IPO JF Apex has FV of RM2.07 for Karex

by **Cals** Mon 21 Oct 2013, 19:30

IPO JF Apex has FV of RM2.07 for Karex

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Monday, 21 October 2013 15:50

KUALA LUMPUR (Oct 21): JF Apex Securities Bhd has a fair value (FV) of RM2.07 for condom manufacturer Karex Bhd shares. This compares to Karex's indicative initial public offering's (IPO) share price of RM1.85 in light of its upcoming listing on Bursa Malaysia.

In a note today, JF Apex analyst Soong Wei Siang said the FV for Karex is derived by pegging a 15-time price-earnings ratio to the manufacturer's FY14F earnings per share of 13.8 sen. Soong said the valuation is a 10% discount to Top Glove Corp Bhd's 16.5 times.
"In our view, Karex shares similarity with Top Glove as both are the largest players in the rubber-related healthcare products in Malaysia by having the class-leading production capacity.
"However, we reckon that the lower valuation is justified in view of the relatively lower market capitalisation of Karex, and the Group has not fixed any dividend policy to reward its shareholders as compared to the 50% dividend payout ratio Top Glove is currently implementing," Soong said.
Karex has an annual production capacity of three billion pieces of condoms from its four plants in Malaysia and Thailand. This makes Karex the largest condom manufacturer in the world.
Karex's IPO involves the sale of 67.5 million shares in the firm. The exercise comprises a public issue of 40.5 million new shares, and an offer for sale of 27 million existing units.
At an indicative price of RM1.85 each, the IPO aims to raise RM124.88 million. The public issue is expected to raise RM75 million for the firm.
Karex is expected to be listed this November 6.