FW: Affin Hwang Capital Daily Insight (LV) - 14 September 2017 - RUBBER PRODUCTS

 

Investment Research                   Affin Hwang Capital Daily Insight | Thursday, 14 September 2017        KLCI Index (12-month)  Research Team     research@affinhwang.com    Alan Tan  Chief Economist | RESEARCH     +603 2146 7540     alan.tan@affinhwang.com Top Calls   Sector Update � Rubber products (NEUTRAL, downgrade) - Better prospects priced in All glove companies within our coverage reported better 2Q17/1H17 results yoy while margins rebounded sequentially as we believe the industry demand-supply dynamics has improved. Moving forward, we believe that automation and cost pass-through will be essential to protect margins while capacity expansion remains the key growth driver. The sector valuation has risen by 12.5% year-to-date. Nevertheless, we believe that the current sector forward P/E valuation of 19.2x has priced in the better prospects ahead and is no longer attractive. As such, we downgrade the sector to NEUTRAL with Top Glove as our sector top pick.   Other Calls   Morning News & Market Summary For important disclosures, please refer to the Disclosure section at the end of the individual linked research reports.        Opportunities Amidst Geopolitical Shifts The downloaded documents are in PDF format and are best viewed in Adobe Reader.