Tuesday, December 6, 2016

Rubber Gloves - Limited Near Term Growth

Author: sectoranalyst | Publish date: Tue, 6 Dec 2016, 04:23 PM

  • Lacklustre earnings recorded by most glove players
  • Earnings affected by various external cost increases
  • Pricing competition to persist at least for the next two years
  • Raw material prices on an increasing trend
  • New BNM policy of converting 75% foreign proceeds into MYR counterproductive
  • Stronger USD will be beneficial but not sustainable in the longer term

Downgrade the sector to NEUTRAL

Lacklustre earnings recorded by most glove players. From the latest earnings announcements, three out of four glove manufacturers under our coverage registered earnings below our full-year earnings estimates. Hartalega (NEUTRAL, TP: RM4.48) was the only glove player that recorded earnings improvement and which came in within our expectation. This resulted in earnings downgrade for the three manufacturers as well as two downgrades in recommendation to NEUTRAL (from BUY recommendations previously).

Earnings affected by various external cost increases. Most of the glove manufacturers’ earnings for 3QCY16 were adversely impacted by various external cost increases. The hike in minimum wage as well as the increase in natural gas price which took effect in 3QCY16 caused the earnings of glove manufacturers to be negatively impacted. This is because it takes about two to three months for these costs increases to be incorporated into the average selling prices (ASPs) to be borne by the customers. Generally, prices are locked in upon confirmation of order which would then take roughly two months to be completed. Therefore, the increases in costs which took place in between these times would not be transferred to the customers. That said, we think that this is a temporary blip as we believe that the conditions will improve once the costs are factored into the ASP starting from 4QCY16 onwards.

Pricing competition to persist at least for the next two years. We opine that pricing competition between the glove manufacturers especially in the nitrile segment will persist for at least the next two years until 2018 as new capacity for nitrile glove production comes on board from all the four major rubber glove manufacturers. It is now a buyers’ market due to the expanded glove production capacity now available to these manufacturers. The glove manufacturers will need to be more competitive in terms of pricing as scalability is no longer an issue, unlike two to three years ago. This is made worse by the various production cost increases mentioned earlier.

To overcome this, we think that the manufacturers will try to ensure that the input costs per glove stays low via: (i) increasing automation in production process; (ii) pushing for higher utilisation rate; (iii) concentrating on customers that are less price sensitive; as well as (iv) having an efficient cost pass-through mechanism. Additionally, we think that the margin compression resulted from the pricing competition will slowly normalise as all the new capacity comes in and the manufacturers would have adapted to the increased production costs.

Raw material prices on an increasing trend. We note that the raw material prices have been slowly creeping up since late September 2016. From our channel checks, we understand that the increase in natural rubber price is mainly due to the increase in demand for motor vehicles in China. This is pursuant to the purchase tax cut on motor vehicles with engine capacities of 1.6 litres and below by the government of China from 10% to 5% which drove the demand for natural rubber with respect to the production of tyres. According to China Passenger Car Association (PCA), sales of motor vehicles with engine capacities of 1.6 litres and below have increased by more than 20% month-over-month ever since the tax cut was introduced. The tax incentive is expected to expire by year-end and the Chinese auto makers are expecting an eleventh-hour surge in sales as customers rush to beat the tax-cut expiration.

Meanwhile, the increase in nitrile price is due to both increases in natural rubber price as well as the temporary shutdown of petrochemical plants in China that produces nitrile butadiene. We understand that the temporary shutdown is due to maintenance works as well as refurbishment done on the production plants. We think that the increasing price trend for both natural rubber and nitrile butadiene will continue until the first half of 2017. This is due to annual wintering season for rubber trees (from March until May) which will cause rubber price to remain elevated as supply for natural rubber declines during the period.

Stronger USD will be beneficial but not sustainable in the longer term. The current MYR weakness against USD is arguably a result of policy uncertainty brought upon by the recently concluded US general election. In addition, the market is expecting that there will be a rate hike by the US Federal Reserves in December. Admittedly, the strong USD will contribute positively in terms of revenue and earnings especially when export of gloves is USD denominated. However, we do not think the strong USD will persist throughout 2017 as we opine that once the uncertainty in regard to the policies of the newly elected US president subsides, the USD will give back some of its recent gains.

BNM policy may result in double conversion by rubber glove exporters. Bank Negara Malaysia announced that effective 5 December 2016, exporters holding proceeds in foreign currency would need to convert as much as 75% of it into Ringgit. It was one of several other measures announced to support the falling Ringgit. As the bulk of revenue for rubber glove manufacturers are denominated in foreign currency, USD is normally used as a natural hedge for the purchase of raw material prices such as nitrile, latex and chemicals. This new policy will result in glove manufacturers having to execute double conversion as USD revenue is converted into MYR and back into USD for expenditure purposes.

Downgrade the sector to NEUTRAL. Based on the expected global demand for rubber gloves which is expected to grow by 8-10% annually, we think that the prospect for gloves is still positive in the long run. This is given the fact that Malaysian rubber glove manufacturers have the advantage against their competitors abroad in terms of both cost efficiency as well as scalability. The Malaysian glove manufacturers currently commands roughly 58% of total rubber gloves supply and we think that there is potential for the market share to increase to >60% in the medium term given the ongoing capacity expansion undertaken by the Malaysian glove manufacturers currently. All factors considered, we are of the opinion that the near term prospects for the rubber glove industry will be challenging as: (i) raw material prices are expected to continue trading at current level and maybe even higher due to the upcoming wintering season for the natural rubber (March-May annually); (ii) strong USD might not persist for an extended duration; and (iii) new BNM policy counterproductive to rubber glove manufacturers. Hence, we are downgrading the sector to NEUTRAL (from POSITIVE) in view of the near term challenging operating environment as well as the lack of upward catalysts for the sector at this juncture.

Source: MIDF Research - 6 Dec 2016

Semiconductor Sector - Set For a Strong Finish

Author: sectoranalyst   |   Publish date: Tue, 6 Dec 2016, 04:23 PM 


Largest YoY Increase Since March 2015

Worldwide semiconductor sales grew 5.1% YoY (+3.4% MoM) to US$30.8bn in October. Building on recent strength, this is the third month of consecutive YoY growth and largest YoY increase since March 2015. The positive MoM trend extended to six straight months. Better numbers were witnessed across nearly every major semiconductor product category. Set for a strong finish, WSTS revised its sales forecast upwards. It is now predicting flattish 2016 sales (-0.1% YoY), followed by a 3.3% YoY growth in 2017.

Americas Back in the Green

All regions reported positive MoM growth for the fourth consecutive month. Americas posted its first positive YoY growth after 14 months. YoY sales were driven by a pickup in China (+14.0% YoY) and Japan (+7.2% YoY). Asia Pacific (All Others) reported a 1.9% YoY increase. Only Europe reported softer YoY numbers, with sales declining 3.0% YoY.

Ends 11 Month Streak

Ending its 11 month streak, the book-to-bill ratio dipped below parity to 0.91x in October. This was due to a 9.0% MoM increase in billings vs. a 5.1% MoM decline in bookings. Nevertheless, both bookings (+12.2% YoY) and billings (+19.8% YoY) remained at elevated levels, compared to a year ago.

Overweight

We maintain our Overweight call on the semiconductor sector. We remain positive on the sector as a beneficiary of the weak ringgit. Coupled with a recovery in global semiconductor sales, this should translate into a better outlook for 2017. We have BUY calls on Inari, Unisem and MPI. MPI is our top pick for the sector at a TP of RM8.85. We like the stock as a proxy to growth in the automotive segment, benefactor of weak ringgit and its undemanding valuations. It is trading at an undemanding PE of 9.0x, vs. its peers of 11.7x.
Source: TA Research - 6 Dec 2016

Sector Update – Telco (UNDERWEIGHT, maintain) - In a tight spot

Author: kltrader   |   Publish date: Tue, 6 Dec 2016, 04:23 PM 


In a tight spot

Although funding issues for future spectrum re-farming exercises are not expected, any increase in competition intensity or a larger-thanexpected payment could thwart FCFs and may put dividends at risk. With the government’s commitment on reducing its fiscal deficit and new competition trying to carve out market share, the risk is real. Meanwhile, sector dividend yields are already unappealing while the increased risk does not support the sector’s premium valuations. Maintain sector Underweight rating with DiGi for preferred exposure.

Cellcos can juggle spectrum cost and dividends, but risk is there

The government managed to raise upfront fees of RM2.7bn from the recent round of spectrum reallocation (for the 900Mhz and 1800Mhz bands), or the first of three lined up till 2018. While there is sufficient capacity for the cellcos to juggle spectrum cost and dividend commitment, we think that dividend upside will be capped, while downside risk is enhanced. Should the cost of future spectrum be higher than anticipated or competition accelerates, the threat of lower dividends would be real.

Competition more rational, for now

On a more positive note, irrational competition which has eroded revenue and profitability of the 3 incumbent cellcos over 2014-15, has somewhat dissipated in recent months. We would nevertheless not discount further price competition from the fourth player, U Mobile, which has gained traction; with better spectrum allocation, it will be an even more formidable player. Webe, which was recently launched, remains a niche player, but can be a potential threat with its strong parentage and their ambitions.

3Q16 results season – broadly in line

9M16 core earnings for the telcos fell a sharp 27% yoy but were broadly in line with expectations, with the exception of Axiata. Sequentially, earnings picked up, although largely due to the 2Q16 low base. On the whole, earnings for the telcos were generally impacted by more intense price competition and start-up losses. We had downgraded Axiata to a Sell due to continued earnings disappointment and the lack of a re-rating catalyst.

Maintain UNDERWEIGHT

Although stock prices have corrected and the sector has underperformed the broader FBMKLCI, sector valuations remain lofty. We think that this could be attributed to a combination of reasons including the sector weighting and its liquidity. The sector’s Shariah compliance status also helps in its positioning, especially amongst domestic funds. Nevertheless, against a backdrop of unattractive valuations and yields that have turned less compelling (because of the earnings contraction), and the lack of a rerating catalyst, we remain sector Underweight with DiGi (DIGI MK) as our sector top pick given its ability to sustain dividend payouts, growing revenue market share and most appealing yields.

Valuations and recommendation

Sector still trading at valuation premium …
Although stock prices have corrected ytd and the sector has underperformed the broader FBM KLCI, sector valuations remain lofty at an average 2017E PE of 23x. We think that this could be attributed to a combination of reasons including the sector weighting in the FBM KLCI and its liquidity. The sector’s Shariah compliance status also helps in its positioning, especially amongst domestic funds. Hence, despite unattractive valuations and yields that have turned less compelling (because of the earnings contraction), the sector remains a crowded trade for the above reasons.
… which in our view is not justified
On the whole, the PER multiples are generally not far from their peaks (respective companies’ PER bands in Fig 23-26) while dividends yields are significantly lower (Fig 21), having more than halved since their peak in 2012 and near their 5-year lows. This, in our view, does not justify the premium valuations. Moreover, with the potential risk of lower dividends ahead, the valuation premium is even less justifiable.

Maintain Underweight

Against a backdrop of unattractive valuations and yields with a lack of immediate re-rating catalysts, we remain sector Underweight. Furthermore, with a rising US interest rate environment (and potentially a rise in Malaysian Government Securities’ yields), we believe that there is further scope for sector underperformance (Fig 22). For sector exposure, DiGi is our sector top pick given its ability to sustain dividend payouts, growing revenue market share and most appealing yields.
Source: Affin Hwang Research - 6 Dec 2016

“兄弟”自小分开抚养 重逢后皆是跨性女人

https://www.malaysiakini.com/news/365378

妮莎雅尤
发表于 2016年12月6日 晚上6点4分 更新于 2016年12月6日 晚上6点31分



跨性别是先天还是后天的?对大马跨性别社运人士妮莎雅尤而言,这个问题一点也不陌生。

常有一些欲强加标签给LGBT群体的人士,向他们抛出这个问题。而妮莎雅尤在个人成长经验中,已有清楚答案。

妮莎昨天在面子书分享,小她三岁的妹妹萨拉丽安特拉(Saraliantra Ayub)的故事。原来,她们从小被分开抚养,而多年后重逢才知道原来的“弟弟”也是跨性女人。

妮莎出生在巫裔和印裔混血家庭,她的父母皆有上一段婚姻,并且生了顺性别(cisgender,非跨性别)的孩子。

“他们的第一段婚姻并没持续。”

父亲在六岁时去世

父母结婚时,母亲皈依为穆斯林,妮莎和萨拉也相继诞生。妮莎说,父亲在她六岁时去世。

“那时情况很糟,我母亲孤家寡人,必须抚养我们。”

“最后她必须将我的‘弟弟’交给父亲的亲戚抚养,而我就则留在母亲以基督徒为主的家庭。”

“我们在很小的时候就分开了。我在13年后,即19岁时,才见到他。”

她忆述,在计划和“弟弟”见面前,心里非常纠结尴尬。

“我们都很紧张,我在想我的‘弟弟’会怎么接受,他的‘哥哥’其实是个姐姐。”

“同时,我的‘弟弟’也在想着同件事。”

惶恐终于转为惊喜


妮莎(见图)说,当两人终于见面时,惶恐终于转为惊喜,只因她们发现对方也是跨性女人。

“我们都很惊讶,发现我们彼此都是跨性女人。”

“那是多大的安慰,我们知道我们并不孤单,而最重要的是,我们这一对跨性别姐妹了解彼此的状况。”

“我们可能在很多方面不同,但庆幸我们有对方的支持。”

非选择或生活方式

妮莎强调,对自己和妹妹而言,身为跨性女人并不是一个选择或生活方式,而是一个身份。

“作为一名跨性者并非我们要求或梦想成为的,这是我们天生的样子。”

“而作为一名跨性男人或跨性女人,并不是后天的,而是天生的。只是我们必须选择接受(这个事实),还是选择一辈子拒绝这个身份,以取悦他人。”

“这是跨性别者需要作出的选择。我选择过我的生活,而不是取悦别人。”

妮莎是著名的跨性社运分子,曾在今年获得美国颁发国际妇女勇气奖(International Women of Courage Award)的殊荣。

加州圣地亚哥市也将妮莎生日定为“妮莎雅尤日”(Nisha Ayub Day),以表彰她的维权贡献。


然而,跨性别者在大马处境堪忧。妮莎就在去年被不明人士袭击,导致脚受伤。

Introducing Amazon Go and the world’s most advanced shopping technology

每秒钟出现新网购者 东南亚电商潜能大

498点看 2016年12月5日
仇昭珍

大马经济转型中系列

大马经济转型中系列257

我国商界无论是企业、中小企业,甚至一般人民化身的微商,都应该好好把握这个新崛起的电商经济发展趋势。

我们的目光不应仅放到中国淘宝,把海外产品引入只有3000万人口的国内市场而已,更应把焦点放在东南亚6亿人口的大市场。

步入11月,双11光棍节疯狂网购节庆,全世界的目光都聚集中国阿里巴巴引领的电子商务再创高峰。

很多人其实并不知道,我国所在的东南亚,也是电子商务高成长地区之一,未来发展前景值得期待,潜能巨大!




仅占全球市场1%

科尔尼管理咨询公司的预测数据显示,2015年全球电子商务销售额料高达1兆美元(约4.4兆令吉),这其中除了中国电子商务市场领头羊的销售额最高以外,东南亚主要6国,也就是马来西亚、菲律宾、新加坡、泰国、印尼和越南的电子商务市场规模达90亿美元(约400亿令吉)。

不过,相比之下,实际上东南亚市场只占全球电子商务市场的1%比例,规模仍属微小。

但是,近年来这个地区的电子商务市场却在高速增长中,谷歌与淡马锡联合发布的东南亚经济报告就指出,东南亚地区每秒钟都会出现新的网络购物者。



增长势头凌驾发达国家

eMartker和科尔尼的研究就指出,中国和东南亚6国预测将以25%的速度激增,成长势头凌驾发达国家市场,譬如美国、欧洲和日本,前景令人刮目相看。

弗若斯特沙利文咨询公司(Frost & Sullivan)也预测,东南亚电子商务市场总值,将从2013年的70亿美元(约308亿令吉),迅速增长至2018年的345亿美元(约1518亿令吉),5年内市场扩增的金额是275亿美元(约1210亿美元),或增长了79%,近乎一倍。



料10年内扩张16倍

谷歌与淡马锡联合的东南亚网络经济报告也指出,虽然与传统商务比较,电子商务的比例仍不高,2015年55亿美元(约242亿令吉)电子商务总额,只占整体商务总额的0.8%比例,但估计在未来10年将以32%的年均复增迅速增长,到了2025年将占6.4%,10年内电子商务市场会扩张16倍!

传统商务市场总值虽仍高于电子商务零售市场总值,但相比之下,前者未来10年预测只取得7%的单位数年均复增。

这说明了电子商务的未来发展趋势,远比传统商务来得强盛,可说是势不可挡。



6亿人口市场庞大

东南亚电子商务市场迅速发展的主要支撑力,在于市场规模庞大,人口规模有6亿,联合国内生产总值有2.5兆美元(约11兆令吉),经济规模甚至比印度更大,而且未来10年预测将以5.3%的年均成长率持续地扩张。

人口结构年轻

而且,东南亚各国的人口结构年轻,70%人口处于40岁以下,相比中国57%,网户不仅年轻而且不断地增长中,现在网户估计有2亿6000万人,是全球第四大网络市场,预测到了2020年将近乎倍增至4亿8000万人。

移动设备全球最高

值得一提的是,东南亚地区每个月都有380万人口成功连线上网,是全球成长最快的网络市场。

良好的网络基础设施,成功为这个地区建立了电子商务发展的有利条件,使东南亚成为最为有潜能的电子商务市场。

东南亚的移动设备普及率也是全球最高的,平均高达119%,不仅高于中国的95%,也高出98%的全球平均水平。

该项报告也指出,随着移动设备,智能电话价格普及化,会鼓励更多人上网购物,东南亚未来10年的电子商务交易料会增加27%,市场规模估计超过50亿美元(220亿令吉)。


马新网购冠全球

上述数据显示,马来西亚和新加坡网购率冠全球,只是印尼的网购率仍比较低,可能归咎于该国的信用卡支付普及率仍只低于1%;相反的,马来西亚和新加坡的信用卡支付普及达到37%和12%,使两国的网购市场发展步伐较其它国家快。

这些有利因素,都一再促使全球网络业者纷纷看好东南亚电子商务的发展前景,预测东南亚有望在2025年成为全球排名第5大的数码经济区,而电子商务是其中一个重要的分支。

实际上,东南亚各国政府十分重视电子商务和数码经济对国家经济发展的重要性。

落实条例推动发展

配合全球数码经济和电子商务的迅速崛起,东南亚国家也落实许多相关条例,推动国内电子商务的发展,譬如马来西亚与菲律宾已落实电子商务法令,新加坡与马来西亚已落实个人数据保护法令,而泰国也落实了电脑犯罪法令。

同时,越南政府正积极发展该国的数码经济,计划未来5年内让有80%的企业能搭上电子商务快车,让顾客通过手机软件或网络进行交易,30%越南人会上网购物。

实际上,根据尼尔森11月公布的调查显示,今年上半年,亚太区消费者网购的频率属全球最高,其中东南亚国家之中的46%越南受访网民,在最近6月内曾使用移动设备来进行网购活动。

泰国51%面书购物

泰国方面,有越来越多泰国农民以及其他人开始在面子书上出售产品。全球咨询公司普华永道商业咨询公司在全球25个国家和地区展开了电子商务调查,发现泰国51%的网购者通过社交媒体,譬如面子书购物,这个比例世界排名第一。

83%趋现金付款

观察报告指出,泰国消费者普遍上不习惯采用信用卡购物,这或会拖缓该国网购发展的速度,但网购规模却仍会持续扩张。

泰国高达83%的消费者,在网购时喜欢使用现金付款,属于东南亚国家中比例最高者,也比全球平均比例高出8%。

另外,贸易自由港口国新加坡国民,可能由于该国国内产品价格免税而相对低廉,所以选择网上购物,尤其是海外购物的习惯反而属于比较近年的事情。但是,目前该国消费者已成为网购最疯狂的消费群之一。

普华永道的调查报告显示,60%新加坡消费者每月网购至少1次,这项调查涉及500名新加坡消费者。其中38%受访者是在近3年才拥有网上购物的习惯,但却是全球采用移动设备上网购物适应最快的一群。

大马政府支持电商发展

马来西亚方面,谷歌与淡马锡在联合发布的东南亚数码经济报告中,乐观看好马来西亚会有越来越多人民通过网上购物,而每名网购者的交易次数都会有所增加。

在3000万的马来西亚人口当中,有38%人口低于19岁,这群新生代将持续主导电子商务的未来发展,甚至可算是未来市场的主要生力军,无论是身为网购者或卖家。

有关乐观看法主要基于我国政府极力支持电子商务的发展,提供了支持科技生态系统的良好基础建设。

在2017年财政预算案中,政府建议投放10亿令吉,提高国内网速、网络覆盖率和服务素质,有意明年提高宽频配套网速一倍,未来两年再提升一倍,更削减配套价格50%,试图进一步提高国家的网络普及率,让更多国民步入网络世界,更使我国人民在当前全球最热的电子商务经济领域中分得一杯羹。

推动中小企出口

我国政府也通过多媒体发展机构(MDeC),致力推动我国企业积极参与海外电子商务市场,提高中小型企业的出口。该局协助国内企业走向电子商务的措施包括:推行移动电子付帐系统,方便业者接受客户以银行扣账卡和信用卡付账;帮助业者参与国际领先电子商务市场管道,如阿里巴巴,以提高产品出口的机会,制造更多的企业营收;以及积极打造马来西亚成为亚洲电子商务物流与供应链活动的区域枢纽。

我国商界无论是企业、中小企业,甚至一般人民化身的微商,都应该好好把握这个新崛起的经济发展趋势,目光不仅放在去中国淘宝,把海外产品引入只有3000万人口的国内市场而已,更应把焦点放在东南亚6亿人口的大市场,把马来西亚独特的产品销往海外,为我国出口和经济作出更积极的贡献。

Karex expects to rise again

Monday, 5 December 2016
BY DANIEL KHOO

Karex workers sorting out condoms. Karex, the world’s largest condom manufacturer, last week reported a 63.4 year-on-year decline in its first-quarter net profit of financial year 2017 to RM8.14mil, while revenue rose slightly to RM80mil from RM76.1mil in the same quarter a year ago.

PETALING JAYA: Despite a drop in its financial performance in the latest quarter, Karex Bhd is quietly confident that it will pick up again in the year ahead.

“There was a delay in the delivery of some of our products. The reason was because there were quite a lot of stocks that were ready to go. It was registered but was unable to be shipped out to the tender market,” a Karex investor relations (IR) personnel told StarBiz.

“This delay, which is only by a few days, is estimated to be at RM13mil which will eventually be recognised. The tender market can be a bit lumpy to our earnings, as it is sold on a large batch basis,” he said.

Karex, the world’s largest condom manufacturer, last week reported a 63.4% year-on-year (y-o-y) decline in its first-quarter of financial year 2017 (FY17) ending June 30 net profit to RM8.14mil, while revenue rose slightly to RM80mil from RM76.1mil in the same quarter a year ago.

The company said that the delayed orders have subsequently been delivered, while net profit was affected in the quarter due to higher distribution expenses and a one-off corporate exercise expense.

It also added that lower foreign-exchange gains also contributed to the lower profit after tax.

“We believe our performance due to the delays will normalise again, as we have also been doing this tender business for quite a long time.

“The tender market’s contribution to our sales for the latest reported quarter is slightly below 29%, and it is usually higher than this,” he said.

“It was quite a strange quarter for us, given that the tender market sales were quite low.

“In the previous quarter (fourth quarter), the tender segment sales were at 39% of total sales with commercial at 59%,” the IR representative added.

The tender market segment for Karex’s products are usually purchased by non-profit organisations such as the United Nations (UN) to be distributed to lower-income countries such as those in Africa which are struggling with the HIV AIDS pandemic.

This segment has been disrupted in calendar year 2016 due to the humanitarian refugee crisis that refocused the UN’s efforts to put all its energy and budget to deal with this issue, while putting other matters such as restocking on the back burner for the time being.

“It has been an unprecedented year for the tender market. These non-profit organisations like the UN usually purchase enough condoms for a year’s stock to be distributed to lower-income countries. For the past year, they have been using their stocks to do the distribution,” he said.

“We expect that their ready stock levels are now low due to them tapping on their inventories, but they are not reducing their distribution either.

“We expect them to restock soon for the year ahead,” he added.

Karex’s tender market usually makes up to the low 40% of its total sales for the year. It was at 37% in FY16, while in the last quarter, it was at 29%.