Karex picked by CIMB as top 3 small-cap picks.

Karex picked by CIMB as top 3 small-cap picks.
Business & Markets 2013
Written by Jonathan Gan at theedgemalaysia.com
Wednesday, 11 December 2013 15:52

KUALA LUMPUR (Dec 11): Karex Bhd, featured in CIMB’s Yearbook entitled “Navigating Malaysia”, was selected as one of the top 3 small cap picks by the investment bank.

The target price for the stock, with an “add” recommendation, was put at RM4.54 -- representing a 20% upside from its current market price.

At 3.20 pm today, Karex -- listed this year -- rose 6 sen to RM3.66 on trades of 495,900 shares.

Karex is the world largest condom maker with an annual capacity of 3 billion pieces per annum and an estimated 10% share of global output.

Incorporated in 1988 in Johor, Malaysia, the group’s market sales cover more than 110 countries across the major regions of Africa, Asia, Europe and America.

Placing Karex under the rubber gloves sector, the yearbook report said that it expects the rubber gloves industry to expand by 7.4% annually over the next 4 years driven by population growth, rising incidences of unwanted pregnancies and a shortage of condoms.

Terrence Wong, analyst at CIMB Research, said: “Given Karex’s position and plans to double its capacity by 2015, it should be well-positioned to grow in tandem with the industry, at the very least.”

Karex’s 1QFY14 results were strong with revenue growing 19% y-o-y, due mainly to higher sales volume and a stronger US dollar against the ringgit.