OSK Research has retained its "buy" recommendation on glove- maker Adventa Bhd (7191), after the company reported a first-quarter results that were within expectations.
The company's first-quarter net profit for the period ended January 31 almost tripled to RM9.35 million, from RM3.23 million a year ago, helped by additional capacity. Its revenue also grew by 12.5 per cent to RM76.64 million during the quarter.
Growth were mainly contributed by continuously strong demand for examination gloves.
The company also regained entry into the Latin American market and resumed exports to Brazil in November 2009.
"Going forward, we expect demand for its examination gloves to remain firm given Adventa's niche in surgical and dental gloves.
"(We) maintain a "buy" (call), with our target price maintained at RM5.37 based on a PER (price-earnings ratio) of 15 times 2011 financial year EPS (earnings per share)," said OSK.
"Our target price for Adventa is based on a PER valuation of 15 times financial year 2011 EPS. We like the company's market leadership in surgical gloves as well as niche in the dental glove segment," the research house added.
It is now RM3.07. Will it move up to its old trajectory?
Given the growing health industry world-wide, Adventa looks poised to take on a bigger market chunk with additional capacity in place.
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