FIGURE 1: COMFORT GLOVES
BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2020 annual report.
1. GENERAL INTRO: Comfort Gloves Bhd is engaged in the manufacture and trading of natural and synthetic specialty examination gloves. The company has two manufacturing plant located in Simpang and Matang, Taiping, Malaysia, consisting of 53 production lines.
2.
NOTABLE
POINTS:
a. In FY2020, the Group’s revenue increased by 8% from RM474.0 million to RM510.7 million driven by strong market demand for premium speciality gloves. Approximately 87% of its revenue was derived from synthetic gloves, while the remainder was from natural rubber gloves. In terms of key markets by country, the biggest market is in Malaysia, followed by Asia, US and Canada.
b. Capital
expenditure are driven by increased demand for synthetic premium speciality
gloves. The Group’s remaining capital commitment on property, plant and
equipment for FYE 2020 amounted to RM9.8 million for installation of new
production lines and related equipment.
c. To
be more cost competitive, the Group has invested in automatic and robotic in
its plants to increase the productivity and efficiency. An energy saving system
is installed to reduce our natural gas consumption. It is implementing on-going
data capturing systems to capture data on real time basis so that operation
team can react immediately to work out a solution. This system also provides it
with a more accurate analytical information and eases the quality traceability.
1.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (RM million): 510.7 million as reported in 2020 annual report, this is a medium
revenue company.
b. SHARE
PRICE: from 2016-2021, share price surged from around RM0.80 to a peak of RM6.00
at the start of the COVID-19 pandemic and then subsequently dropped back to current
level of around RM2.80.
c. EARNING
PER SHARE (EPS): earning per share in last 5 years was overall steady, which
ranged from 4.16 to 7.03 sen, except for FY2020, the increased gloves demand
brought about by the COVID-19 pandemic enabled COMFORT GLOVES to realise an earning
per share of up to 27.42 sen.
d. PRICE
TO EARNINGS (P/E) RATIO: current P/E ratio is at 10.37, which is quite
reasonable.
e. FUTURE
POTENTIAL/PROSPECTS: share price expect to be stable in the next few years
f.
CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 50.7
million, which is around 10% of total assets.
2.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2020 financial year, COMFORT GLOVES did not declare a dividend payout
to shareholders.
b. DIVIDEND
PAYOUT RATIO: N/A
c. CONSISTENCY:
the dividend payout was not consistent, the dividend paid to shareholders in
the last five years ranged from 0 to 1.5 sen.
3.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2020 financial year, COMFORT GLOVES reported a good return of
shareholders’ equity, at 10.66%. This was significantly increased to 35.58% in
FY2021 due to the increase in earnings.
b. COST-TO-INCOME
RATIO: the cost-to-income ratio is 1130%, which is quite high.
4.
OTHER
INDICATORS:
a. CASH
FLOW: cash flow is positive but quite low, at around RM 34.7 million,
equivalent to RM 0.06 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 a few investment funds
but not including insurance funds. The EPF accounts for 1.22% of shareholdings.
Its major shareholders are Cheang Phoy Ken (17.59%), Keen Setup Sdn Bhd (14.41%)
and Dato’ Lau Eng Guang (7.22%).
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