Calamity, tsunami, H1N1, war will spur rubber gloves demand

Calamity, tsunami, H1N1, war will spur rubber gloves demand. Usage of rubber gloves will increase where it is required the most. In war torn or conflict prone region, now namely the MENA region focusing specifically on Libya, Bahrain, Saudi Arabia, Tunisia, and those countries that are seemingly infected with the lamentation and uprising against the rule of bad politics, bad governance and bad image.

Tsunami in Japan will set the tone for high quality rubber gloves. Countries situated inside the Pacific Ring of Fire will certainly increase their stockpile of ready rubber gloves. Think of countries who have the purchasing power such as Taiwan, Japan, China.

H1N1 or another bird flu seems imminent but it is not publicly discussed nor tabled. There were recent reports of culling of swine in Korea, both north and south. Did anyone notice it? Was it just passing? Similar to stock market crashes, the small waves are often ignored and when the large tsunami comes literally, most people are caught right in the middle of the ocean.

KOSSAN rated buy by 4 research firms RM4.29

These recent months have seen positive ratings being given to KOSSAN. The average target price is RM4.29.
Hwang DBS Vickers Research gives KOSSAN a RM3.90 Target Rating.
CIMB gives KOSSAN a higher RM5.41 Target Price.
Maybank Investment Banking gives firm RM3.60.
And BIMB Securities Research puts the firm at RM4.28.

Focusing on high end and nitrile gloves Kossan beats competition

As you may recall, I wrote a recent rubber industry (mainly rubber gloves) round-up some weeks ago. Personally I was trying to determine which stock to enter. I finalise to two - Rubberex and Kossan. Then finally chose Kossan.

Kossan has been moving production to nitrile gloves since July 2010. Focusing on powder-free nitrile and surgical gloves, and basically to go higher-end of the glove market.

Nitrile gloves are made of synthetic latex. They contain no latex proteins and offer excellent resistance to punctures and tears. Nitrile gloves are three times more puncture resistant than rubber and can be used to offer superior resistance to many types of chemicals.

Unlike other latex gloves, nitrile gloves have low resistance to friction and are very easy to slide on. There are a few other reasons that nitrile gloves are more popular than other latex or vinyl gloves, including a higher degree of flexibility and superior solvent resistance.

There are several ways these companies now operate.
A mix of both nitrile and natural rubber gloves. Purely rubber. Purely nitrile. Natural rubber gloves have long been contended by synthetic rubber glove. Mainly from US propaganda machine to reduce a dependence on natural rubber products which only several countries in the world produces. Politics aside, going both ways is best. Given the nature that diversification is how financial management and investment should be played.

So you have zoomed in onto the sector. Rubber Gloves. And now choose a company that offers good growth and specialisation - yet enough product diversification.

Watch rubber gloves. Recent bird flu news in HK might bring about a new demand.

Buying in dips - AirAsia Genting Singapore Kossan Scomi KNM

Today's dips could be a chance to buy-and-accumulate before more funds are released and the imminent QE2 money coming into Malaysia and Singapore markets. Both these markets attained 20% gains this year compared to over 40% for Thailand and Indonesia. Therefore it is safe to suggest foreign funds will have a higher likelihood to invest in equities in Malaysia and Singapore.

Some choice picks:
Singapore - Genting Singapore (casino and integrated resort), China Oilfield, China Aviation Oil, (start to accumulate oil and gas related stocks), Golden Agri (palm oil), Ezra (oil and gas), SATS, SMRT (just given out dividend and prices pressed down).
Malaysia - AirAsia (low cost carrier), Kossan, Hartalega, Supermax (rubber industry, rubber gloves), Scomi, KNM (industrial engineering) both below 50 sens.

Rubber Companies New Potential for 2011

Rubber is a commodity that has been revived earlier this year due to the H1N1 influenza saga. Prices of rubber gloves companies went over the roof earlier this year. Rubber gloves are not cyclical. In fact it is a slowly increasing industry as more and more people get health care and ageing, and requiring medical care, the demand of gloves increases over time. A spike comes when there is a calamity or panic in a communicable disease such as SARS. War time, there will be a demand too. So whichever way the world is moving ahead, population growth, wealth, ageing, better access to medical, it seems the rubber gloves industry will benefit.

Here is roundup of these companies mainly listed in Malaysia with Market Price at 29th October 2010 and 2009 Sales.
1) Supermax Current $4.50 $803mil
Supermax Corporation Berhad is a Malaysia-based investment holding company. The Company operates in three segments: manufacturing of gloves; trading of gloves, and investment holding. It has nine factories that manufacture various types of latex gloves, which are exported to over 146 countries, including the United States, European Union, the Middle East, Asia and South Pacific countries. As of December 31, 2009, the Company's subsidiaries were Supermax Latex Products Sdn. Bhd., Supermax Glove Manufacturing Sdn. Bhd., Maxter Glove Manufacturing Sdn. Bhd., Supermax Incorporated, Spenser Glove Manufacturing Berhad, Supermax International Sdn. Bhd., Supermax Energy Sdn. Bhd., Seal Polymer Latex Products Sdn. Bhd. and SPI Gloves Sdn. Bhd.
  Wright Quality Rating: DBB2

2) Top Glove $5.50 $2079mil
Top Glove Corporation Berhad is a Malaysia-based investment holding company providing management services. The Company's subsidiaries are engaged in the manufacture and trading of gloves; producing and selling latex concentrate, and property investment and trading of machinery. It operates in Malaysia, Thailand and People's Republic of China. The Company's subsidiaries include Top Glove Sdn. Bhd., TG Medical Sdn. Bhd., Great Glove Sdn. Bhd., Top Glove Engineering Sdn. Bhd. and TG Medical (U.S.A.) Inc. On March 25, 2010, the Company acquired Top Quality Glove Sdn. Bhd.
  Wright Quality Rating: CAA2

3) Kossan $3.12 $842mil
Kossan Rubber Industries Bhd. is a Malaysia-based company engaged in investment holding and manufacturing and sales of rubber products. The Company offers molded rubber products, extruded rubber products, engineered rubber products, colored ethylene propylene diene Monomer (EPDM), rollers, ethylene vinyl acetate (EVA), polyurethane (PU) products and gloves. It has 49 production lines with an annual production capacity of 3.9 billion pieces of gloves. Its ultimate holding company is Kossan Holdings (M) Sdn. Bhd. As of December 31, 2009, the Company's direct subsidiaries were Kossan Latex Industries (M) Sdn. Bhd., Perusahaan Getah Asas Sdn. Bhd., Hibon Corporation Sdn. Bhd., Doshin Rubber Products (M) Sdn. Bhd., Ideal Quality Sdn. Bhd., Kossan Engineering (M) Sdn. Bhd. and Top Calibre Sdn. Bhd.
  Wright Quality Rating: CAA2

4) IRCB 47 sen $147mil
Integrated Rubber Corporation Berhad is a Malaysia-based investment holding company. The Company operates in two business segments: manufacturing, which is engaged in the manufacturing and trading of latex gloves, and investment holding, which covers investment of ordinary and quoted shares. The activities of the Company are carried out solely in Malaysia. The United States, Canada, Japan and Europe are the major export markets for the manufacturing division, while the major market for the other divisions is principally in Malaysia. The Company's subsidiaries are Comfort Rubber Gloves Industries Sdn Bhd., PBT Sdn. Bhd. and Quality Gallant Sdn. Bhd.
  Wright Quality Rating: LCNN

5) Rubberex 87 sen $317mil
Rubberex Corporation (M) Berhad is a Malaysia-based investment holding company. Through its subsidiaries, the Company is principally involved in the manufacturing and sale of household, industrial and disposable rubber gloves. The Company has two production facilities: China plant, which is located in Buluo, Huizhou City, Guangdong province, and Malaysia plant, which is located in Ipoh. Its China plant is for the production of reusable synthetic gloves and disposable vinyl gloves. It offers industrial gloves, consumer gloves, disposable gloves and condoms. During the year ended December 31, 2009, the Company acquired an additional 40% equity interest in Pioneer Vantage Limited, Lifestyle Investment (Hong Kong) Limited, LPL (Hui Zhou) Glove Co. Limited and Lifestyle Safety Products (Hui Zhou) Co. Limited, as well as an additional 20% equity interest in Rubberex (Hong Kong) Limited.
  Wright Quality Rating: LBC5

6) Adventa $2.41 $287mil
Adventa Berhad is a Malaysia-based company engaged in investment holding and the provision of management services to its subsidiaries. The Company's operations are divided into three segments: Healthcare Products, which is involved in the manufacture, distribution and trading of healthcare products; Energy Provider, which is involved in the generation and supply of energy and electricity using biomass technology, and Others, which include the provision of management services to its subsidiaries. It offers surgical and synthetic gloves. The Company distributes its products within Malaysia and to Hong Kong, Germany and Uruguay. During the fiscal year ended October 31, 2009, the Company acquired 100% equity interest in Cytotec (M) Sdn. Bhd. and had incorporated a new subsidiary in Malaysia under the name of Icodex Sdn. Bhd.
  Wright Quality Rating: DBD5

My picks are Kossan and Rubberex. The number 1 and 2 are Top Glove and Supermax which are still strong. While Kossan seems to have good sales. And Rubberex at a good position for volume with the current price tag.