Latexx up 6%, among top gainers

KUALA LUMPUR (April 17) : LATEXX PARTNERS BHD [] shares rose as much as 6%, placing shares of the rubber glove manufacturer among top gainers on Tuesday morning.

The stock added nine sen to RM1.58 before trading lower at RM1.55 at 11.24am.

Latexx said last February that it plans to reward shareholders with a tax-exempt final dividend of 3% a share for financial year ended December 31, 2011.

The company has not announced the entitlement and payment dates for the dividend.



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CIMB Research has technical buy on Latexx Partners at RM1.58

KUALA LUMPUR (March 6): CIMB Equities Research has a technical buy on Latexx Partners at RM1.58 at which it is trading at a FY13 price-to-earnings of 5.6 times and is trading at a price-to-book value of 1.3 times.

It said on Tuesday that the correction from its Nov-11 was sharp. Prices fell to its 61.8% Fibonacci Retracement level before a base was formed.

“Looking at the chart, we think a short term support was found at the RM1.50 level. Indicators are showing signs of improvement. MACD histogram bars are falling at a slower pace, suggesting that selling pressure has tapered off. Meanwhile, RSI has also hooked upward,” it said.

CIMB Research said as long as the RM1.50 level holds steady, any pullback is an opportunity to accumulate. Next resistance levels are RM1.73 and RM1.87. Be quick to cut loss if the RM1.50 level is breached as next support is at RM1.40.



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High oil prices rein in equities markets

KUALA LUMPUR: High oil prices reined in the regional markets and curb investors’ appetite for equities on concerns of the adverse impact on weaker economies, particularly in Europe.

Another nagging concern was whether Germany's parliament would support the Greek bailout.

At the close, the FBM KLCI managed to eke out a 0.27of a point gain to 1,559.04. Turnover was 1.64 billion shares valued at RM1.63 billion. Losers beat gainers 327 to 455, while 341 counters traded unchanged.

Japan's Nikkei 225 fell 0.14% to 9,633.93, Singapore's Straits Index 1.05% lower at 2,946.78, South Korea's Kospi 1.42% to 1,991.16 and Hong Kong's Hang Seng Index 0.88% to 21,217.86.

However, Shanghai’s Composite Index managed to close up 0.30% to 2,447.06 and Taiwan's Taiex 0.28% to 7,959.34.

Reuters reported Brent crude slipped below US$125 on Monday, flagging after five days of gains pushed oil to 10-month highs on worries tension over Iran's disputed nuclear programme could lead to a disruption in Middle East supplies.

Brent has risen 16% this year, after a 13.3 percent gain in 2011, helping weaken recent strong correlations with stock markets.

Meanwhile, the world's 20 leading economies, the G20, piled pressure on Germany at the weekend to drop its opposition to a bigger European bailout fund, telling Europe it must put up extra money if it wanted more help from other countries.

At Bursa Malaysia, penny stocks were among the most active. Naim Indah Corp added one sen to 52.5 sen while Envair also inched up one sen to 30.5 sen.

Harvest Court rose 18 sen to RM1.23 and the warrants 15 sen to 98 sen as speculative interest return to the stock.

Consumer stocks were top gainers, with Dutch Lady up RM1.70 to RM27.5, Carlsberg 25 sen to RM9.70, Panasonic Malaysia and Guinness Anchor, both up by 20 sen to RM21.20 and RM12.94 respectively.

Among the losers were Hong Leong Industries, down 22 sen to RM3.99, Malpac fell 20 sen to RM1.50. Latexx-WA fell 14 sen to RM1.14 and Latexx 13 sen to RM1.55.

However, consumer heavyweight Nestle fell 28 sen to RM54.92,

CIMB Equities Research said earlier on Monday it was maintaining its Underperform call on Nestle at RM55.20 with a target price of RM48.30.

“While we like Nestle’s defensive earnings and huge consumer base, its 27 times FY12 P/E is pricey. We reiterate our Underperform call (DCF-based target price), with the main potential derating catalyst being volatile commodity prices,” it said.



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KL shares close marginally higher

Shares of the following companies had unusual moves in Malaysia trading. Stock symbols are in parentheses and prices are as of the close in Kuala Lumpur. The FTSE Bursa Malaysia KLCI Index rose 0.27 point, or less than 0.1 per cent, to 1,559.04.

DRB-Hicom Bhd, an automotive, construction and property group, dropped 2 per cent to RM2.52, its lowest close since Jan. 26. Third-quarter net income slipped 28 per cent from a year earlier to RM79.6 million, the company said in a stock-exchange filing.

Dutch Lady Milk Industries Bhd, a dairy-products maker, jumped 6.6 per cent to RM27.50, a record close. The company declared a dividend of 50 sen per share and a special dividend of 80 sen after fourth-quarter profit more than doubled to RM28.4 million from RM10.8 million a year earlier, according to an exchange filing.

KLCC Property Holdings Bhd, the owner of Kuala Lumpur’s Petronas Twin Towers, gained 3.7 per cent to RM3.40, its highest close since July 22. Its third-quarter profit jumped to RM518.7 million from RM67.8 million a year earlier, the company said in a statement.

Latexx Partners Bhd, a rubber-glove maker, slid 7.7 per cent to RM1.55, its largest loss since July 25. Its fourth-quarter profit slumped to RM926,000 from RM5.6 million a year earlier, according to an exchange filing.

Oriental Holdings Bhd, a vehicle assembler, advanced 2.8 per cent to RM6.24, its highest close since Feb. 23. The company may be bought out by its single-largest shareholder, the Star newspaper reported, citing a person it didn’t name. Robert Wong and Lim Su Tong, managing directors at Oriental, weren’t immediately available for comments when contacted at their office.

Silk Holdings Bhd gained 2.5 per cent to 40.5 sen, its highest close since Feb. 22. PLUS Expressways Bhd is interested in buying the highway toll concessions of Silk and Lingkaran Trans Kota Holdings Bhd, the Edge newspaper reported, citing people it didn’t name. Lingkaran added 0.8 per cent to RM4.03, its highest close since Dec. 6, 2007.

Silk Executive Chairman Mohammed Azlan Hashim didn’t immediately reply to an e-mail by Bloomberg News seeking comments. Lingkaran Executive Director Yusoff Daud wasn’t in the office when phoned. -- Bloomberg



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Market mixed midday, concerns over high oil price

KUALA LUMPUR (Feb 27): Blue chips were higher at midday on Monday, buoyed by CIMB and Telekom but the broader market was mixed as investors’ sentiment was cautious about the impact of higher oil prices on the global economy.

The FBM KLCI rose 2.66 points to 1,561.43. Turnover was 851.34 million shares valued at RM730.13 million. There were 340 gainers, 330 losers and 310 stocks unchanged.

Brent crude eased slightly but stayed around 10-month highs above US$125 per barrel amid escalating tension over Iran's disputed nuclear programme, according to Reuters. Investors concerns were whether it could break through US$130.

US light crude oil fell 40 cents to US$109.37. Crude palm oil prices for third-month delivery rose RM20 to RM3,296 per tonne. The ringgit weakened against the US dollar to 3.0162.

Key regional markets which fell included Japan’s Nikkei 225, South Korea’s Kospi and Singapore’s Straits Times – three countries which are heavily dependent on imported crude oil.

At Bursa Malaysia, Dutch Lady rose RM1.70 to RM27.50 and Carlsberg 35 sen to RM9.80 while Guinness Anchor added 16 sen to RM9.10. Among PLANTATION []s, Batu Kawan added 24 sen to RM18.80 and Chin Tek 15 sen to RM9.10.

CIMB added eight sen to RM7.14, pushing up the KLCI by 1.41 points, Telekom added seven sen to RM5.15, nudging the KLCI up 0.59 of a point while AMMB’s six sen gain to RM6.09 pushed the index up by 0.42 of a point. RHB Capital rose 22 sen to RM7.88.

Naim Indah Corp was the most active with 99.48 million shares done, It added 3.5 sen to 55 sen. China Stationery rose 10 sen to RM1.20.

MBM Resources was the top loser, down 20 sen to RM4.42 on profit taking and also concerns about earnings per share dilution from its proposed rights issue.

BAT, SOP and MAHB lost 10 sen each to RM52.46, RM6.15 and RM5.70 respectively. Latexx fell 12 sen to RM1.56 and the warrants 10 sen to RM1.18.



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Latexx slides on Q4 earnings slump

Latexx Partners Bhd, a rubber-glove maker, slid 3 per cent to RM1.63, headed for its lowest close since Oct 21.

Its fourth-quarter earnings slumped to RM926,000 from RM5.6 million a year earlier, according to an exchange filing. - Bloomberg



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FBM KLCI slips below 1,520-level at mid-day break

KUALA LUMPUR (Jan 11): The FBM KLCI extended its losses at the mid-day break on Wednesday and fell below the 1,520-point level, weighed by select blue chips.

The FBM KLCI was down 2.20 points to 1,519.79 at the mid-day break.

Gainers edged losers by 344 to 327, while 303 counters traded unchanged. Volume was 1.11 billion shares valued at RM903.12 million.

The ringgit weakened 0.05% to 3.1348 versus the US dollar; crude palm oil futures for the third month delivery fell RM13 per tonne to RM3,196, crude oil shed 45 cents per barrel to US$101.79 while gold added US$4.58 an ounce to US$1,636.93.

At the regional markets, Japan’s Nikkei 225 rose 0.17% to 8,436.41, Hong Hong’s Hang Seng Index up 0.09% to 19,020.85, Taiwan’s Taiex added 0.39% to 7,206.95 and Singapore’s Straits Times Index gained 0.32% to 2,728.66.

The Shanghai Composite Index fell 0.42% to 2,276.15 and South Korea’s Kospi lost 0.19% to 1,849.64.

Among the decliners on Bursa Malaysia, Super Enterprise fell 19 sen to 76 sen, PPB down 12 sen to RM17.08, GAB lost 10 sen to RM12.32, United Malacca, Telekom, Tradewinds and Harvest Court down nine sen each to RM6.70, RM4.82, RM9.58 and RM1.51 respectively, while KLK and Carlsberg lost eight sen each to RM24.76 and RM8.73.

Meanwhile, glove makers were in focus as investors viewed the softening natural rubber prices as positive for the companies.

Furthermore, Supermax Corp Bhd executive chairman Datuk Seri Stanley Thai said the company was expecting to achieve net profit between RM100 million to RM110 million and sales of RM1 billion for FY2011 ended Dec 31.

He said natural rubber price expected to fall to between RM5.50 to RM6 in 1QCY2012 and expected a better FY2012 due to softening natural rubber price and stable forex.

Among glove makers, Supermax rose 37 sen to RM4.30, Kossan 19 sen to RM3.49, Top Glove 17 sen to RM5.23, Hartalega 15 sen to RM6.15, Adventa 13 sen to RM1.72 and Latexx 11 sen to RM2.02.

Takaso was the most actively traded counter with 62.5 million shares done. The stock added 1.5 sen to 26 sen.

Other actives included Mudajaya, Hubline, Supermax and Maybulk.



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KLCI slips at mid-morning, Asian markets mixed

KUALA LUMPUR (Jan 11): The FBM KLCI slipped into negative territory at mid-morning on Wednesday while Asian markets remained mixed, with gains capped by lingering worries over the eurozone debt crisis.

The FBM KLCI shed 0.51 of a point to 1,521.48 at 10.01am.

Gainers edged losers by 258 to 169, while 264 counters traded unchanged. Volume was 502.95 million shares valued at RM292.22 million.

At the regional markets, Japan’s Nikkei 225 was up 0.21% to 8,440.12, Hong Kong’s Hang Seng Index added 0.23% to 19,048.00, Taiwan’s Taiex gained 0.33% to 7,202.25 and Singapore’s Straits Times Index edged up 0.05% to 2,721.31.

Meanwhile, South Korea’s Kospi fell 0.33% to 1,847.08 and the Shanghai Composite Index shed 0.08% to 2,283.99.

BIMB Securities Research in a note Jan 11 said investors were warming up to the developments in the Eurozone.

It said that positive comments from Fitch that it will not downgrade France this year despite placing the region on negative watch list last year had put a different perspective on Europe now.

Consequently, most major European bourses charted positive gains overnight.

The research house said better earnings indication from Alcoa coupled with any absence of negative news saw another positive day for the Dow Jones Industrial Average (+70 points) whilst the S&P 500 ended on a 12-month high.

“Regionally, equity markets snapped their dismal runs with most ended in positive territory following better indications from Europe.

“As for the FBMKLCI, it closed on a flat note at 1,521 just a tad below the next resistance of 1,525 of which may be tested today,” it said.

On Bursa Malaysia, Tong Herr fell 15 sen to RM1.93, PPB down 14 sen to RM17.06, Telekom nine sen to RM4.82, HELP, LPI Capital and BAT down six sen each to RM1.50, RM14.02 and RM49.84 respectively, while Can-One fell five sen to RM1.73.

Among the gainers at mid-morning, Dutch Lady rose 38 sen to RM26.38, Mudajaya 20 sen to RM2.52, Supermax 13 sen to RM4.06, UMW and Latexx 11 sen each to RM7 and RM2.02, Cepco and Hai-O nine sen each to RM1.69 and RM2.06, while Petronas Gas and Tenaga were up eight sen each to RM15.42 and RM6.15.

The actives included Mudajaya, Hubline, Takaso, PDZ, Benalec and JCY.



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CIMB Research has technical buy on Latexx at RM1.97

KUALA LUMPUR (Nov 29): CIMB Equities Research has a technical buy on Latexx Partners at RM1.97 at which it is trading at a FY13 price-to-earnings of 6.0 times and price-to-book value of 1.1 times.

The research house said on Tuesday the rebound from its September’s low does not look complete as prices are still holding steadily above its 30-day and 50-day SMAs.

“Looking at the chart, we think the candles are likely to edge towards the 200-day SMA soon. Once the RM2.16 level is taken out, the following resistances levels are RM2.31 and RM2.42,” it said.

CIMB Research said the indicators remain compelling. MACD signal line is hovering in the positive territory while RSI is also above the 50pts mark.

“Aggressive traders may start to nibble now. However, it is important to place a stop at below the RM1.87-RM1.80 levels, depending on one’s risk appetite,” it said.



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Latexx losing its grip in 3Q

Latexx Partners Bhd (Nov 22, RM1.86)
Maintain neutral at RM1.87 with revised target price of RM2.05 (from RM1.95): At only 64.8% of our FY11 estimate 9MFY11 earnings missed our forecast, leading to a cut in FY11 to FY13 earnings per share. But our target price (7.83 times CY13 price-earnings ratio) rises as we roll it over to end-CY12. We maintain our “neutral” call. We prefer Hartalega for its solid fundamentals and undemanding valuations.

Revenue for 9MFY11 revenue fell by 10.1% year-on-year (y-o-y) to RM350.9 million due to lower output. Utilisation rates were only 60% in 3Q after touching 80% in 2Q. Higher rubber and nitrile prices led to a 7.7% y-o-y increase in operating costs to RM287 million. As a result of the lower revenues and higher costs, earnings before interest, tax, depreciation and amortisation (Ebitda) fell by 19.8% y-o-y to RM64 million and Ebitda margins contracted by 2.2 percentage points y-o-y to 18.2%. Core net profit fell by 28.1% y-o-y to RM43.1 million. During the quarter, the composition of Latexx’s sales was 64% nitrile and 36% natural rubber. Some 51.6% of the group’s sales were shipped to the US, 24.9% to Asia, 20.5% to the EU and the 3% balance to the Middle East and South America. Latexx declared a 2.5 sen dividend per share (DPS), which was expected.

Latexx is still cautious and is taking measures to improve efficiency and lower costs. The company will also retain its focus on the nitrile segment where growth is about 5% per year against a 1% y-o-y contraction for natural rubber. Also, nitrile gloves remain competitively priced as they are 25% cheaper to produce than natural rubber equivalents.

We expect an 18% quarter-on-quarter rise in 4Q net profit to RM15 million due to lower costs as the nitrile price has fallen 25% since Oct 1 and the natural rubber price has dropped 13%. We also expect Latexx to pay another 2.7 sen DPS after its 4Q results, taking FY11 DPS to 5.2 sen. — CIMB Research, Nov 22


This article appeared in The Edge Financial Daily, November 23, 2011.



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Latexx falls after Q3 profit shrinks

Latexx Partners Bhd, a Malaysian rubber-glove maker, fell to its lowest level in almost three weeks in Kuala Lumpur trading after reporting a 28 percent drop in third-quarter profit to RM12.7 million.

The stock dropped 2.7 percent to RM1.82 at 9:07 a.m. local time, set for its lowest close since Nov. 3. -- Bloomberg



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Stocks to watch: Triplc, Harvest, Alam Maritim, Eversendai, Mah Sing

KUALA LUMPUR (Nov 22): Market sentiment is expected to be cautious on Tuesday with investors again staying on the sidelines as the euro zone's debt crisis struck again at the heart of Europe.

In the UK, bank and commodity stocks weighed on the FTSE 100 at midday on Monday, with clouds gathering over the prospect for global growth as U.S. debt talks broke down and France was told it could lose its Aaa rating from Moody's, Reuters reported.

Meanwhile, billionaire investor Warren Buffett warned of a major flaw in the 17-member euro zone system and added it would take more than words to fix it.

At Bursa Malaysia, which saw the FBM KLCI sliding 1.4% or 20.32 points to 1,434.08, dragged by key blue chips including Genting, MISC and index-linked PLANTATION [] stocks on Monday, there would not be any rush to buy equities.

Among the stocks to watch are TRIPLC BHD [], HARVEST COURT INDUSTRIES BHD [], ALAM MARITIM RESOURCES BHD [], Eversendai Corporation Bhd, MAH SING GROUP BHD [], LATEXX PARTNERS BHD [] and UNITED PLANTATIONS BHD [].

Triplc will be uplifted from the Practice Note 17 classification on Tuesday after it had regularised its financial condition.

This will see the listing and quotation of 6.367 million settlement shares issued pursuant to the capitalisation of RM6.36 million or 25% of the RM25.47 million in debts owing by the group to certain substantial shareholders and creditors and the waiver of the remaining 75% of such debts amounting to RM19 million.

Also to be quoted are 64.02 million shares of RM1 each issued under the consolidation of every 100 shares of 43 sen each into 43 shares subsequent to the reduction of the paid-up b cancelling 57 sen of the par value of each of the 148.88 million shares in issue after the capitalisation.

Harvest Court announced Mohd Nazifuddin Najib has resigned as an independent director on Monday. He was appointed to the board on Oct 28. Nazifuddin still owns 3.98 million Harvest Court shares.

Alam Maritim’s third quarter net profit rose 50.5% to RM13.33 million from RM8.92 million a year ago, underpinned by its offshore support vessels segment. Its revenue increased by 71.3% to RM116.03 million from RM67.69 million while earnings per share were 1.70 sen compared with 1.20 sen.

Eversendai’s order book increased to RM1.60 billion with the latest contract secured by its subsidiary Shin Eversendai Engineering (M) Sdn Bhd to build part of the Manjung power plant. The contract was for the boiler and auxiliary equipment for the Manjung Unit 4, which was awarded by Alstom Services Sdn Bhd.

Mah Sing’s earnings jumped 45.6% to RM43.22 million in the third quarter ended Sept 30, 2011 from RM29.67 million.

It said the performance was underpinned by strong sales which exceeded the RM2-billion mark as up to Nov 15, due to the strong branding and the flexibility afforded by its comprehensive portfolio of PROPERTIES [].

Latexx Partners’ net profit for the third quarter ended Sept 30, 2011 fell 27.8% to RM12.73 million from RM17.63 million a year earlier, due mainly to the persistently high raw material prices and the weaker US dollar. Its revenue for the quarter slipped 6.2% to RM121.81 million from RM129.88 million in 2010.

United Plantations’ net profit for the third quarter ended Sept 30, 2011 jumped 32.6% to RM105.15 million from RM79.27 million a year earlier, driven mainly by significant improvement in the selling prices of crude palm oil (CPO) and palm kernel (PK). Its revenue for the quarter surged 59.3% to RM439 million from RM275.54 million in 2010.

The plantation company declared an interim dividend of 18.75 sen net per share for the year ending Dec 31, 2011, and a special dividend 11.25 sen net per share, to be paid on Dec 21.



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Latexx 3Q net profit falls 27.8% to RM12.73m

KUALA LUMPUR (Nov 21): LATEXX PARTNERS BHD [] net profit for the third quarter ended Sept 30, 2011 fell 27.8% to RM12.73 million from RM17.63 million a year earlier, due mainly to the persistently high raw material prices and the weaker US dollar.

The company said on Monday that its revenue for the quarter slipped 6.2% to RM121.81 million from RM129.88 million in 2010.

Earnings per share decreased to 5.17 sen compared to 8.19 sen in 2010, while net assets per share was RM1.23.

Latex declared a first interim tax exempt dividend of 2.5 sen per share of 50 sen each for the financial year ending Dec 31, 2011 to be paid on Jan 3, 2012.

For the nine months ended Sept 30, Latexx’s net profit fell 28.1% to RM43.06 million from RM59.89 million in 2010, while its revenue was down 10.1% to RM350.92 million from RM390.53 million.

Reviewing its performance, Latexx said the normalising demand, higher raw material prices of both natural rubber and nitrile latex were the main reasons for the contraction in the revenue and profit margin for the third quarter.

On its prospects, Latexx said although the industry outlook remained to be challenging in the near to midterm, the group would continue to deliver positive performance.

The company said that NR latex price has softened since June 2011 and the exchange rate of the US dollar had also improved.

On the other hand, nitrile latex price has peaked during the period of 3Q11 and has shown sign of softening recently, it said.

Despite the signs of improvement of the business environment, Latexx said it would still be cautious and take all possible measures to continue to remain as a competitive glove manufacturer.

Latexx said it would continue to grow its business by focusing on the Nitrile range, especially on the non- medical sectors, i.e. personal care, food handler, industrial, etc. to widen and diversify the revenue base.

“The group will also continue to broaden its customer base by focusing more on other countries besides the affluent markets.

“Fully embracing the industry’s environment with the challenges ahead, the group is confident that the current undertakings and strategies of the group is on the right track and will lead the Group to attain the organisational and earnings goal,” it said.



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Markets take a breather, KLCI down 4 pts

KUALA LUMPUR (Oct 31): Key regional markets including Bursa Malaysia took a breather on Monday, as investors used the excuse of the surge in the US dollar against the yen to take profit.

The markets had rallied last week after European officials hammered out a deal to rescue Greece. As for the FBM KLCI, it is up 114.3 points from Oct 3’s 1,367.52 to end 1,481.82 last Friday. For last week, the KLCI was up 30.9 pts or 2.19%.

At 12.30pm, the FBM KLCI was down 4.04 points or 0.27% to 1,477.78. Turnover was 637.07 million shares valued at RM526.29 million. There were 261 gainers, 334 losers and 263 stocks unchanged.

Reuters reported Asian shares fell and precious metals slipped on Monday as the dollar spiked to a three-month high against the yen following Japan's intervention, prompting investors to book profits after last week's rally.

The dollar rose more than 4 percent against the yen to above 79 yen, hours after briefly falling to a record low of 75.31 yen since World War II. The dollar index as measured against six major currencies rose 1.3 percent.

Hong Kong’s Hang Seng Index lost 1.14% to 19,791.74, South Korea’s Kospi fell 1.05% to 1,909.21, Singapore’s Straits Times Index 1.30% to 2,868.01, Japan’s Nikkei 225 0.18% to 9,034.45, Shanghai’s Composite Index 0.53% to 2,460.41 and Taiwan’s Taiex Index 0.35% to 7,589.10.

US light crude oil fell 90 cents to US$92.42, crude palm oil third month futures RM31 to RM2,940 while the ringgit weakened against the US dollar to 3.0750 from the previous close of RM3.0697.

At Bursa, among the heavyweights, Tenaga fell 11 sen to RM5.75 after posting losses in the fourth quarter while RHB Cap gave up 11 sen also to RM7.56. As for GENTING BHD [], investors took profit after the strong run-up in the share price.

Nestle was the top loser, down 60 sen to RM49.80, Petronas Dagangan 14 sen RM16.18 and IJM 13 sen to RM5.70.

Hard disk drive manufacturer JCY rose four sen to 61 sen with 40.77 million shares as it was expected to benefit as its competitors were affected by the severe flooding in Thailand. JCY-CD rose two sen to 8.5 sen.

Loss-making Zelan added 2.5 sen to 38 sen on news that it has received a letter of intent from Mudajaya Corporation Bhd to undertake civil works valued at RM300 million for a power plant expansion in Johor.

Among the gainers were Choo Bee, up 33 sen to RM1.75, DiGi 32 sen to RM31.82 while F&N rose 24 sen to RM17.02. Supermax extended its gains on the positive outlook for the glove maker, with the shares up 21 sen to RM3.77 while Latexx rose 12 sen to RM1.88 and the warrants 13 sen to RM1.44.

Rubber mart to improve on tight supply

The Malaysian rubber market is expected to improve next week as supply remains tight due to the rainy season and floods in Thailand, dealers said.

A dealer said the euro debt crisis will, however, continue to affect the market. "Traders are awaiting the solution to the eurozone debt crisis," he said.

During the four-day trading week, the market was mixed and its performance was affected by the rainy season and floods which as a result saw tight supply of the material. Traders were also monitoring the eurozone financial crisis.

For the week just ended, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 rose 13.5 sen to 1,231 sen per kg while latex-in-bulk fell 5.5 sen to 793.5 sen per kg.

The unofficial closing price for SMR 20 gained 22.5 sen to 1,226 sen per kg while latex-in-bulk dropped 3.5 sen to 794.5 sen per kg. -- Bernama

CIMB Research has technical buy on Latexx Partners

KUALA LUMPUR: CIMB Equities Research has a technical buy on Latexx Partners at RM1.80 at which it is trading at a FY12 price-to-earnings of 5.8 times and price-to-book value of 1.5 times.

It said on Friday, Oct 28 that Latexx Partners swung above its triangle resistance on Thursday.

“We think that there is still room to the upside. If prices can continue to stay above this resistance-turned-support trend line, there is a good chance that the stock will edge closer towards RM1.90 and RM2.02,” it said.

CIMB Research said the MACD signal line has returned to the black while RSI is rising towards the upper band of the neutral zone.

“Any pullback is an opportunity to accumulate. However, always but a stop at below RM1.66-RM1.61 to limit downside risk,” it said.

Rubber glove stocks rally on lower latex prices

KUALA LUMPUR: Investors flocked to rubber glove counters yesterday as the FBM KLCI continued to slide on weakening global economic sentiments.

The bellwether FBM KLCI index lost 9.07 points to close at 1,441.18 points, but rubber glove manufacturers bucked the trend and were among the top gainers on the local market yesterday.

Supermax Corp Bhd strengthened 9% or 27 sen to RM3.22 while Latexx Partners Bhd and Adventa Bhd gained 14 sen each to RM1.63 and RM1.67 respectively.

Top Glove Corp Bhd and Hartalega Holdings Bhd added one sen each to RM4.13 and RM5.51 respectively while Kossan Rubber Industries Bhd moved up eight sen to RM2.80.

Investors flocked to these counters as headwinds came to an end with latex prices falling from the all-time high of RM10.93 per kg in April to close at RM7.99 per kg yesterday.

Analysts also noted that the strengthening greenback against most currencies and softening supply have brought glove makers back in favour. The ringgit weakened to 3.129 yesterday against the US dollar from 2.939 seen on July 27.

Given the improving factors, glove makers are expecting better profitability moving forward.

Top Glove announced on Tuesday that it is expecting 20% revenue growth for FY12 ending Aug 31 on the back of growing demand and new capacity. For FY11, Top Glove’s net profit fell 54% to RM115.2 million, dragged down by high latex prices and the strong dollar.

Top Glove is currently adding new production lines that would increase its total capacity to 42 billion gloves per annum. Its chairman Tan Sri Lim Wee Chai had forecast latex prices falling to RM7 per kg in the next three to six months, depending on weather conditions.

Lim’s view is echoed by Supermax executive chairman and group managing director Datuk Seri Stanley Thai who said latex prices are expected to retreat further to between RM6 and RM6.50 per kg in 1QFY12.

Thai said global demand and consumption would continue to grow next year at between 8% and 12% per annum, considering gloves are recession-proof as they are used in the healthcare sector.

An analyst noted that investors view rubber glove stocks as defensive counters during bearish market conditions.

“Whether in times of recession or not, the healthcare sector will always have demand for gloves. As such, investors flock to these counters especially given the lack of opportunities in the market,” said OSK Research analyst Jason Yap.

Based on Bloomberg data, Hartalega had 10 “buy” calls and one “neutral” call with a median target price of RM6.98. There were no “sell” recommendations on the stock.

Top Glove had nine “sell”, eight “neutral” and four “buy” calls, with a median target price of RM4.02. Kossan had a median price of RM3.26 with seven “buy” and eight “neutral” recommendations.

Supermax had four “buys”, two “sells” and six “neutrals” with a median target price of RM3.49. Adventa attracted one “buy” and “sell” each and two “neutral” calls, with a median price of RM1.64.

This article appeared in The Edge Financial Daily, October 21, 2011.

Glove makers, UOA Development and JCY up despite cautious market sentiment

PETALING JAYA: A string of stocks managed to attract investor interest in an otherwise cautious market and they included glove counters, property firm UOA Development Bhd and hard-disk drive maker JCY International Bhd.

Analysts said the price of latex touched RM8 per kg yesterday, off its recent high of RM11 per kg in April, signalling a possible downtrend in the price of the commodity.

Latex makes up more than 60% of glove makers' costs and a decline in its price is welcome news for the industry.

At the close, counters like Supermax Corp Bhd and Adventa Bhd were up 27 sen and 13 sen to RM3.22 and RM1.67 respectively.

In the case of Latexx Partners Bhd, news of a possible takeover could also have been a catalyst.

Latexx, which rose 14 sen to RM1.63, has been speculated to be the subject of a takeover for a few weeks now after a first attempt in May failed due to issues related to pricing.

Meanwhile, dealers attributed interest in UOA Development, which reached a multi-month high of RM1.70 after rising 19 sen, to “pure market play”.

The stock, at this level, is still 35% down on its June initial public offering (IPO) price of RM2.60.

CIMB Research said in a report that UOA Development's poor share price performance since its listing gave investors a chance to accumulate the stock, adding that investors' realisation of the strong core earnings growth for 2011 to 2013 could spark a re-rating, along with robust sales or more land-banking activities.

Hard-disk driver maker JCY was also on the active list yesterday, finishing one sen lower at 57 sen after hitting an intra-day high of 61 sen. JCY gave up its gains after CIMB Research issued a “trading sell” call on it, seeing that the stock had hit the house's target price.

On Wednesday, the stock put on 28% due to expectations that it would receive more orders as the floods in Thailand affected its competitors.

Sentiment remained cautious in the broader market with 232 counters finishing higher while 500 ended lower.

The 30-stock FTSE Bursa Malaysia KL Composite
Index was down 9.07 points, or 0.63%, to 1,441.18 at the close, with most investors still feeling nervous about the uncertainties in the debt-laden West.

Concerns over slower growth in economic powerhouse China also continued to weigh on investor sentiment, analysts said.

CIMB Research has technical buy on Latexx

KUALA LUMPUR: CIMB Equities Research has a technical buy on Latexx Partners at RM1.49 at which it is trading at a FY12 price-to-earnings of 4.8 times and price-to-book value of 1.2 times.

It said on Thursday, Oct 20 the recent rebound lifted Latexx above its 30-day SMA. Since then, prices have been consolidating in a bullish flag pattern.

“We are of the opinion that this upswing can be extended. If we are right, prices should take out the 50-day SMA soon, before charging towards RM1.56 and RM1.68 next,” it said.

CIMB Research said the MACD signal line has turned flattish, reflecting its earlier consolidation mode. Meanwhile, RSI is above the 50pts mark.

“Risk takers may consider taking some position now ahead of the breakout run. Be quick to cut loss if the RM1.42 level is violated,” it said.