KAREX (5247) : Stocks With Momentum: Karex
Karex Bhd
In the past two days, Karex’s share price bucked the local bourse’s downtrend, rising 5.6% to RM3.20 on the back of a ten-fold spike in volume. It is unclear what sparked the sudden interest, although there are, recently, positive analyst reports on the counter.
Listed just slightly over a year ago, in November 2013, Karex prides itself as the largest condom manufacturer in the world by capacity. The company manufactures, primarily, for commercial global brand owners, government and non-government agencies.
The recent release of its 1QFYJune15 financial results saw the company’s revenue growing 7.2% y-y to RM70.1 million. Net profit rose an outsized 26.7%. Karex attributes the improved margins to economies of scale on higher volume condom sales and better product mix. The company also benefited from softer latex prices, its key raw material. Latex prices have been trending down this year and are now at five-year lows, the result of supply glut.
Karex will also benefit from the strengthening of the US dollar vs the ringgit, as the bulk of its sales are destined for overseas markets and denominated, mainly, in the greenback.
Aside from organic capacity expansion, Karex recently announced the proposed acquisition of 55% equity interest in Global Protection Corp. (“GP”) for a cash consideration of US$6.6 million. GP is the owner of the ONE brand condoms, the fourth largest brand in the US with access to more than 25,000 stores in the US and Canada.
The company is sitting on net cash of RM65.9 million. It declared a final single-tier dividend of 2.5 sen per share, translating into net yield of 0.8%. The stock trades ex-entitlement on the 10th of December.
Valuations are, however, relatively expensive – at 5.3 times book value and trailing 12-month P/E multiple of 26 times.
http://www.theedgemarkets.com
Karex Bhd
In the past two days, Karex’s share price bucked the local bourse’s downtrend, rising 5.6% to RM3.20 on the back of a ten-fold spike in volume. It is unclear what sparked the sudden interest, although there are, recently, positive analyst reports on the counter.
Listed just slightly over a year ago, in November 2013, Karex prides itself as the largest condom manufacturer in the world by capacity. The company manufactures, primarily, for commercial global brand owners, government and non-government agencies.
The recent release of its 1QFYJune15 financial results saw the company’s revenue growing 7.2% y-y to RM70.1 million. Net profit rose an outsized 26.7%. Karex attributes the improved margins to economies of scale on higher volume condom sales and better product mix. The company also benefited from softer latex prices, its key raw material. Latex prices have been trending down this year and are now at five-year lows, the result of supply glut.
Karex will also benefit from the strengthening of the US dollar vs the ringgit, as the bulk of its sales are destined for overseas markets and denominated, mainly, in the greenback.
Aside from organic capacity expansion, Karex recently announced the proposed acquisition of 55% equity interest in Global Protection Corp. (“GP”) for a cash consideration of US$6.6 million. GP is the owner of the ONE brand condoms, the fourth largest brand in the US with access to more than 25,000 stores in the US and Canada.
The company is sitting on net cash of RM65.9 million. It declared a final single-tier dividend of 2.5 sen per share, translating into net yield of 0.8%. The stock trades ex-entitlement on the 10th of December.
Valuations are, however, relatively expensive – at 5.3 times book value and trailing 12-month P/E multiple of 26 times.
http://www.theedgemarkets.com
