Barefoot Investor: Latexx Partners Bhd also losses during the early trade

At 9.05am, Latexx shares fell five sen to RM2.13 while its warrants lost 11 sen to RM1.60. Shares dropped due to YTY Industry Holdings Sdn Bhd had withdrawn its offer to merge its four glove-making subsidiaries unit with it.

CIMB Research in a note July 25 said the aborted Latexx Partners-YTY merger was a negative surprise as indications from both parties in recent weeks were optimistic.

The biggest winner from this is Hartalega, which remains the world’s largest nitrile glovemaker, it said.
CIMB Research said Hartalega trades at a forward P/E of only 9.1x despite having sector-leading profitability (38% ROE) and yields (5.1%).

This is the second deal Latexx has failed to consummate in six months and we now attribute a higher risk premium to the stock, it said.

“We maintain our forecasts but downgrade Latexx from Trading Buy to NEUTRAL. Our target is cut from RM2.60 to RM2.44 based on a lower forward P/E of 9.8x (previously 10.4x) or a 25% discount (previously 20%) to Top Glove.

“While the news is negative, we believe it’s balanced by better 2H11 results. We recommend a switch to Kossan, our top pick. (


Post a Comment

Related Posts Plugin for WordPress, Blogger...