Karex / Goh Siang

Re: Karex / Goh Siang

Postby winston » Sat Jun 03, 2017 1:37 pm

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Karex shares under pressure, although fundamentals remain intact

BY CECILIA KOK

Posted five consecutive quarters of earnings decline.


Year-to-date, the counter has fallen about 28%.
At present level, Karex is trading at 26 times consensus earnings estimate for the financial year ending June 30, 2018 (FY18), and about 19 times consensus FY19 earnings estimate.


CIMB Research, which has downgraded its call on Karex to “reduce” from “hold” and cut its target price for the counter to RM1.70 from RM2.32 previously, notes that the current valuations for the counter seems expensive, while the near-to-medium-term outlook for the company remains weak.


AffinHwang Capital, which has cut its target price for Karex to RM1.90 from RM2.20 while maintaining its call on the counter at “hold”, concurs that the latter’s near-term earnings growth is unlikely to be exciting.


“The headwinds – such as pricing pressure and volatile rubber prices – are short term".


Karex – which operates two manufacturing facilities in Malaysia, specifically in Pontian, Johor, and Port Klang, Selangor, and one plant in Hat Yai, Thailand – produces about four billion pieces of condom per year. Besides producing for third parties, the company also manufactures condoms under its own brands, namely Carex and INNO, which are mainly exported to Middle Eastern countries.

Karex’s capacity utilisation at present stands at a low of 60% due in part to the weak tender market. Nevertheless, the group expects its capacity utilisation rate to improve to 65% in the near term.


Meanwhile, Karex’s cash balances have been halved to around RM82.4mil as at March 31, 2017. This compared with its cash and cash equivalents RM162.6mil a year ago. :|

The group’s total borrowings, on the other hand, fell marginally to RM24.3mil against RM25.9mil previously.


Source: The Star

http://www.thestar.com.my/business/busi ... uP5QkYQ.99
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Re: Karex / Goh Siang

Postby winston » Wed Aug 30, 2017 7:48 am

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Lower earnings for Karex in FY17

KUALA LUMPUR: The world's largest condom maker Karex Bhd's earnings fell more than half for the financial year ended June 30, 2017 due to lower gross profit margin and other one-off expenses in relation to corporate exercises.

It announced on Tuesday the FY17 earnings fell 58% to RM27.94mil from RM66.68mil a year ago. Its revenue rose 5.2% to RM361.45mil from RM343.62mil. Its administrative expenses rose to RM38.87mil from RM28.49mil.

However, for the fourth quarter ended June 30, its earnings slumped 76% to RM2.90mil from RM12.11mil a year ago. Its earnings per share were 0.29 sen compared with 1.21 sen.

Karex said revenue rose 10.8% or RM8.9mil to RM91.63mil from RM82.72mil due to additional sales contributed by the sexual wellness segment.

Result from operating activities fell due to higher distribution and administrative expenses. Correspondingly, profit before tax and profit after tax were lower as compared to the corresponding quarter in the previous year.

In the quarter, administrative expenses more than doubled to RM10.68mil from RM4.37mil.

On the prospects, Karex said the group continued to focus on developing its new products, expansion into new markets and own brand business.

“The group remains optimistic about the progress in FYE 2018 and the prospects for growth within the condom industry overall,” it said.

Source: The Star

http://www.thestar.com.my/business/busi ... Ii2t6vD.99
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Re: Karex / Goh Siang

Postby winston » Mon Nov 27, 2017 8:30 am

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Karex still attractive in long term

KUALA LUMPUR: Karex Bhd is still attractive in the long-term given its position as the world’s largest condom manufacturer and budding potential as an original brand manufacturer, says CIMB Equities Research.

The research house said on Monday that it viewed the company over the long term though the near-term earnings outlook remains weak.

“We view any potential sell-down of the stock as a buying opportunity. Downside/upside risks: sharp decline/increase in condom average selling prices,” it said.

CIMB Research said after inputting its earnings per share (EPS) cuts while rolling over its valuation to end-2018, its TP is raised slightly to RM1.44.

“This is still based on an unchanged 28 times CY19 price-to-earnings (-one standard deviation of its three-year mean),” it said.

It said Karex’s 1QFY6/18 core net profit of RM4.2mil was well below expectations at 9.4% of its and 8.7% of Bloomberg consensus’ FY18F estimates.

Despite a higher 1QFY18 revenue (34.4% on-year), net profit was weaker than expected due to:
i) weaker ASPs,
ii) higher operating costs, and
iii) increase in production costs.

In light of the easing of pricing competition, the group has raised the prices of its condoms which will be reflected at the beginning of 3QFY18 (early CY18).

“Our FY18-20F EPS are cut by 13.6% to 35.7%. Nevertheless, we expect Karex to record stronger quarters ahead from higher average selling prices and better cost control,” it said.

Source: The Star

https://www.thestar.com.my/business/bus ... long-term/
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Re: Karex / Goh Siang

Postby winston » Thu Mar 01, 2018 2:26 pm

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Karex down 1.33% following 1Q results, analysts' downgrades

by Syahirah Syed Jaafar

November 27, 2017

KUALA LUMPUR (Nov 27): Karex Bhd shares dipped 1.33% at mid-morning today, following the release of its first quarter results (1QFY18), as well as downgrades by analysts.

As at 10.30am, the stock fell two sen to RM1.48, with 249,800 shares traded. It has a market capitalisation of RM1.46 billion.

On Friday, the group released its first quarter results which saw a 49% year on year net profit decline, despite a 34% year-on-year increase in revenue which the group attributes to higher sales volume, especially in the tender segment, in the quarter.

As such, according to research houses, Karex’s earnings came in below expectations, resulting in revised price targets and calls.

Hong Leong Investment Bank (HLIB) Research has downgraded the stock to Sell, with a lower target price of RM1.04, from RM1.37 previously, explaining while it is long term positive on the group’s ambition to grow its own-brand manufacturing (OBM) segment, significant investments in this category will continue to impact profitability in the near term. The segment incurred higher distribution and administrative costs in the quarter.

“Karex’s 1QFY18 PATAMI of RM4.1m (-48.8% yoy, +43.2% qoq) was below expectations, accounting for 7.9% and 8.7% of HLIB and consensus full year estimates,” said HLIB research in a note today.

Affin Hwang Research too has lowered its price target to RM1.20, from RM1.30 previously, maintaining its Sell call, as it believes Karex’s OBM segment has “yet to receive critical mass.”

“Despite the higher sales volume, we believe that earnings growth for the year would likely be flattish, as lower product margin and higher fixed cost remain a challenge for Karex. Although we are still positive on the long term outlook of Karex in transforming itself to become a competitive brand in the OBM market, the short-term earnings growth is expected to be volatile,” Affin Hwang Research said in a note today.

CIMB Research however, while acknowledging Karex’s slower-than-expected recovery, had increased its price target to RM1.44, from RM1.40 previously, with no change to its Hold call.

“We expect Karex to record stronger earnings ahead, in tandem with higher average selling prices for condoms sold in the tender segment, as well as better cost control, especially in terms of distribution and administrative expenses,” CIMB Research said in a note today.

Source: The Edge

http://www.theedgemarkets.com/article/k ... downgrades
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Re: Karex / Goh Siang

Postby winston » Thu Mar 01, 2018 3:50 pm

Nov 25, 2017

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1QFY18: A slower-than-expected recovery

1QFY6/18 core net profit of RM4.2m was well below expectations at 9.4% of our and 8.7% of Bloomberg consensus’ FY18F estimates.

Despite a higher 1QFY18 revenue (34.4% yoy), net profit was weaker than expected due to:
i) weaker ASPs,
ii) higher operating costs, and
iii) increase in production costs.

In light of the easing of pricing competition, the group has raised the prices of its condoms which will be reflected at the beginning of 3QFY18 (early CY18).

Our FY18-20F EPS are cut by 13.6-35.7%. Nevertheless, we expect Karex to record stronger quarters ahead from higher ASPs and better cost control.

Maintain Hold with a higher TP of RM1.44 as we roll over to end-2018.

Source: CIMB

https://brokingrfs.cimb.com/ewHUQyTDldb ... GZJIg2.pdf
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Re: Karex / Goh Siang

Postby winston » Fri Mar 02, 2018 10:21 am

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Strong ringgit environment a bane for Karex

1HFY18 core net profit of RM7.6m was grossly below our and Bloomberg consensus expectations, at only 27% and 16% of the respective FY18 estimates.

The weaker-than-expected results were due to:
i) stronger ringgit environment,
ii) depressed ASPs in tender markets, and
iii) high operating expenses.

Near-term outlook should remain weak. We expect:-
i) stiff competition in tender segment to persist,
ii) high distribution expenses, and
iii) stronger ringgit vs. US$.

We cut our FY18-20F EPS by 44.9-46.9% to account for:
i) lower tender margins,
ii) higher overall expenses, and
iii) lower US$/RM rate of RM4.05.

Downgrade to Reduce from Hold, with TP lowered to RM0.78 (28x CY19F P/E)

Source: CIMB

https://brokingrfs.cimb.com/tCanuHMr4_k ... oRyjw2.pdf
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Re: Karex / Goh Siang

Postby winston » Mon Sep 03, 2018 8:15 am

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CIMB Research downgrades Karex to reduce, lower target price

CIMB Equities Research has downgraded condom producer Karex Bhd to reduce from hold with a lower target price (TP) of 50 sen as near-term outlook remains weak.

The research house said Karex’s FY6/18 core net profit was below expectations, making up 90% of its and 71.6% of Bloomberg consensus full-year estimates.

“The steep 58.2% on-year decline in FY18 core net profit was mainly due to:
i) stronger ringgit
ii) higher raw material costs and
iii) competition in the tender segment.


Source: The Star

https://www.thestar.com.my/business/bus ... VyG2IQP.99
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Re: Karex / Goh Siang

Postby winston » Mon Dec 03, 2018 10:37 am

Karex expects better days as latex price falls

by Justin Lim

To offset that volatility, Karex plans to roll out more higher-margin products, like ultra-thin condoms, and condoms with new flavours and more texture.

On the expansion front, the company is targeting to venture into Singapore and Thailand by end-FY19. Those ventures are pending regulatory approvals.

Karex wants to grow its business online, like by selling tailor-made condoms via an e-commerce platform. Recall that Karex, in January 2016, acquired US custom-fit condom maker TheyFit LLC, which produces condoms of 66 sizes.

an increase in minimum wage policy starting January next year will have a negative impact on its business.

The company has cut its manpower from a peak of over 3,000 people to 2,800 now. It is now on a five-year plan, started November last year, to halve its labour costs, which account for about 20% of the company’s production costs.

On Nov 26, Karex announced that its net profit sank 53% year-on-year (y-o-y) to RM1.98 million for the first financial quarter ended Sept 30, 2018 (1QFY19), from RM4.21 million on lower sales. Revenue fell 14% to RM92.16 million from RM107.59 million.

CIMB Research expects Karex’s earnings to remain weak in the near term, citing ongoing headwinds like low tender volumes and pricing competition, in addition to higher advertising and promotional expenses needed to drive sales of its OBM segment.

In a note on Nov 26, it maintained its “reduce” call on Karex, with a lower target price (TP) of 47 sen versus 50 sen previously.

Affin Hwang Capital Research similarly maintained its “sell” call on Karex, with an unchanged TP of 40 sen a share, saying profitability had yet to bottom out as Karex’s 1QFY19 earnings came in below expectations.




Source: The Edge Financial Daily

http://www.theedgemarkets.com/article/k ... rice-falls
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