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NewsHLIB Research maintains Hold on Karex, ups target to RM4.14
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HLIB Research maintains Hold on Karex, ups target to RM4.14
by Cals Wed 18 Mar 2015, 01:31
HLIB Research maintains Hold on Karex, ups target to RM4.14
By TheEdge Markets.com / theedgemarkets.com | March 17, 2015 : 8:17 AM MYT
KUALA LUMPUR (March 17): [size=14]Hong Leong IB Research has maintained its “Hold” rating on Karex Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) at RM4.18 with a higher target price of RM4.14 and said that currently, Pontian was Karex’s largest plant with capacity to produce 2 billion pieces (bn pcs) of condom per annum, followed by their plant in Hat Yai, Thailand (1.2 bn pcs) and Klang, Selangor (0.8 bn pcs).
In a note Tuesday, the research house said that by 2016, Karex would have enlarged production capacity of 6 bn pcs of condom per annum with 3 bn pcs from Pontian, 2.2 bn pcs from Hat Yai and 0.8 bn pcs from Klang.
HLIB said Karex’s placement exercise had been completed and the research house’s projection of cash balance now stood at RM244.9 million for FY15.
It said approximately 73% of the proceeds will be used for development and business expansion, which in our opinion most likely will be M&A for overseas brand.
“We raised our target price to RM4.14 as we lift our target P/E from 19x to 21x CY16 EPS to reflect the latest figure of its international peers.
“We maintain Hold recommendation as we believe further upside is capped by its rich valuations (FY16 P/E of 22.5x) after the recent share price run-up (share price advanced by 37.5% since we initiate the coverage in Dec 2014),” it said.
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By TheEdge Markets.com / theedgemarkets.com | March 17, 2015 : 8:17 AM MYT
KUALA LUMPUR (March 17): [size=14]Hong Leong IB Research has maintained its “Hold” rating on Karex Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) at RM4.18 with a higher target price of RM4.14 and said that currently, Pontian was Karex’s largest plant with capacity to produce 2 billion pieces (bn pcs) of condom per annum, followed by their plant in Hat Yai, Thailand (1.2 bn pcs) and Klang, Selangor (0.8 bn pcs).
In a note Tuesday, the research house said that by 2016, Karex would have enlarged production capacity of 6 bn pcs of condom per annum with 3 bn pcs from Pontian, 2.2 bn pcs from Hat Yai and 0.8 bn pcs from Klang.
HLIB said Karex’s placement exercise had been completed and the research house’s projection of cash balance now stood at RM244.9 million for FY15.
It said approximately 73% of the proceeds will be used for development and business expansion, which in our opinion most likely will be M&A for overseas brand.
“We raised our target price to RM4.14 as we lift our target P/E from 19x to 21x CY16 EPS to reflect the latest figure of its international peers.
“We maintain Hold recommendation as we believe further upside is capped by its rich valuations (FY16 P/E of 22.5x) after the recent share price run-up (share price advanced by 37.5% since we initiate the coverage in Dec 2014),” it said.
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