Tuesday, May 31, 2016

Karex Berhad: SELL





Karex Berhad
Research

General information
27 years experience in this industry
World's largest manufacturer
Global condom market year 2015 = RM27 billion
Capacity increase from 4 billion to 5 billion
Net cash position
Private placement RM158 million on March 2015

Positive
Target to increase capacity to 7 billion in 2017 (40% increase of capacity from current production)

Finance Background
Gross profit margin = 33% to 39%
Distribution expenses = 5.0% (year 2014) to 5.5% (year 2016) - getting worse
Administrative expenses from 4.5% (year 2014) to 11.0% (year 2016) - getting very worse
Net profit, exclude currency gain/loss and others gain/loss will be normalised at around 16%

Annually revenue for year 2016 (estimation) will be RM340 million

Assume net profit margin 16%, exclude any extra gain/loss, then profit shall be RM54.4 million

Outstanding shares = around 1 billion

EPS = 54.4/1000 = 5.44 cents

Assume 40% increase in profit (in line with increment with capacity production)

EPS @ 2017 = 5.44 cents x 1.4
= 7.62 cents

Give high PE ratio 20 for this industry, target price is RM1.52

Current share price RM2.26, which is over price.

If consider margin of safety, you shall get in at PE = 15, which give you the entry price of RM1.14 (provided this company still in high grow path)

Note* Even Warren Buffett bought Coca-Cola Company when it is trading at around PE 15. So do you think current price have any buffer zone for margin of safety? (which is twice the price of PE15). You judge it yourself. Buy or sell at your own risk.


i3investor please do not simply copy and paste. Please do respect intellectual property right!


3 comments:

Hassan said...

Wow, how to make such good money with KLSE? Keen to learn.

Kesh said...

Hi Hassan,

There is a lot of ways to make money in KLSE. First thing first, always buy with safety of margin, so the chance of losing money is minimum. Protect your capital first, then only look for return.

Unknown said...

Assalamualaikum Warahmatullahi Wabarakatuh.

Negara: Indonesia
Nama: Queen Jamillah
Alamat: Nusa Lembongan
Teleph☎:+62 877-8303-2269
WhatsApp:+62 877-8303-2269
e_mail: queenjamillah09@gmail.com
  Sudah dua tahun sekarang saya memberikan kesaksian tentang bagaimana saya meminjam jumlah 700 juta dari Iskandar Lestari Loan Company dan beberapa orang meragukan saya karena tingkat penipu online saya bisa membuktikan kepada Anda semua bahwa Bunda Iskandar bukan pemberi pinjaman yang curang. telah memberi saya satu hal lagi untuk tersenyum karena setelah menyelesaikan angsuran bulanan pinjaman yang saya pinjam sebelum saya memohon kepada ibu bahwa saya ingin pergi untuk ekspansi lebih lanjut dari bisnis saya sehingga saya mengajukan jumlah 2,7 miliar setelah melalui proses hukum transaksi saya disetujui oleh pihak berwenang dan dalam waktu tiga hari proses hukum untuk menyalurkan pinjaman saya ke rekening Bank Rakyat Indonesia (BRI) saya tercapai dengan mudah. ​​Saya tidak memiliki tantangan dengan Bank Indonesia (BI) karena Ibu Iskandar dan tim Manajemen dari ISKANDAR LESTARI LOAN COMPANY telah dianggap sebagai pemberi pinjaman yang sah sehingga tidak ada masalah sama sekali untuk bantuan keuangan, hubungi ISKANDAR LENDERS hari ini melalui llow informasi kontak
(e_mail: [iskandalestari.kreditpersatuan@gmail.com]

Waalaikumsalam Warahmatullahi Wabarakatuh.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.