Analysis of the Glove Sector.
https://spreadsheets.google.com/pub?key=0AuRRzs61sKqRdDM1ZFNXQ2ZPRHBYcFJjd1lDNFVYdFE&hl=en&output=html
The top 6 glove companies are priced at RM 8.7 billion in market capitalization. They generated a total of about RM 766 million in earnings the last 12 months.
Showing posts with label Glove. Show all posts
Showing posts with label Glove. Show all posts
Tuesday 5 October 2010
Saturday 2 October 2010
Glove makers advance after CIMB Research maintains overweight on sector
Glove makers advance after CIMB Research maintains overweight on sector
Written by Surin Murugiah
Friday, 01 October 2010 15:29
KUALA LUMPUR: Rubber glove makers on Bursa Malaysia advanced in the afternoon session on Friday, Oct 1 after CIMB Research maintained its overweight on the sector and said that despite considerable headwinds encountered by the sector this year, demand for rubber gloves continued to grow at a healthy clip.
http://www.theedgemalaysia.com/business-news/174572-glove-makers-advance-after-cimb-research-maintains-overweight-on-sector-.html
Written by Surin Murugiah
Friday, 01 October 2010 15:29
KUALA LUMPUR: Rubber glove makers on Bursa Malaysia advanced in the afternoon session on Friday, Oct 1 after CIMB Research maintained its overweight on the sector and said that despite considerable headwinds encountered by the sector this year, demand for rubber gloves continued to grow at a healthy clip.
At 3.15pm, Supermax was up 15 sen to RM3.94, Hartalega gained 14 sen to RM4.84, Latexx rose 13 sen to RM2.57, Top Glove, Kossan and Adventa gained 10 sen each to RM5.23, RM3.07 and RM2.50, respectively, while Rubberex added three sen to 87 sen.
CIMB Research in a report on Friday said with continued technological advancement of glove products and facilities, Malaysian rubber glove manufacturers would maintain its leadership in the global market.
In light of the positive long term prospects of the industry, the research house maintained its overweight call. All the glove stocks under its coverage remain as Outperforms, said CIMB Research.
“Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.
“The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8 times. Supermax and Latexx remain our top picks,” it said.
In light of the positive long term prospects of the industry, the research house maintained its overweight call. All the glove stocks under its coverage remain as Outperforms, said CIMB Research.
“Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.
“The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8 times. Supermax and Latexx remain our top picks,” it said.
http://www.theedgemalaysia.com/business-news/174572-glove-makers-advance-after-cimb-research-maintains-overweight-on-sector-.html
Monday 30 August 2010
Glovemakers slide further on more negative developments
Glovemakers slide further on more negative developments
Written by Loong Tse Min
Thursday, 26 August 2010 15:29
KUALA LUMPUR: Malaysian-listed latex glovemakers’ shares continued to slide yesterday as investors’ concerns on the industry’s prospects appear to intensify this week.
Most glovemakers have been falling so far this week with the world’s second-largest latex glovemaker Supermax Corp Bhd losing about 8% over three trading days to end at RM5.07 yesterday.
Over the last three trading days, Hartalega Holdings Bhd lost 31 sen or 3.9% to close at RM7.63 yesterday, Kossan Rubber Industries Bhd fell 23 sen or 6.35% to RM3.39, Latexx Partners Bhd was down 26 sen or 7.71% to RM3.11, Adventa Bhd shed eight sen or 3.03% to RM2.56 and Rubberex Corp (M) Bhd was down 5.5 sen or 5.73% to 90.5 sen.
The world’s largest latex glovemaker Top Glove Corp Bhd put on 11 sen or 1.8% to RM6.16 over Monday and Tuesday but fell 10 sen or 1.62% to RM6.06 yesterday.
The latest developments that seem to support these concerns include the ringgit’s further strengthening, more signs of a slowing US economy and continued high rubber prices.
Following Bank Negara Malaysia’s foreign exchange liberalisation moves, the ringgit reached it highest levels in 13 years at RM3.1320 on Monday. In the US, the deluge of bad economic data continued. On Monday, investors were spooked by data showing that existing home sales for July plunged a record 27%.
Meanwhile, rubber prices continue to hold firm, despite the recent fall in the price of palm oil and other commodities. Standard Malaysian Rubber general purpose FOB current month was priced at RM9.84 per kg yesterday, the highest since May 5.
Among glovemakers, Supermax fell the most yesterday, down 16 sen or 3.06% to RM5.07, as CIMB Research warned yesterday that the company may report a quarter-on-quarter (q-o-q) earnings contraction for its second fiscal quarter. The company is expected to release its results today.
This article appeared in The Edge Financial Daily, August 26 2010.
Written by Loong Tse Min
Thursday, 26 August 2010 15:29
KUALA LUMPUR: Malaysian-listed latex glovemakers’ shares continued to slide yesterday as investors’ concerns on the industry’s prospects appear to intensify this week.
Most glovemakers have been falling so far this week with the world’s second-largest latex glovemaker Supermax Corp Bhd losing about 8% over three trading days to end at RM5.07 yesterday.
Over the last three trading days, Hartalega Holdings Bhd lost 31 sen or 3.9% to close at RM7.63 yesterday, Kossan Rubber Industries Bhd fell 23 sen or 6.35% to RM3.39, Latexx Partners Bhd was down 26 sen or 7.71% to RM3.11, Adventa Bhd shed eight sen or 3.03% to RM2.56 and Rubberex Corp (M) Bhd was down 5.5 sen or 5.73% to 90.5 sen.
The world’s largest latex glovemaker Top Glove Corp Bhd put on 11 sen or 1.8% to RM6.16 over Monday and Tuesday but fell 10 sen or 1.62% to RM6.06 yesterday.
The long list of concerns over the industry was raised about a month ago, which was also highlighted by The Edge Financial Daily.
These include potential overcapacity, record-high latex prices, the appreciation of the ringgit, a potential cut in Malaysian gas subsidies and possibly slower demand ahead due to the economic slowdown and easing H1N1 influenza fears.
The latest developments that seem to support these concerns include the ringgit’s further strengthening, more signs of a slowing US economy and continued high rubber prices.
Following Bank Negara Malaysia’s foreign exchange liberalisation moves, the ringgit reached it highest levels in 13 years at RM3.1320 on Monday. In the US, the deluge of bad economic data continued. On Monday, investors were spooked by data showing that existing home sales for July plunged a record 27%.
Meanwhile, rubber prices continue to hold firm, despite the recent fall in the price of palm oil and other commodities. Standard Malaysian Rubber general purpose FOB current month was priced at RM9.84 per kg yesterday, the highest since May 5.
Among glovemakers, Supermax fell the most yesterday, down 16 sen or 3.06% to RM5.07, as CIMB Research warned yesterday that the company may report a quarter-on-quarter (q-o-q) earnings contraction for its second fiscal quarter. The company is expected to release its results today.
However CIMB Research, which has a buy call on Supermax, defended the stock saying, “We are not worried about the potential q-o-q earnings contraction as this is not the first time glove manufacturers are facing this situation. From our checks, demand for rubber gloves remains healthy and Supermax continues to operate at almost 90% utilisation, supporting our view of sufficient pricing power that will allow glovemakers to pass on any cost increases.”
At the same time, some institutional buyers appear to be nibbling in glovemaker stocks at their current low prices.
This article appeared in The Edge Financial Daily, August 26 2010.
Sunday 29 August 2010
Supermax 2Q earnings jump 77.9% to RM45.8m
Supermax 2Q earnings jump 77.9% to RM45.8m
Written by Joseph Chin
Thursday, 26 August 2010 13:36
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KUALA LUMPUR: Supermax Corp Bhd posted RM45.85 million in earnings in the second quarter ended June 30, up 77.9% from RM25.78 million a year ago, underpinned by strong revenue growth, cost savings and productivity.
The glove maker said on Thursday, Aug 26 group revenue rose by 24.6% or RM46.34 million to RM234.82 million from RM188.48 million a year ago, on the back of strong global demand for rubber gloves as well as higher selling prices.
“However, despite a challenging operating environment, the group did well to record profitability growth over the corresponding quarter a year ago,” it said.
Supermax said profit before tax and profit after tax rose by 55.8% (RM17.5 million) and 77.9% (RM20.1 million) respectively. The improvement in profitability is attributed to the revenue growth as well as cost savings from higher efficiency and productivity from improved processes and refurbished lines.
It declared dividend of 2.5 sen a share.
http://www.theedgemalaysia.com/business-news/172547-supermax-2q-earnings-jump-779-to-rm458m.html
Written by Joseph Chin
Thursday, 26 August 2010 13:36
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KUALA LUMPUR: Supermax Corp Bhd posted RM45.85 million in earnings in the second quarter ended June 30, up 77.9% from RM25.78 million a year ago, underpinned by strong revenue growth, cost savings and productivity.
The glove maker said on Thursday, Aug 26 group revenue rose by 24.6% or RM46.34 million to RM234.82 million from RM188.48 million a year ago, on the back of strong global demand for rubber gloves as well as higher selling prices.
“However, despite a challenging operating environment, the group did well to record profitability growth over the corresponding quarter a year ago,” it said.
Supermax said profit before tax and profit after tax rose by 55.8% (RM17.5 million) and 77.9% (RM20.1 million) respectively. The improvement in profitability is attributed to the revenue growth as well as cost savings from higher efficiency and productivity from improved processes and refurbished lines.
It declared dividend of 2.5 sen a share.
http://www.theedgemalaysia.com/business-news/172547-supermax-2q-earnings-jump-779-to-rm458m.html
Wednesday 23 June 2010
Demand of rubber gloves still ahead of supply
Demand of rubber gloves still ahead of supply
Tags: Brokers Call | Datuk Seri Stanley Thai | Kossan | Latex price | OSK Investment Research | Rubber glove manufacturers | rubber gloves | Supermax Corporation Bhd | Top Glove
Written by Financial Daily
Wednesday, 23 June 2010 10:19
Rubber gloves
Maintain overweight: Recently, we invited Supermax Corporation Bhd executive chairman and group managing director Datuk Seri Stanley Thai to give fund managers an update on the rubber glove industry. We gather that demand is still strong as most of the rubber glove manufacturers have sold forward up to September 2010 in spite of the current high selling prices of gloves reflecting a rise in latex price. Although margins will dip as glove makers only pass on the cost increase to their customers, most importantly the absolute net profit figures will be maintained and therefore EPS and fair values are intact. We remain overweight on the sector, with our top picks being Top Glove (Buy, TP: RM15.15), Supermax (Buy, TP: RM9.11) and Kossan (Buy, TP: RM11.30).
The global annual consumption of medical examination and surgical gloves is expected to reach about 155 billion pieces by 2011 from 135 billion pieces in 2009, boosted by growing healthcare awareness after the H1N1 pandemic and healthcare reforms in many countries and the recent passing of reforms in US as standards of living improve. Of the total world exports, Malaysia supplies 63% of global demand. Also, about 54% of the global market is shared among the top six rubber glove companies listed in Malaysia.
Medical grade gloves make up about 85% of Malaysia’s total glove exports. The product mix between natural rubber and nitrile gloves is in the ratio of 74:26 while that for powder-free and powdered gloves is 67:33. More than 70% of these gloves are sold to developed countries, and there is huge potential demand from developing countries like China and India in the coming years.
Latex price has remained at a high of about RM7 per kg. The US dollar is still struggling to regain lost ground against the ringgit. Although rubber glove manufacturers can pass on most of the costs associated with these negative factors to their customers, they may experience a time lag in adjusting prices, especially in supplying to non-healthcare MNCs. Nevertheless, as supply still lags demand since most of gloves are sold forward up to September 2010, we believe these two factors would not pose a major threat to the rubber glove industry.
We remain positive owing to: 1) continuously strong demand from the medical and hygiene markets; 2) increasing awareness of health and cleanliness following the H1N1 pandemic; 3) the possibility of governments in developing countries making compulsory the use of gloves for the medical sector; 4) a recovery in the global economy and living standards rise; and 5) local rubber glove manufacturers again embarking on capacity expansion to boost revenues and profits. — OSK Investment Research, June 22
This article appeared in The Edge Financial Daily, June 23, 2010.
Tags: Brokers Call | Datuk Seri Stanley Thai | Kossan | Latex price | OSK Investment Research | Rubber glove manufacturers | rubber gloves | Supermax Corporation Bhd | Top Glove
Written by Financial Daily
Wednesday, 23 June 2010 10:19
Rubber gloves
Maintain overweight: Recently, we invited Supermax Corporation Bhd executive chairman and group managing director Datuk Seri Stanley Thai to give fund managers an update on the rubber glove industry. We gather that demand is still strong as most of the rubber glove manufacturers have sold forward up to September 2010 in spite of the current high selling prices of gloves reflecting a rise in latex price. Although margins will dip as glove makers only pass on the cost increase to their customers, most importantly the absolute net profit figures will be maintained and therefore EPS and fair values are intact. We remain overweight on the sector, with our top picks being Top Glove (Buy, TP: RM15.15), Supermax (Buy, TP: RM9.11) and Kossan (Buy, TP: RM11.30).
The global annual consumption of medical examination and surgical gloves is expected to reach about 155 billion pieces by 2011 from 135 billion pieces in 2009, boosted by growing healthcare awareness after the H1N1 pandemic and healthcare reforms in many countries and the recent passing of reforms in US as standards of living improve. Of the total world exports, Malaysia supplies 63% of global demand. Also, about 54% of the global market is shared among the top six rubber glove companies listed in Malaysia.
Medical grade gloves make up about 85% of Malaysia’s total glove exports. The product mix between natural rubber and nitrile gloves is in the ratio of 74:26 while that for powder-free and powdered gloves is 67:33. More than 70% of these gloves are sold to developed countries, and there is huge potential demand from developing countries like China and India in the coming years.
Latex price has remained at a high of about RM7 per kg. The US dollar is still struggling to regain lost ground against the ringgit. Although rubber glove manufacturers can pass on most of the costs associated with these negative factors to their customers, they may experience a time lag in adjusting prices, especially in supplying to non-healthcare MNCs. Nevertheless, as supply still lags demand since most of gloves are sold forward up to September 2010, we believe these two factors would not pose a major threat to the rubber glove industry.
We remain positive owing to: 1) continuously strong demand from the medical and hygiene markets; 2) increasing awareness of health and cleanliness following the H1N1 pandemic; 3) the possibility of governments in developing countries making compulsory the use of gloves for the medical sector; 4) a recovery in the global economy and living standards rise; and 5) local rubber glove manufacturers again embarking on capacity expansion to boost revenues and profits. — OSK Investment Research, June 22
This article appeared in The Edge Financial Daily, June 23, 2010.
Tuesday 11 May 2010
OSK Research raises Hartalega target price to RM9.89
OSK Research raises Hartalega target price to RM9.89
Written by OSK Investment Research
Tuesday, 11 May 2010 08:51
KUALA LUMPUR: OSK Investment Research has maintained its buy call on Hartalega Holdings at RM7.79 with a higher target price of RM9.89 (from RM8.92), and said the company's 4QFY10 results scheduled to be announced Tuesday, May 11 would be in line with its own and consensus expectations.
"We see a better quarter-on-quarter performance, mainly contributed by 1) its timeliness in passing on the cost of higher latex price; 2) higher sales as a result of bigger production capacity, and 3) growing demand for nitrile gloves as the price difference with natural rubber gloves narrows due to the increase in natural rubber price.
"There is also the possibility of a bonus issue, following in the steps taken by its peers," it said in a note on Tuesday.
Written by OSK Investment Research
Tuesday, 11 May 2010 08:51
KUALA LUMPUR: OSK Investment Research has maintained its buy call on Hartalega Holdings at RM7.79 with a higher target price of RM9.89 (from RM8.92), and said the company's 4QFY10 results scheduled to be announced Tuesday, May 11 would be in line with its own and consensus expectations.
"We see a better quarter-on-quarter performance, mainly contributed by 1) its timeliness in passing on the cost of higher latex price; 2) higher sales as a result of bigger production capacity, and 3) growing demand for nitrile gloves as the price difference with natural rubber gloves narrows due to the increase in natural rubber price.
"There is also the possibility of a bonus issue, following in the steps taken by its peers," it said in a note on Tuesday.
Sunday 9 May 2010
Technology to fatten Latexx profit margin
By Lynn Omar and Ooi Tee Ching
Published: 2010/05/08
Business Times
LATEXX Partners Bhd (7064) is set to see fatter profit margin next year, after securing a technology to make natural rubber gloves for medical practitioners with hypersensitive skin.
These gloves will be priced more than an ordinary pair of gloves but Latexx declined to say by how much.
Latexx's net profit margin stood at 16 per cent for 2009, which is better than its bigger rival Top Glove Corp Bhd which is below 14 per cent now.
Hartalega Holdings Bhd has the best margin at 24 per cent.
In the last decade, glovemakers produced more synthetic gloves after a small number of the developed world's doctors and nurses complained of their allergy to natural rubber and deemed it unsafe.
Basically, their skin is hypersensitive to the protein residue in natural rubber gloves.
Famous hospitals like the Johns Hopkins Hospital and Shriner's Hospital in the US went to such extent of viewing such allergic reaction as serious threats that they banned natural rubber medical devices and switched to synthetic gloves and catheters.
But the fact remains that natural rubber gloves are more comfortable to wear and far more elastic.
With this MPXX(TM) technology from Budev BV that "washes off' protein content in natural rubber", Latexx chief executive officer (CEO) Low Bok Tek anticipates some hospitals and dental clinics in North America and Europe to switch back to natural rubber gloves.
"When our clients see the MPXX technology logo, they'll know they are using virtually protein-free natural rubber gloves," said Low.
He was speaking to reporters after a briefing for analysts in Kuala Lumpur yesterday. Also present were Latexx head of corporate services Dr Liew Lai Lai and Budev CEO Michiel Paping.
"We recently imported the sample machine here to wash off the protein residue from the natural rubber gloves. Our initial estimate is to 'wash' 500 million pieces a year," said Paping.
Latexx is also hopeful of dishing out more dividends to shareholders this year on prospects of robust glove sales. The group declared dividends of 2.5 sen a share for the first quarter of this year.
Read more: Technology to fatten Latexx profit margin http://www.btimes.com.my/Current_News/BTIMES/articles/laytexx-2/Article/index_html#ixzz0nPEv7b4O
Published: 2010/05/08
Business Times
These gloves will be priced more than an ordinary pair of gloves but Latexx declined to say by how much.
Latexx's net profit margin stood at 16 per cent for 2009, which is better than its bigger rival Top Glove Corp Bhd which is below 14 per cent now.
Hartalega Holdings Bhd has the best margin at 24 per cent.
In the last decade, glovemakers produced more synthetic gloves after a small number of the developed world's doctors and nurses complained of their allergy to natural rubber and deemed it unsafe.
Basically, their skin is hypersensitive to the protein residue in natural rubber gloves.
Famous hospitals like the Johns Hopkins Hospital and Shriner's Hospital in the US went to such extent of viewing such allergic reaction as serious threats that they banned natural rubber medical devices and switched to synthetic gloves and catheters.
But the fact remains that natural rubber gloves are more comfortable to wear and far more elastic.
With this MPXX(TM) technology from Budev BV that "washes off' protein content in natural rubber", Latexx chief executive officer (CEO) Low Bok Tek anticipates some hospitals and dental clinics in North America and Europe to switch back to natural rubber gloves.
"When our clients see the MPXX technology logo, they'll know they are using virtually protein-free natural rubber gloves," said Low.
He was speaking to reporters after a briefing for analysts in Kuala Lumpur yesterday. Also present were Latexx head of corporate services Dr Liew Lai Lai and Budev CEO Michiel Paping.
"We recently imported the sample machine here to wash off the protein residue from the natural rubber gloves. Our initial estimate is to 'wash' 500 million pieces a year," said Paping.
Latexx is also hopeful of dishing out more dividends to shareholders this year on prospects of robust glove sales. The group declared dividends of 2.5 sen a share for the first quarter of this year.
Read more: Technology to fatten Latexx profit margin http://www.btimes.com.my/Current_News/BTIMES/articles/laytexx-2/Article/index_html#ixzz0nPEv7b4O
Comparative analysis of Glove companies (9.5.2010)
Comparative analysis of Glove companies (9.5.2010)
http://spreadsheets.google.com/pub?key=thG2gqUrXjSrcpL3LAlPbRg&output=html
The whole sector has been re-priced since last year. The average PE for the sector is around 15.
Topglove trades at a slight premium. It is debt free and has net cash. It should continue to generate a lot of free cash flows in years to come.
Hartalega has done extremely well. It enjoys the biggest profit margin amongst the glove companies. This is due to its use of automation to increase productivity. It has overtaken the other more established companies and ranks 3rd in the earnings table.
Latexx has made a remarkable turnaround. It has good earnings and should continue to grow. Due to its smaller size, its growth is anticipated to be the fastest amongst all the glove companies.
Supermax is the most indebted of all the glove companies. Given the better glove business environment, perhaps, its management may surprise the investors in the next year or two. Meantime, its not as attractive as the above three companies in term of fundamentals.
Kossan has been disappointing. Kossan continues to carry a lot of debt despite having been a long player in the market when many other players have benefited from the strong revenue and margin growths to pare down their borrowings. Its profit margin is below the average of the industry.
Adventa gets good press. However, when comparing its fundamentals with its peers, it is not such an attractive stock. Its dividend payout is the highest in the industry compared to the industry average of nearer 20%. Moreover, its PE is the highest among the glove companies, but this does not appear to reflect its growth potential.
Rubberex is a disappointment and stood up quite apart from the fast moving players in this industry.
There are also significant risks in this industry, best summarised here:
Solid earnings growth as supplanted by
Key risks include
http://spreadsheets.google.com/pub?key=thG2gqUrXjSrcpL3LAlPbRg&output=html
The whole sector has been re-priced since last year. The average PE for the sector is around 15.
Topglove trades at a slight premium. It is debt free and has net cash. It should continue to generate a lot of free cash flows in years to come.
Hartalega has done extremely well. It enjoys the biggest profit margin amongst the glove companies. This is due to its use of automation to increase productivity. It has overtaken the other more established companies and ranks 3rd in the earnings table.
Latexx has made a remarkable turnaround. It has good earnings and should continue to grow. Due to its smaller size, its growth is anticipated to be the fastest amongst all the glove companies.
Supermax is the most indebted of all the glove companies. Given the better glove business environment, perhaps, its management may surprise the investors in the next year or two. Meantime, its not as attractive as the above three companies in term of fundamentals.
Kossan has been disappointing. Kossan continues to carry a lot of debt despite having been a long player in the market when many other players have benefited from the strong revenue and margin growths to pare down their borrowings. Its profit margin is below the average of the industry.
Adventa gets good press. However, when comparing its fundamentals with its peers, it is not such an attractive stock. Its dividend payout is the highest in the industry compared to the industry average of nearer 20%. Moreover, its PE is the highest among the glove companies, but this does not appear to reflect its growth potential.
Rubberex is a disappointment and stood up quite apart from the fast moving players in this industry.
There are also significant risks in this industry, best summarised here:
Solid earnings growth as supplanted by
- capacity expansion, and
- positive newsflow
Key risks include
- a sudden surge in latex price,
- energy input costs or
- an unfavourable ringgit/US$ foregin exchange rate movement.
Tuesday 27 April 2010
Prices of these counters have tripled or quadrupled over the last 1 year or so.
Let us look at the prices of glove companies. Prices of these counters have tripled or quadrupled over the last 1 year or so. These prices can be understood by looking at the components driving them:
Price = PE x Earnings
Price of stock (++++) = PE (+) x Earnings (+++)
Price of stock (++++) = PE (+) x Sales (+) x Profit margin (++)
Envisage what will happen to the price of the stock should profit margins be halved. This is not impossible, especially when the present build-up in capacity reached the stage where the gap between supply and demand is abolished.
Those holding glove stocks may wish to enjoy the ride for the moment.
Comparative Analysis of Glove Companies
Comparative Analysis of Glove Companies
http://spreadsheets.google.com/pub?key=tiEBLAmYR0EJiE7ccJcc8bw&output=html
http://spreadsheets.google.com/pub?key=tiEBLAmYR0EJiE7ccJcc8bw&output=html
Wednesday 14 April 2010
Malaysian Glovemakers Fall on Higher Rubber, Ringgit
Bloomberg
By Barry Porter
April 13 (Bloomberg) -- Malaysian glovemakers led by Top Glove Corp. declined in Kuala Lumpur trading on the prospect a surge in rubber prices and a higher ringgit will increase costs and lower the value of overseas earnings, damping earnings.
Top Glove fell 4.4 percent to 12.90 ringgit at the close, its biggest retreat in almost a year. About 21 percent of the company’s revenues in the year to Aug. 31 were made outside Malaysia. Supermax Corp., which makes the majority of its sales in America, slid 3.6 percent to 6.64 ringgit.
Rubber futures reached a 20-month high in Tokyo trading yesterday, increasing the cost of latex used in medical and other protective gloves, while the ringgit touched a 23-month high against the dollar. A higher local currency reduces the value of overseas sales when converted back into ringgit.
“With higher latex costs, a weaker ringgit against the U.S. dollar and potential pricier energy costs, we see growing concern for earlier-than-expected margin compression,” AmResearch said in a report on April 9. Investors are concerned that glove-makers won’t be able to pass on all the increased costs to their customers, it said.
AmResearch downgraded the sector to “underweight” on April 9. Top Glove was cut to “hold” with a lower fair value of 12.50 ringgit. Kossan Rubber Industries Bhd. was reduced to “hold” with its fair value trimmed to 7.65 ringgit. The stock lost 4.4 percent to 7.56 ringgit today.
Demand Boost
Glovemakers have outpaced the broader market in the past 12 months as global health scares bolstered medical glove demand. Top Glove has jumped 141 percent in the period as first-quarter and second-quarter earnings almost doubled from a year earlier. Kossan rallied 136 percent and Supermax gained 498 percent.
Global demand rose by 10 billion units last year, while Malaysia manufacturers increased output by less than 5 billion pieces, according to Jason Yap, an analyst with OSK Research Sdn.
“Demand is still strong compared to supply,” Yap said in a telephone interview today. “Maybe by the end of this year it will reach equilibrium when additional capacity comes on stream.”
Yap, who believes today’s drops are “short-term retracements”, retains “buy” ratings on Malaysia’s largest glove makers, with a 15.15 ringgit share target for Top Glove, 11.30 ringgit for Kossan and 10.00 ringgit for Supermax.
--Editors: Richard Frost, Reinie Booysen
To contact the reporter on this story: Barry Porter at bporter10@bloomberg.net
To contact the editor responsible for this story: Linus Chua at lchua@bloomberg.net
Comparative Qualitative Analysis of Glove Companies
The ratings consist of three letters and a number. Each letter reflects a composite qualitative measurement of numerous individual standards which may be summarized as follows:
A = Outstanding; B = Excellent; C = Good; D = Fair; L = Limited; N = Not Rated.
The number component of the Quality Rating is also a composite measurement of the annual corporate growth, based on earnings and modified by growth rates of equity, dividends, and sales per common share. The Growth rating may vary from 0 (lowest) to 20 (highest). (See sample Quality Rating above.)
Wright Quality Rating: DBD0 Rating Explanations
Wright Quality Rating: CANN Rating Explanations
Wright Quality Rating: LDNN Rating Explanations
Wright Quality Rating: DBC8 Rating Explanations
Wright Quality Rating: DBA2 Rating Explanations
Wright Quality Rating: LBD1
Wright Quality Rating: DBB2 Rating Explanations
Wright Quality Rating: CAA2 Rating Explanations
Monday 5 April 2010
A quick look at Latexx
A quick look at Latexx
http://spreadsheets.google.com/pub?key=tCBaT5VvGDp2xCY3zXOPcLQ&output=html
Read an analyst who mentioned that this company may target an earning of RM 100 million in a year's time. How probable is this? Your speculative guess is as good as mine. ;-)
Friday 2 April 2010
Brokers still bullish on gloves
Glove manufacturers: Buy
Nomura Securities Malaysia says the recently passed healthcare reform bill in the US will boost sentiment on the shares of glove makers like Kossan Rubber (7153) , Supermax and Top Glove. It has a "buy" call on all three stocks.
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The historic development in the US last Sunday will have a widespread impact and the immediate-term effects will all lead to an increased demand for healthcare from now on, the stockbroker said.
Nomura sees glove makers as only standing to benefit at the moment from these healthcare developments, given that gloves are relatively price-inelastic necessities.
"Besides the positive sentiment generated by the passing of the reform bill, we see all the companies as key long-term beneficiaries given their US sales exposure, with Kossan and Supermax being more well-placed to capitalise on demand upticks," the stockbroker said in a report on March 22.
Kossan Rubber makes half of its sales from the US, while Supermax has 42 per cent sales coming from there. Top Glove's US sales from the US is only 26 per cent.
"Given that Supermax pursues OBM model, its distribution arm, Supermax Inc, has existing ties with hospitals, nursing homes and dental clinics. This allows it to more directly tap in to any increased demand coming from those networks."
http://www.btimes.com.my/Current_News/BTIMES/articles/bv25a/Article/
Monday 22 February 2010
Supermax: Future Prospects and Internal target for FY2010
Prospects
The rubber glove industry continues to be on a strong growth path despite the current global financial challenges and global economic uncertainties. In addition to the organic growth of 8-12% annually, global demand has been boosted by the ongoing H1N1 pandemic and growing demand from emerging markets as well as the healthcare and hygiene sectors.
The Group currently operates 8 wholly owned manufacturing plants and has 5 overseas distribution centres. The growing demand which is continuously being tapped by the Group’s wide global network of 750 distributors in over 145 countries and 5 distribution centres augurs well for the Group in terms of business stability and sustainability in the long term. The Group’s investment in overseas distribution since year 2001 has benefited and yielded greater market penetration in selected market territories.
The ongoing refurbishment works as well as the construction of its new Meru plant which encompasses the installation of 16 new lines with added capacity of 2.3 billion pieces of gloves per annum, is also expected to contribute to the Group’s performance going forward.
For the current financial year, the Group has achieved earnings per share of 48.37 sen, which had already surpassed its original internal target of a minimum 27 sen for year 2009 as well as the revised target of 44 sen. In view of this better than projected performance, the Company has now revised the internal target for FY2010 from the initial target of 50 sen earnings per share to 62 sen or RM168 million Profit after Tax for FY2010.
http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/ba387758ae37412b482568a300466fb6/da19a43ca011aaac482576cf003baf58/$FILE/SCB%20Q4%2709%20Bursa%20Anncmnt%20Notes%205pm.pdf
The rubber glove industry continues to be on a strong growth path despite the current global financial challenges and global economic uncertainties. In addition to the organic growth of 8-12% annually, global demand has been boosted by the ongoing H1N1 pandemic and growing demand from emerging markets as well as the healthcare and hygiene sectors.
The Group currently operates 8 wholly owned manufacturing plants and has 5 overseas distribution centres. The growing demand which is continuously being tapped by the Group’s wide global network of 750 distributors in over 145 countries and 5 distribution centres augurs well for the Group in terms of business stability and sustainability in the long term. The Group’s investment in overseas distribution since year 2001 has benefited and yielded greater market penetration in selected market territories.
The ongoing refurbishment works as well as the construction of its new Meru plant which encompasses the installation of 16 new lines with added capacity of 2.3 billion pieces of gloves per annum, is also expected to contribute to the Group’s performance going forward.
For the current financial year, the Group has achieved earnings per share of 48.37 sen, which had already surpassed its original internal target of a minimum 27 sen for year 2009 as well as the revised target of 44 sen. In view of this better than projected performance, the Company has now revised the internal target for FY2010 from the initial target of 50 sen earnings per share to 62 sen or RM168 million Profit after Tax for FY2010.
http://announcements.bursamalaysia.com/EDMS/edmsweb.nsf/ba387758ae37412b482568a300466fb6/da19a43ca011aaac482576cf003baf58/$FILE/SCB%20Q4%2709%20Bursa%20Anncmnt%20Notes%205pm.pdf
Sunday 31 January 2010
Rubber glove companies enjoy pricing power and steadily rising sales
Judging from the capacity expansion by rubber glove companies, it appears that larger glove companies like Top Glove, Supermax and Sempermed (Thailand) have more moderate expansion plans as a percentage of existing capacity, while smaller ones like Latexx and Adventa have more aggressive expansion plans and are likely to show higher earnings growth in 2010.
An oversupply of rubber gloves is unlikely in 2010 but could be a worry in 2011 when more capacity comes onstream. Assuming that the 150 billion-a-year medical glove market grows by 8% a year, an additional capacity of 12 billion gloves will be required per year. Rubber glove companies have been able to pass on higher costs arising from rising latex prices, with Top Glove increasing prices again in January 2010.
Nevertheless, producers of nitrile gloves may now enjoy better margins as the cost advantage that latex gloves enjoy over nitrile gloves may have narrowed as latex prices have risen faster than nitrile prices. Ratings of Malaysian rubber glove companies are still cheaper than those of Ansell, SSL International and the Malaysian market.
The Edge
1.2.2010
By Choong Khuat Hock
Comments:
The whole glove industry is growing. Due to capacity expansion and their smaller sizes, the smaller glove companies are expected to show faster earnings growth than the bigger glove companies.
The industry business is still resilient. Profit margin is either maintained or improving. Glove companies are still able to pass the cost to the customers. How long will this last?
This industry is highly competitive. The business is driven by volume and price. When capacity to supply outstrips demand, those companies with durable competitive advantage are expected to survive. Those low cost producers will be the big winners and leaders. Those companies that automate their production with good quality control will probably be able to lower their costs per unit through increasing productivity. It is possible that those leveraging on low human labour costs now with no or few plans for increasing automation of the manufacturing processes, may eventually lose out to the former in the future both in terms of quality, productivity and costs.
An oversupply of rubber gloves is unlikely in 2010 but could be a worry in 2011 when more capacity comes onstream. Assuming that the 150 billion-a-year medical glove market grows by 8% a year, an additional capacity of 12 billion gloves will be required per year. Rubber glove companies have been able to pass on higher costs arising from rising latex prices, with Top Glove increasing prices again in January 2010.
Nevertheless, producers of nitrile gloves may now enjoy better margins as the cost advantage that latex gloves enjoy over nitrile gloves may have narrowed as latex prices have risen faster than nitrile prices. Ratings of Malaysian rubber glove companies are still cheaper than those of Ansell, SSL International and the Malaysian market.
The Edge
1.2.2010
By Choong Khuat Hock
Comments:
The whole glove industry is growing. Due to capacity expansion and their smaller sizes, the smaller glove companies are expected to show faster earnings growth than the bigger glove companies.
The industry business is still resilient. Profit margin is either maintained or improving. Glove companies are still able to pass the cost to the customers. How long will this last?
This industry is highly competitive. The business is driven by volume and price. When capacity to supply outstrips demand, those companies with durable competitive advantage are expected to survive. Those low cost producers will be the big winners and leaders. Those companies that automate their production with good quality control will probably be able to lower their costs per unit through increasing productivity. It is possible that those leveraging on low human labour costs now with no or few plans for increasing automation of the manufacturing processes, may eventually lose out to the former in the future both in terms of quality, productivity and costs.
Wednesday 27 January 2010
Rubber glove sector downgraded
Rubber glove sector downgraded
Published: 2010/01/27
MIDF Research has downgraded the rubber glove sector to "Neutral" from "Overweight" due to concerns over sustainability of global glove demand growth, expected excess glove production capacity and earnings margin sustainability.
"After the remarkable surge in 2009, the price momentum carried through in 2010 with a 15.9 per cent - 30.3 per cent year-to-date," it said in a research note today.
However, moving forward, MIDF Research said the returns prospect of glove companies are expected to be less promising from the risk-reward perspective.
The research house said the market is expecting global glove demand to hit about 150 billion pieces this year, with a growth rate of eight to 10 per cent annually.
"Although we also anticipate glove demand to continue rising, mainly from developing countries, there is a risk that the growth demand will be lower, considering that the domestic glove production and export values last year were not as high as reflected by consensus estimate of eight to 10 per cent per annum," it said.
For the cumulative 11 months last year, production volume and export value grew by only 2.0 per cent year-on-year and 0.8 per cent year-on-year to 42 billion pieces and RM6.46 billion, respectively.
"In addition to lower volume, the slower growth in export value was also attributable to lower average selling price in tandem with the lower average latex price in 2009," MIDF Research said.
It said there was no guarantee that lower average selling price would lead to higher demand and export volume, adding that the diminishing threat of the H1N1 viral outbreak would be a drag on demand.
MIDF Research said glove makers were expanding their production capacity more aggressively this year with an average increase of 26.6 year-on-year growth.
"An additional capacity of 15 billion pieces of glove is expected to be available by the second half of this year. In 2011, the glove makers planned to expand their capacity by another 16 billion pieces of glove," it said.
MIDF Research said earnings margin should be safeguarded in the first half of this year given the higher plant utilisation rate and better pricing power.
"We believe margin sustainability is highly dependent on the issues of demand sustainability and excess production capacity," it added. - BERNAMA
Published: 2010/01/27
MIDF Research has downgraded the rubber glove sector to "Neutral" from "Overweight" due to concerns over sustainability of global glove demand growth, expected excess glove production capacity and earnings margin sustainability.
"After the remarkable surge in 2009, the price momentum carried through in 2010 with a 15.9 per cent - 30.3 per cent year-to-date," it said in a research note today.
However, moving forward, MIDF Research said the returns prospect of glove companies are expected to be less promising from the risk-reward perspective.
The research house said the market is expecting global glove demand to hit about 150 billion pieces this year, with a growth rate of eight to 10 per cent annually.
"Although we also anticipate glove demand to continue rising, mainly from developing countries, there is a risk that the growth demand will be lower, considering that the domestic glove production and export values last year were not as high as reflected by consensus estimate of eight to 10 per cent per annum," it said.
For the cumulative 11 months last year, production volume and export value grew by only 2.0 per cent year-on-year and 0.8 per cent year-on-year to 42 billion pieces and RM6.46 billion, respectively.
"In addition to lower volume, the slower growth in export value was also attributable to lower average selling price in tandem with the lower average latex price in 2009," MIDF Research said.
It said there was no guarantee that lower average selling price would lead to higher demand and export volume, adding that the diminishing threat of the H1N1 viral outbreak would be a drag on demand.
MIDF Research said glove makers were expanding their production capacity more aggressively this year with an average increase of 26.6 year-on-year growth.
"An additional capacity of 15 billion pieces of glove is expected to be available by the second half of this year. In 2011, the glove makers planned to expand their capacity by another 16 billion pieces of glove," it said.
MIDF Research said earnings margin should be safeguarded in the first half of this year given the higher plant utilisation rate and better pricing power.
"We believe margin sustainability is highly dependent on the issues of demand sustainability and excess production capacity," it added. - BERNAMA
Tuesday 26 January 2010
Maybank Research ups Hartalega’s earnings forecast
Maybank Research ups Hartalega’s earnings forecast
Written by Maybank Investment Research
Tuesday, 26 January 2010 10:00
KUALA LUMPUR: Maybank Investment Research has raised the earnings outlook for Hartalega by between 12% and 19% and lifted the target price to RM8.30.
It said on Tuesday, Jan 26 it expects 3QFY10 results are expected to again beat consensus forecasts. It has a Buy call on RM7.77.
“Strong earnings and margins should extend into FY11 before industry capacity catches up and restocking activities abate, potentially impacting ASP (average selling price) and margins in FY12.
“Nevertheless, we think that Hartalega, with its superior technical abilities, should be able to ride this out by raising operating efficiencies. Maintain Buy. Our new TP is DCF-derived,” it said.
Written by Maybank Investment Research
Tuesday, 26 January 2010 10:00
KUALA LUMPUR: Maybank Investment Research has raised the earnings outlook for Hartalega by between 12% and 19% and lifted the target price to RM8.30.
It said on Tuesday, Jan 26 it expects 3QFY10 results are expected to again beat consensus forecasts. It has a Buy call on RM7.77.
“Strong earnings and margins should extend into FY11 before industry capacity catches up and restocking activities abate, potentially impacting ASP (average selling price) and margins in FY12.
“Nevertheless, we think that Hartalega, with its superior technical abilities, should be able to ride this out by raising operating efficiencies. Maintain Buy. Our new TP is DCF-derived,” it said.
Hartalega gains as target price raised
Hartalega gains as target price raised
Published: 2010/01/26
Hartalega Holdings Bhd, a Malaysian rubber-glove maker, rose to a record after Maybank Investment Bank Bhd increased the share price forecast, saying fiscal third-quarter earnings due on January 28 will exceed consensus forecasts.
The stock gained 1.7 per cent to RM7.90 at 9:38 am local time, set for the highest level since it went public on April 17, 2008.
Maybank raised the target price for the stock to RM8.30 from RM6.50. -- Bloomberg
Published: 2010/01/26
Hartalega Holdings Bhd, a Malaysian rubber-glove maker, rose to a record after Maybank Investment Bank Bhd increased the share price forecast, saying fiscal third-quarter earnings due on January 28 will exceed consensus forecasts.
The stock gained 1.7 per cent to RM7.90 at 9:38 am local time, set for the highest level since it went public on April 17, 2008.
Maybank raised the target price for the stock to RM8.30 from RM6.50. -- Bloomberg
Monday 25 January 2010
Rubberex 4Q net profit up 55% to RM5.61m
Rubberex 4Q net profit up 55% to RM5.61m
Written by Joseph Chin
Friday, 22 January 2010 16:03
KUALA LUMPUR: Rubberex Corp (M) Bhd posted net profit of RM5.61 million for the fourth quarter ended Dec 31, 2009, up 55.5% from the RM3.61 million a year ago due to sales contribution from its China subsidiaries and better profit margins and the company expects China to provide the bulk of the earnings this year.
It said on Friday, Jan 22 revenue rose 16.2% to RM91.72 million from RM78.9 million. Earnings per shares were 6.71 sen compared with 4.56 sen.
For the financial year ended Dec 31, 2009, net profit nearly doubled to RM16.56 million from RM8.63 million a year ago. Revenue was RM325.44 million compared with RM274.51 million.
"Such commendable achievement is mainly contributed by the strong demand of disposable gloves produced by its China operations. The board and management foresee that demand for disposable gloves will show further growth in 2010," it said.
Rubberex said additional production capacity has been installed in China which would increase the output by more than 25% to 5.6 billion pieces annually.
"Even though the industrial gloves segment of our Malaysian operation is showing improvement in orders intake amid encouraging signs of an economic recovery in the US, the management foresees that overall group's earnings growth for this year will continue to be derived mainly from its China operations.
"Barring any unforeseen circumstances, the group’s performance for financial year 2010 will be significantly better than the previous year," it said.
Written by Joseph Chin
Friday, 22 January 2010 16:03
KUALA LUMPUR: Rubberex Corp (M) Bhd posted net profit of RM5.61 million for the fourth quarter ended Dec 31, 2009, up 55.5% from the RM3.61 million a year ago due to sales contribution from its China subsidiaries and better profit margins and the company expects China to provide the bulk of the earnings this year.
It said on Friday, Jan 22 revenue rose 16.2% to RM91.72 million from RM78.9 million. Earnings per shares were 6.71 sen compared with 4.56 sen.
For the financial year ended Dec 31, 2009, net profit nearly doubled to RM16.56 million from RM8.63 million a year ago. Revenue was RM325.44 million compared with RM274.51 million.
"Such commendable achievement is mainly contributed by the strong demand of disposable gloves produced by its China operations. The board and management foresee that demand for disposable gloves will show further growth in 2010," it said.
Rubberex said additional production capacity has been installed in China which would increase the output by more than 25% to 5.6 billion pieces annually.
"Even though the industrial gloves segment of our Malaysian operation is showing improvement in orders intake amid encouraging signs of an economic recovery in the US, the management foresees that overall group's earnings growth for this year will continue to be derived mainly from its China operations.
"Barring any unforeseen circumstances, the group’s performance for financial year 2010 will be significantly better than the previous year," it said.
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