莊厥福的分析报告看一看

致敬，致哀，致谢。

http://biz.thestar.com.my/news/story.asp?file=/2009/8/3/business/4433452&sec=business

Monday August 3, 2009
A higher rating for branded glove firms?
Hock's Viewpoint - By Choong Khuat Hock
Most gloves produced under OEMs sold to branded resellers
THE rubber glove industry is one in which Malaysia is leading globally.
However, on closer examination, it would appear the bulk of rubber glove companies like Top Glove Corp Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd and Latexx Partners Bhd are original equipment manufacturers (OEMs) that produce rubber gloves sold under the reseller’s brand name.
Most of the resellers like Kimberley-Clark, McKesson Corp, Cardinal Health, Medline and Ansell provide a wide range of healthcare and hospital products.
Increasingly, these companies are manufacturing less and outsourcing production to OEMs.
Instead, they are focusing on research and development (R&D), brand development and distribution.
Although, OEM rubber glove manufacturers in Malaysia can make reasonable returns due to the limited number of large rubber glove makers, the scope to increase margins is limited as resellers control the brand and can shift their orders to other OEM rubber glove manufacturers offering lower prices.
The margins of OEM manufacturers are thus determined by the type of gloves they produce and their operational efficiency.
Hartalega enjoys the highest margin among OEM manufacturers due to its operational efficiency and a higher percentage of nitrile glove production which currently enjoys better margins.
Latexx also enjoys good margins as its production facilities are concentrated in just one location, thereby minimising overheads and ensuring better quality control.
Among the listed rubber glove companies, the only two involved in selling rubber gloves under their own brands are Supermax Corp Bhd and Adventa Bhd.
Around 55% of rubber glove sales by Supermax consist of its own brand of gloves. In 2008, Supermax’s dental brands achieved a commendable 7.1% share of the dental glove market in the US.
Nevertheless, the challenge faced by Supermax is that large US hospital chains would normally like to simplify logistics by buying from companies that can provide a full range of healthcare and hospital products.
Hence, Supermax sells mainly through distributors and dealers who target smaller establishments like nursing homes, clinics, dentists, laboratories rather than large hospital chains.
Supermax enjoys operating profit margins of around 30% for gloves sold under its own brand, although margins are currently much higher in Mexico and Brazil where there is a shortage of gloves.
Adventa is the only listed company in Malaysia that is producing surgical gloves which require a more complicated process.
Around 60% of surgical gloves are sold under its own brand throughout the world.
To develop cutting-edge surgical gloves, Adventa has a R&D centre with eight chemists and six assistant chemists.
Its gloves are also tested by three surgeons who provide invaluable feedback. Adventa is in the process of patenting some of its inventions.
Operating profit margins for its own brand of surgical gloves are as high as 40%.
Recognising the need to provide a full range of hospital products, Adventa has set up a distribution arm to sell a range of hospital and disposable products utilising its global network of distributors.
Due to strong demand for its surgical gloves, Adventa is planning to expand its surgical glove capacity from 250 million gloves per annum currently to 350 million per annum by year-end and 450 million per annum by the end of 2010.
The current valuations of Malaysian rubber glove companies do not seem to reward companies that sell gloves under their own brands.
In fact, Supermax and Advanta have among the lowest price-earnings ratio (PERs) among rubber glove companies (see table).
Perhaps this could be partly due to company-specific factors.
In the case of Supermax, it is still recovering from the financial burden arising from its failed investment in APL Industries Bhd, though it would appear that the company is on the road to recovery.
In the case of Adventa, it is not a very well covered rubber glove company and its strong operating profits may be masked by its one-off foreign exchange losses.
Kimberly-Clarke, which markets a wide range of consumer and disposable products globally under its own brand, is trading on a prospective PER of 13.5 times while both Supermax and Adventa are trading on PERs significantly below 10 times despite faster earnings growth.
Branding has ensured better margins for Supermax’s and Adventa’s gloves sold under their own brands.
The challenge is to enhance their brands and boost sales in the face of competition from multinationals.
If they are successful, the potential earnings growth could be tremendous as they are starting from a lower base compared with the near-stagnant sales of multinationals such as Kimberly-Clarke.