RHB raises earnings projection for Rubberex

KUALA LUMPUR: RHB Research anticipates strong earnings from Rubberex Corp Bhd in its upcoming results as its product average selling price (ASP) could have been higher than expected.

The research house said this was based on the results and outlooks shared by Hartalega Holdings Bhd and Supermax Corp Bhd, which announced their earnings in October.

"We expect Rubberex to announce its 3Q20 results by the end of the month. In view of its high glove ASP for July-September, 3Q20 earnings should double QoQ and surge >10 times YoY," it said.

RHB lifted FY21-23F core earnings by 48-136% on higher ASP assumptions. In line with the upgrade, it reiterated its "buy" recommendation on the stock and raised its target price to RM3 from RM2.20 previously.

Meanwhile, nitrile glove production capacity is expected to surge 150% quarter-on-quarter.

According to RHB, Rubberex has completed building its new factory and is in the final round of trial runs to optimise the production process.

"We expect earnings contributions from the new factory to start in December, so 4Q20 earnings should be much better QoQ.

"For the nitrile gloves segment, Rubberex’s capacity will increase 150% to 2.5bn ppa from 1.0bn ppa currently, once the factory is ready in December," it said.
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