RHBInvest Research

Saturday, October 30, 2010

Sector Call

Rubber Gloves:

Kossan remains our top pick

  • In this report, we make a comparison between two glove manufacturers, Kossan and Hartalega, where nitrile gloves makes up a higher proportion of their product mix.
  • We maintain our Underperform call on Top Glove (FV=RM5.40) and Market Perform call on Adventa (FV=RM2.47).
  • We reiterate our Market Perform call on Hartalega (FV=RM5.64).

Corporate Highlights

  • 3QFY12/10 results to meet our expectations, secures Build-Operate-Transfer for Male Air.
  • Our fair value has been raised from RM6.81 to RM7.70.

  • 4QFY10 dampened by depreciation and repair & maintenance costs .
  • Our indicative fair value lowered to RM9.40 (from RM10.30). Recommendation downgraded to Market Perform.

Technical Highlights

Daily Trading Strategy:
  • Chart wise, the deterioration on the overall technical readings of late due to the increase profit-taking activities did not augur well for the FBM KLCI.
  • A fall to below the 10-day SMA will turn the short-term sentiment negative, while a rebound from the SMA will indicate a possible technical rebound on the index.
  • Hence, we continue to expect rangebound trading today, for we do not foresee investors to opt for a heavy position ahead of the next week.

Daily Technical Watch: Kencana
  • Could see follow-through selling pressure if it loses the 10-day SMA.
  • Immediate Support at RM1.72
  • Immediate Resistance at RM1.90


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