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Wednesday, October 26, 2011

LATEXX PARTNERS BERHAD, MALAYSIA (Stock code: 7064) Worth to buy

Latexx Partners Berhad (LATEXX) is an investment holding company. The company, through its subsidiaries, manufactures, markets, distributes, and exports natural and synthetic rubber gloves. It also operates in property investment.
Latexx Partners Bhd says it is still eyeing M&A opportunities even after two failed merger and acquisition (M&A) bids in the last six months. Executive chairman and chief executive Low Bok Tek said future M&As involving Latexx will be assessed thoroughly to ensure the deals are economically viable, and make business sense. “As mentioned earlier, the company is committed to organic growth and is going to see the plans through. We have not ruled out the possibility of M&As in the future as well. However, for any corporate exercise to go through, it must be assessed thoroughly to ensure the basis of the industry consolidation is justifiable and creating value [for] the parties involved.”
According to Low, Latexx’s organic growth plans were not disrupted during the last two rounds of M&A as the glove manufacturer was still expanding as planned. He said the group had completed the expansion of its annual production capacity from six billion pieces of gloves to nine billion and is currently working towards 12 billion pieces in the next two years. By 2015, Low expects Latexx’s annual maximum output to reach 15 billion pieces. “All newly added lines are hybrid that is interchangeable between nitrile and natural rubber. We will continue to grow our business by focusing on our nitrile range, especially on the non-medical sectors,” Low said.

Low said the outlook of the group’s earnings is improving in tandem with the company’s expansion. The company is allocating some RM70 million to install new production facilities, he said. The capital expenditure will be financed via internally generated funds and an “optimum level” of borrowings. Geographical expansion to emerging markets is also on the cards. Low said since the last two quarters, Latexx has been widening its global reach across Eastern Europe, the Middle East, and Asia. These markets will be in addition to the developed markets where the glove producer already has a presence. (The Edge Financial Daily, August 10, 2011)

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