Gas Malaysia in an announcement to Bursa Malaysia informed that the Government has approved the natural gas tariff revision for non-power sector in Peninsular Malaysia with effect from 1 November 2014 by an average of a mere 2.3%. Ceteris paribus, assuming “no-cost pass through”, an average 2.3% increase in natural gas tariff is expected to hit rubber gloves players’ earnings by <1%. However, we are not overly concerned since rubber gloves players generally are able to pass on the cost increase judging from past experience in previous electricity and natural gas tariff hikes back in end-2013 and lately in May 2014, respectively. Hence, we are maintaining our OVERWEIGHT rating for the rubber gloves sector. After three quarters in the lull, we believe rubber glove players under our coverage are poised for re-rating. The positive outlook is driven by commercial production of new capacity expected to come on-stream by 4QCY14, which will drive earnings growth. We believe persistent concerns over falling demand, fears of oversupply and price wars are overplayed, which were addressed in our past two quarterly strategy reports. Our TOP PICK is SUPERMX. We like Supermax for: (i) re-rating catalyst upon commercial production of its new plant expected by end Dec (one line has started production) which dispelled market skepticism of persistent delays in the new plant, (ii) steep 40% discount to the sector average, and (iii) being a beneficiary of the strengthening USD against RM. We also have OUTPERFORM calls for KOSSAN (TP: RM5.23) and HARTALEGA (TP: RM7.48).
Average 2.3% tariff hike for natural gas for non-power sector. Gas Malaysia Berhad in an announcement to Bursa Malaysia informed that the Government has approved the natural gas tariff revision for non-power sector in the Peninsular Malaysia taking effect from 1 November 2014 by an average of 2.3%. This is the second increase for natural gas hike within a year, Recall, the previous increase was back in May 2014 with an average of 20%. Ceteris paribus, assuming no cost pass-through, the hike in natural gas tariff is expected to hit rubber gloves players’ earnings by <1%. However, we are not overly concerned since rubber gloves players generally are able to pass on the cost increase judging from previous electricity and natural gas tariff hikes. Fuel accounts for an average 10% of production cost of which natural gas accounts for an average of 7%. Based on our back-of-envelope calculation, players need to raise average selling price by 0.5%. However, we are not overly concerned since rubber gloves players generally are able to pass on the cost increase judging from past experience in previous electricity and natural gas tariff hikes back in end-2013 and lately in May 2014, respectively.
Slower-than-expected ramp up in new supply is positive to industry. In the past two quarters, we have highlighted that concerns of industry oversupply had been overplayed. In fact, in-coming new supply has been slower-than-expected. 9MYTD, only Kossan and Top Glove have started commissioning their new plants gradually between 2QCY14 and 3QCY14, albeit at a slower pace. As such the slower-than-expected ramp up in new production capacity further reinforced our positive outlook on the sector with lesser concerns on competitive pressure and oversupply issues. Kossan’s scheduled new 5b pieces capacity has been delayed from March to end-Aug 2014. The remaining Plant (2) and (3) with a total of 12 lines are expected to be operational in September and November (net increase in new capacity for 2014 is 2.0bn pieces compared to our earlier forecast of 2.5b pieces). Supermax’s new plant with an estimated 5.4b pieces has been delayed and can only start commercial operations by 4Q14 instead of 3Q14 with an estimated net incremental increase of 1.5b pieces (earlier projection was 2.5b pieces). Top Glove is scalling back and only expects 2b pieces new capacity by end-2014. Hartalega’s NGC plant is only expected to commence commercial production by 4Q14 with a net incremental increase of 2.0b pieces by end-2014.
Margins to remain stable, raw material prices easing, solid demand and medium-term tight supply for nitrile gloves. We expect margins and earnings of gloves players to sustain in subsequent quarters due to: (i) sustained high demand for nitrile gloves, (ii) easing of both input raw material nitrile and latex prices, and (iii) capacity constraint for nitrile gloves, which could put upwards pressure on ASPs. Over the last two quarters, the downtrend in average selling prices (ASPs) was not entirely due to price competition but on lower raw material prices as well. From our channel checks, players are generally facing full capacity constraint and have to turn away customers taking advantage of the lower ASPs which resulted in overwhelming demand situation.
Maintain OVERWEIGHT. Our TOP PICK is SUPERMX with an OUTPERFORM and TP of RM3.23. We like SUPERMX for: (i) re-rating catalyst upon commercial production of its new plant expected by end Dec (one line has started production) which dispelled market skepticism of persistent delays in the new plant, (ii) a steep 40% discount to sector average, and (iii) beneficiary of the strengthening USD against the RM. We also have OUTPERFORM calls for KOSSAN (TP: RM5.23) and HART (TP: RM7.48).
2)Insider Asia’s Stock Pick: Supermax Corp
Supermax corp bhd
We had previously highlighted the gloves industry as one of the beneficiaries, as countries struggle to contain the spread of Ebola (refer to The Edge Financial Daily dated October 15, 2014). Demand for protective gear including gloves will rise substantially should the outbreak turns into a global epidemic. Our first pick was Kossan Rubber Industries ( Financial Dashboard), whose share price has since risen by 4.6%.
Trading at a PE ratio of 13.5 times, Supermax is another value proposition for investors looking for an exposure in this sector. As a comparison, Kossan and Top Glove are currently trading at PE multiples of 20.1 times and 17.2 times, respectively.
Supermax is one of the world’s largest rubber gloves makers. Production capacity for nitrile gloves will surge by 127.8% to 12.3 billion pieces per annum by end-2014. Once commissioned, nitrile gloves will form 53% of its total installed capacity. The balance comes from natural rubber gloves.
More expansions are on the drawing board, spanning the next 10 years. This includes the Glove City Project, consisting of 6 manufacturing plants with an installed capacity of 4.1 billion pieces each. Construction is targeted to start in 2015. Additionally, the proposed 100-acre Supermax Business Park will house its Integrated Glove Manufacturing Complex (IGMC) to produce nitrile gloves. The company plans to invest RM700-750 million to build 40 production lines over two phases with total production capacity of 15.5 billion pieces per year.
Supermax has fairly decent fundamentals. The company’s ROE averaged 14.4% for the past three years, while net gearing declined from 29.4% to 17.3% during the same period. Plus, profit margin should improve once the about-to-be completed additional capacity for higher-value nitrile gloves comes onstream.
The company has a minimum 30% dividend payout policy. Dividends totalled 5 sen per share in 2013, translating into a net yield of 2.2%.
3)美国出新招来对付ebola,其中手套要穿两个。
1. Gloves
ORIGINAL C.D.C. GUIDANCE The gloves come off first. The rest of the disrobing process can be done with bare hands. A bare hand can safely pull off a glove by slipping it under the wristband.
to closed from (both dates inclusive) for the purpose of determining the entitlements
Registrar's name ,address, telephone no
Tricor Investor Services Sdn. Bhd.
(Company No. 118401-V)
Level 17, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
Tel No. 03-2264 3883
Payment date
28/01/2015
a.Securities transferred into the Depositor's Securities Account before 4:00 pm in respect of transfers
30/12/2014
b.Securities deposited into the Depositor's Securities Account before 12:30 pm in respect of securities exempted from mandatory deposit
c. Securities bought on the Exchange on a cum entitlement basis according to the Rules of the Exchange.
Number of new shares/securities issued (units) (If applicable)
Statement By Supermax Corporation Berhad ("the Company")
Please refer to the attached statement issued by the Company in relation to Dato' Seri Stanley Thai, Executive Chairman and Group Managing Director of the Company, and Datin Seri Cheryl Tan, Executive Director of the Company, being charged by the Securities Commission under Section 188(3)(a) of the Capital Markets and Services Act, 2007 involving APLI shares in 2007. Both claimed trial to the charges preferred against them.
The Board of Directors of Supermax Corporation Berhad ("Company") is pleased to propose a single-tier final dividend of 6% per ordinary share of RM0.50 each in respect of the financial year ended 31 December 2014 for the approval of the shareholders at the forthcoming Company's Eighteenth Annual General Meeting.
The proposed entitlement and payment dates for the final dividend shall be determined at a later date and announced accordingly.
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