OSK Research maintains BUY on Adventa

OSK Research maintains a Buy on Adventa with a target price of RM3.73.

It said on Tuesday, Sept 28, the glove maker’s 3QFY10 results were within expectations.

Although this quarter’s results were affected by continuously high latex prices and an unfavorable exchange rate, Adventa’s 3QFY10 net profit leapt by 27.1% on-quarter, mainly contributed by the higher sales of surgical gloves, which fetch higher margin.

“Despite our recent downgrade on the rubber glove sector to Neutral, we continue to like the company’s leadership in the surgical and dental gloves segment. Maintain Buy with a target price of RM3.73,” it said.

OSK Research said its target price of RM3.73 was based on a PER valuation of 12 times FY11 EPS. Although it was Neutral on the rubber glove sector, it continued to like the company’s market leadership in surgical gloves as well as its niche in the dental glove segment.

“Currently, we observe that the higher end examination gloves have proven to be more resilient to normalization in demand, which we believe is the main factor hampering the performance of some of the listed rubber glove companies,” it said.