0006 GMT [Dow Jones] Tanjung Offshore (7228.KU) may rise to test MYR1.25 (yesterday's intraday high), then MYR1.30 vs yesterday's close at MYR1.23 (+15%) says dealer; this after company says awarded long-term charter contract for 3 newly- delivered anchor handling tug and supply (AHTS) vessels from Petronas Carigali for tenures of 3-6 years. Estimates total value of contracts, commencing in March, at MYR150 million; says will contribute positively to earnings in 2010, beyond. Dealer says Wednesday's announcement to stock exchange follows Tuesday's news company awarded MYR70 million 3-year contract by Petronas Carigali to provide wellhead maintenance services in Peninsular, East Malaysia. "Investors will be encouraged by news of this additional contract... the earnings outlook is starting to look better," says dealer. (KPL)
Shares of rubber glove makers had a good run yesterday after an analyst said they are still cheap relative to their future earnings.
About half of yesterday's top 10 gainers were rubber glove makers. Among them, Rubberex Corp Bhd (7803) jumped the most, gaining 18 per cent to RM2.75, followed by Supermax Corp Bhd with a 14 per cent rise to RM5.35.
Rubber glove makers had a good year in 2009 as their stocks did better than the broader market's 45 per cent gain.
But CIMB's head of research Terence Wong said in a report that they are set for another good run this year, helped by higher demand due to rising population, hygiene awareness and stricter health rules.
The stocks are also cheap as the sector's average price multiple, at 9.4 times 2010 earnings, are about half the peak recorded in 2006/2007.
"We believe that the rubber glove companies are still undervalued and offer tremendous earnings upside due to their expansion programmes," he said.
Demand should stay resilient.
"Demand for rubber gloves is expected to be strong over the next few years. Malaysian glove makers predominantly manufacture examination and medical-grade gloves which make up on average 90 per cent of their output.
"Rubber glove will remain as protection against the spread of diseases, especially for healthcare workers. We believe demand will not only be resilient but will continue to grow along with hygiene awareness, health regulations and population size," added Wong.
CIMB has "outperform" recommendations on all the rubber glove makers under its coverage, with Supermax and Adventa its top picks. It has a target price of RM7.96 for Supermax, RM5.44 for Adventa, Top Glove (RM15.90), Latexx (RM4.36), Kossan (RM5.49), and Hartalega (RM11.24).
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