Latest Target Price 6.80

https://research.rhbtradesmart.com/view-file/hash/176056513435231955fc5b711c62bc

RHB report:

Stay BUY with higher MYR6.80 TP from MYR5.70, 70% upside with
c.1% yield. Our TP is based on CY21F P/E of 11.3x – a 20% discount
against the peers’ average. Our target P/E is at a discount to reflect Comfort Gloves’ smaller market cap/liquidity to peers. 9MFY21 (Jan) earnings beat expectations on better-than-expected ASPs. After adjusting for higher ASPs, we increase our earnings forecasts and TP.

Earnings beat expectation. Comfort’s 9MFY21 earnings of MYR149.5m
were above expectations, as it makes up 97% of our FY21F full-year net
profit estimate. Comparison against consensus is not available, as the stock is under-researched. The positive deviation was due to better-than expected ASPs. In line with the gloves industry price uptrends, we believe Comfort has increased its monthly ASPs by 5-10%.

9MFY21 net profit soared 552% YoY. Revenue grew 69% YoY in 9MFY21
to MYR627.5m due to an increase in sales volumes and significantly better ASPs. Comfort also enjoyed better economies of scale, which caused EBITDA margins to increase to 34.9% (9MFY20: 12.7%).

3QFY21 net profit improved 111% QoQ (>10x YoY). Revenue grew 40%
QoQ (+106% YoY) in 3QFY21 to MYR276.7m. This was due to an increase
in sales volumes and much better ASPs. EBITDA margin improved to
45.3% vs 2QFY21’s 32.4% and 3QFY20’s 11.9%.

Prospects. Comfort believes the emphasis on hygiene and sanitation will
not be reduced in the event a vaccine becomes generally available. Hence, it plans to expand capacity by 10% in 4QFY21 to capture the rising demand for gloves. On the nitrile butadiene shortage, the company has acknowledged the global shortage situation. It said its specialty premium gloves made from latex are equally in demand as compared to nitrile ones.

Higher TP of MYR6.80. We have increased FY21F-23F earnings by 63-
103% to reflect the higher ASPs – in line with the industry trend. The higher TP is in tandem with better earnings estimates. Our target P/E has been lowered to 11.3x from 18x – in sync with the latest sector P/E.

Maintain BUY. In the near term, we expect Comfort to register a stronger set of results in 3QFY21 in tandem with the higher ASP trend in the industry. In the long run, we believe the company will be a beneficiary of the long term uptrend in global gloves consumption.

Risks include worse-than-expected gloves demand after the COVID-19
pandemic ends, lower-than-expected sales volumes/USD, and higher-than estimated raw material prices.

anyone has the latest report on Comfort? Heard that the target price is RM6.80