Karex remains a Hold for its growing original brand manufacturer segment, but near-term earnings growth is unlikely to be exciting
KUALA LUMPUR: Condom and rubber products manufacturer Karex fell to an early low of RM1.83 – lowest since March 2015 – on Wednesday after its near-term earnings growth was seen unlikely to be exciting.
At 11am, it was down 19 sen to RM1.86. There were 7.42 million shares done at prices ranging from RM1.83 to RM2.
The FBM KLCI was down 0.07 of a point to 1,765.27. Turnover was 754.89 million shares valued at RM524.88mil. There were 266 gainers, 439 losers and 314 counters unchanged.
Affin Hwang Capital Research lowered its discounted cashflow derived 12-month target price for rubber products manufacturer Karex to RM1.90 after lowering its margin assumptions.
It said that despite firmer sales volumes and demand, its core net profit fell 28% sequentially on lower average pricing and higher operational expenses.
“We lower our discounted cashflow-based 12-month target price to RM1.90 (from RM2.20) after incorporating our earnings cuts, which are somewhat offset by rolling forward our investment horizon.
“Karex remains a Hold for its growing original brand manufacturer segment, but near-term earnings growth is unlikely to be exciting. Upside risk: better-than-expected recovery in tender orders. Downside risk: higher-than-expected marketing costs,” said the research house.
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