PropNex Ltd – More resilient than expected

• 3Q20 PATMI rose 10.6% YoY to S$6.8mn, far exceeding our forecast. 9M20 earnings form 111% of our FY20e forecast. Despite lockdown, new project revenue was more resilient than expected.
  
• Revenue from new projects rose 15% YoY to S$51.9mn. Higher market share, billing of earlier projects and successful virtual selling were some of the reasons.
• Net cash of S$94.7mn, up from 3Q19’s S$74.5mn.
• Maintain BUY with a higher DCF TP of S$0.85, from S$0.70. Circuit breaker might have affected resale and rental revenue but not new project sales. Yields of 6% and cash flows of S$28mn p.a. with modest capex and working-capital requirements are what we like about PropNex.

AmBank 'overweight' on Malaysia's glove makers

AMBANK has maintained its "overweight" call on Malaysia's glove sector and raised its fair value (FV) of Top Glove - the world's largest rubber glove maker.

This comes as it expects the sales volume and average selling price (ASP) of gloves to "grow exponentially" in the second-half year amid the Covid-19 pandemic, wrote AmBank analyst Nafisah Azmi in a sector report on Tuesday.

"We believe that selling prices will continue to soar in the next six months as lead time stretches up to 12 months. The glove companies' earnings will be further boosted by expanded margins as raw material prices remain low, selling prices continue to grow, US dollar (USD) continues to strengthen over the Malaysian ringgit (MYR), and expansion plans remain intact for the glove producers," said Ms Nafisah.

In the light of the recent spike in Covid-19 cases worldwide, AmBank has raised its ASP assumptions for Malaysia-listed glove producers including Top Glove, Hartalega and Kossan.

Top Glove – top performer

Malaysian glove maker Top Glove last week reported a 365% jump in net profit to RM348m and a 42% rise in revenue to RM1.69b for its third quarter ended 30 May thanks to a surge in demand for its gloves because of the virus pandemic.


Earnings per share was up from 2.92 sen to 13.59 sen. Its shares jumped 14 Singapore cents to S$5.70 on Friday on cum-dividend trading. The company is paying an interim dividend of 10 sen on 9 July.