Monday, May 25, 2009


Alex Lu said...

You have a valid point about Latexx's recent financial performance. For example, its net profit for 1Q2009 increased to RM9.1m from RM1.1 mil achieved in 1Q2008, while turnover increased from RM48 mil to RM70 mil during the same periods. Also, one would note that its FY2008 results was significantly better than its FY2007, with net profit increasing by more than two-fold from RM4.9 mil to RM15.6 mil while turnover jumped from RM151 mil to RM223 mil.

Latexx has attributed the significant increase in revenue in 1Q2009 to "the continuous capacity expansion and also higher prices of glove realised", while the improvement in "profit was attributed to better margin from change in product mix with sales of more premium product, improved in overall cost savings from economies of scale, decline in latex and crude oil price and favourable US dollar exchange rate".

Prior to FY2005, Latexx was a loss-making company. Its recent performance is tabulated below:

(RM'mil) FY'05 FY'06 FY'07 FY'08
Turnover 128 141 151 223
Net Profit 4.3 3.9 4.9 15.6

If Latexx can repeat the last two quarters' performance for the remaining quarters of FY2009, then it may record a full-year EPS of about 15 sen. Based on its closing price of RM0.97 last Friday, Latexx is now trading at a PE of 6.5 times. That would make Latexx a fairly attractive rubber glove manufacturer.

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