Adventa - Arriving late to the party

Stock Name: ADVENTA
Company Name: ADVENTA BHD

Research House: CIMB

Price Call: SELL

Target Price: 1.49

Target RM1.49

At 19% of our full-year estimate, 1Q core EPS was in line as we expect an improvement in sales in the quarters ahead when Adventa's nitrile glove plant starts. Also, raw material prices are expected to remain stable, enabling management to raise selling prices and pass costs on. We reiterate our Underperform call and target price basis of 9.14x CY13 P/E or a 30% discount to Top Glove's 2-year average. Derating catalysts include falling demand for its natural rubber (NR) product and lower nitrile margins. We prefer Hartalega.

Source: CIMB Daybreak - 27 March 2012, Full PDF Report