Re: Karex / Goh Siang
Posted: Sat Jun 03, 2017 1:37 pm
not vested
Karex shares under pressure, although fundamentals remain intact
BY CECILIA KOK
Source: The Star
http://www.thestar.com.my/business/busi ... uP5QkYQ.99
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