8.63 times and Supermax Corp Bhd at 8.53 times.
Other peers such as Rubberex Corp (M) Bhd is trading at a historical PER of 11.11 times and Integrated Rubber Corp Bhd at 24.59 times. Latexx trades at a historical PER of 6.8 times.
With net asset per share of RM1.07 as at Sept 30, Latexx trades at a price-to-book ratio of 2.41 times.
For the nine months ended Sept 30, Latexx’s revenue totalled RM390.53 million, up 73.11% from the previous corresponding period while net profit totalled RM59.89 million, a jump of 71.95% from RM34.83 million previously.
Latexx is relatively cash rich; it had a net cash of RM17.29 million as at Sept 30, with RM18.54 million in long-term borrowings, RM18.78 million in short-term borrowings and RM54.61 million cash.
Analysts are bullish on Latexx despite the continuous increase in average latex price and the weakening US dollar. All four analysts who released reports on its most recent results had a “buy” recommendation on the stock.
The consensus target price on the stock is RM3.49, according to Bloomberg data. This is 35% or 91 sen higher than yesterday’s closing price of RM2.58, which gave the company a market capitalisation of RM567.1 million.
For one, MIMB Investment Bank said it was still positive on the stock as it was expected to focus on operational efficiencies and cost control to boost earnings going forward.
“Notwithstanding the headwinds in the industry, Latexx is expected to continue with its expansion plans,” the research house said in a note to clients on Nov 11, 2010.
According to Latexx in notes accompanying its financial statements to Bursa, the construction of an additional production plant adjacent to existing production facilities has been completed.
Nine double formers and two single formers glove production lines were commissioned and had since started operations, said the company. The expansion was expected to raise its annual production capacity from seven billion pieces to nine billion pieces by 2011, it added.
This article appeared in The Edge Financial Daily, January 27, 2011.
Written by Yantoultra Ngui Yichen
Thursday, 27 January 2011 11:43
KUALA LUMPUR: Talk of privatisation of Latexx Partners Bhd has surfaced amid the continuous rise in latex price and the weakening US dollar which have hit the once-favoured rubber gloves industry.
The counter has been actively traded recently, with an average daily transacted volume of some 1.3 million shares for the past 10 days, according to Bloomberg data.
Latexx closed 2.27% or six sen lower to RM2.58 yesterday with a total of 3.1 million shares traded. Its shares hit a 52-week high of RM4.25 on April 7, 2010 while its 52-week low was RM2.37 on Sept 24, 2010
A company official said she had no clue on the matter when contacted by The Edge Financial Daily, but said the rumour of possible privatisation had been going around for some time.
Latexx’s executive chairman and CEO Low Bok Tek was not available to comment at press time.
According to Bloomberg data, BT Capital Sdn Bhd is the major shareholder of Latexx with 49.57 million shares or a 22.55% stake, followed by Low with 15.47 million shares (7.04%) and Lembaga Tabung Haji with 11.68 million shares (5.32%).
Given that Low is a shareholder of BT Capital, his direct and deemed interest in Latexx amount to 29.59% stake.
Rubber glove manufacturers took a hit recently from the continuous rise in latex prices and a depreciating US dollar. But analysts said this was not the first time glove manufacturers were facing this situation.
According to an analyst, glove makers have shown they are able to pass on the cost of higher latex prices and weaker greenback to end-consumers, though at one to two months’ lag.
Despite the headwinds, rubber glove makers were still positive on the back of robust demand from traditional healthcare usage and new segments such as the food and services industry.
“The demand growth for gloves has remained healthy although the concern for H1N1 has faded,” Latexx said in notes accompanying its financial statements to Bursa Malaysia on Nov 10. “Upon normalising, the demand for gloves still grows at 10% to 12% annually, which indicates a remarkable upside for any industry.”
Latexx’s present undemanding valuation could be fuelling privatisation speculation and generating interest on the stock.
According to Bloomberg data, the counter is trading at a forward price-to-earnings ratio (PER) of 7.27 times, lower than prevailing average valuations for the rubber sector.
Its bigger peers such as Hartalega Holdings Bhd is trading at a forward PER of 10.91 times, Top Glove Bhd at 14.62 times, Kossan Rubber Industries Bhd at 8.63 times and Supermax Corp Bhd at 8.53 times.
Other peers such as Rubberex Corp (M) Bhd is trading at a historical PER of 11.11 times and Integrated Rubber Corp Bhd at 24.59 times. Latexx trades at a historical PER of 6.8 times.
With net asset per share of RM1.07 as at Sept 30, Latexx trades at a price-to-book ratio of 2.41 times.
For the nine months ended Sept 30, Latexx’s revenue totalled RM390.53 million, up 73.11% from the previous corresponding period while net profit totalled RM59.89 million, a jump of 71.95% from RM34.83 million previously.
Latexx is relatively cash rich; it had a net cash of RM17.29 million as at Sept 30, with RM18.54 million in long-term borrowings, RM18.78 million in short-term borrowings and RM54.61 million cash.
Analysts are bullish on Latexx despite the continuous increase in average latex price and the weakening US dollar. All four analysts who released reports on its most recent results had a “buy” recommendation on the stock.
The consensus target price on the stock is RM3.49, according to Bloomberg data. This is 35% or 91 sen higher than yesterday’s closing price of RM2.58, which gave the company a market capitalisation of RM567.1 million.
For one, MIMB Investment Bank said it was still positive on the stock as it was expected to focus on operational efficiencies and cost control to boost earnings going forward.
“Notwithstanding the headwinds in the industry, Latexx is expected to continue with its expansion plans,” the research house said in a note to clients on Nov 11, 2010.
According to Latexx in notes accompanying its financial statements to Bursa, the construction of an additional production plant adjacent to existing production facilities has been completed.
Nine double formers and two single formers glove production lines were commissioned and had since started operations, said the company. The expansion was expected to raise its annual production capacity from seven billion pieces to nine billion pieces by 2011, it added.
This article appeared in The Edge Financial Daily, January 27, 2011.
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