KAREX (5247) : RHB Research maintains Buy on Karex
KUALA LUMPUR: RHB Research has maintained its Buy call on Karex with a target price of RM3.43, pegged to a 20 times FY15F P/E.
"Our target P/Eof 20 times is at a slight discount to Hartalega Holdings’ target P/E of 21 times, which is justifiable for its high expected growth rate," it said in a note on Monday.
It said that Karex’s 1QFY15 net profit of RM12.8mil came in within expectations as it believed 2H would be stronger, backed by additional new capacity at its Hat Yai plant.
"For the quarter under review, the revenue increase was mainly driven by higher sales volume whereas the increase in pre-tax profit was attributed to sales of higher-margin products, favourable currency exchange rates and low raw material costs," it said.
RHB noted that completion of Karex's plant in Pontian, Johor may be delayed due to the re-design of certain parts of the plant to accommodate the new polyisoprene dipping lines and its own high dipping lines.
Meanwhile, its Hat Yai plant has begun to expand with additional capacity of one billion pieces and is scheduled to commence operation by 4QFY15.
The company targets to achieve annual capacity of five billion pieces by end-FY15, six billion in FY16 and seven billion in FY17.
"Karex is also venturing into new products and markets to stimulate its growth – it plans to launch new polyisoprenecondoms by early next year and set up a new base in Europe within the next three months to expand its market," it noted.
http://www.thestar.com.my
KUALA LUMPUR: RHB Research has maintained its Buy call on Karex with a target price of RM3.43, pegged to a 20 times FY15F P/E.
"Our target P/Eof 20 times is at a slight discount to Hartalega Holdings’ target P/E of 21 times, which is justifiable for its high expected growth rate," it said in a note on Monday.
It said that Karex’s 1QFY15 net profit of RM12.8mil came in within expectations as it believed 2H would be stronger, backed by additional new capacity at its Hat Yai plant.
"For the quarter under review, the revenue increase was mainly driven by higher sales volume whereas the increase in pre-tax profit was attributed to sales of higher-margin products, favourable currency exchange rates and low raw material costs," it said.
RHB noted that completion of Karex's plant in Pontian, Johor may be delayed due to the re-design of certain parts of the plant to accommodate the new polyisoprene dipping lines and its own high dipping lines.
Meanwhile, its Hat Yai plant has begun to expand with additional capacity of one billion pieces and is scheduled to commence operation by 4QFY15.
The company targets to achieve annual capacity of five billion pieces by end-FY15, six billion in FY16 and seven billion in FY17.
"Karex is also venturing into new products and markets to stimulate its growth – it plans to launch new polyisoprenecondoms by early next year and set up a new base in Europe within the next three months to expand its market," it noted.
http://www.thestar.com.my
