FIGURE 1: RUBBEREX
CORPORATION (M) BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2018 annual report.
1.
GENERAL INTRO: Rubberex is one of the major
glove manufacturers in Malaysia.
2.
NOTABLE POINTS:
a. main
products categories include household or general-purpose gloves, industrial
gloves as well as nitrile disposable gloves for the export market. Household
and industrial gloves contribute 53.9% to overall revenue of the group.
b. One
significant development during 2018 was where the Group’s vinyl disposable
glove operations in China were unexpectedly halted in September 2018 when new
regulated environmental laws came into effect, prompting the Chinese government
to issue mandatory stop-work orders on factory owners and manufacturers with
coal-operated boilers within the vicinity of city limits. While they explored
the possibility of investing into other clean energy fuels such as natural gas
or electricity, the Board and Management concurred that the high operating
costs could not be justified given the volatility of selling prices and
declining market demand for vinyl disposable gloves from China. This division
recognised a loss of RM60.8 million in the current financial year.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (million): ~205 million in 2018 annual report, this is a low revenue
company.
b. SHARE
PRICE: from 2015-2019, share price decreased from around RM0.80 to around
RM0.60
c. EARNING
PER SHARE (EPS): earning per share in last 5 years decreased from 4.46 to
3.44sen
d. FUTURE
POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected
to be stable.
e. CAPITAL
EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 18.8
million, around 6% of total assets.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2018 report, Rubberex declared a total dividend payout of 1.75 sen
per share, amounts to dividend yield of 3.33 % based on current share price.
b. CONSISTENCY:
consistent dividend payout, last five years (2014-20198) dividends declared range
from 1.75 to 3.5 sen per share.
c. DIVIDEND
PAYOUT RATIO: in 2018 financial year, Rubberex paid out about 50% of its
earnings to investors in the form of dividend.
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2018 financial year, Rubberex achieved a poor return of
shareholders’ equity, at 2.94%.
b. COST-TO-INCOME
RATIO: cost-to-income ratio is quite high at about 1931%.
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive, around RM 23.7 million, equivalent to RM 0.09 per
share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is not well supported by institutional investors, there are only 8 institutional
investors at top 30 major shareholders list, including Med-Bumikar Mara Sdn Bhd
(25.53%) and Duvest Holdings Sdn Bhd (9.54%) but not including insurance
companies and investment funds.
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