M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Tue, 24 Nov 2020, 10:33 AM


M+ Online Technical Focus - 14 September 2020

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Healthcare sector

Signs of turning

  • Given that there are no signs of abating in the new numbers of Covid-19, we see demand for personal protective equipment (PPE) to remain sturdy overtime. According to Statista (German market data specialist), global PPE market is expected to balloon from US$52.0bn in 2019 to US$93.0bn in 2027.
  • Concerns over the confirmed Covid-19 cases (more than 200,000 daily since 20-Jul- 20) likely to ensure demand remains intact. The retracement in gloves-related stocks in recent weeks suggests that weakness is likely to be overdone, primed for recovery. Also, we see valuations have turned more compelling at current juncture.

Trading Catalyst

  • Comfort Gloves Bhd saw the commissioning of new production reaping the benefits with 2QFY21 net profit jumping 501.4% YoY to RM42.8m. Moving forward, the group will focus on the production of natural rubber and synthetic premium specialty gloves and will continue to ramp up their production by approximately 20.0% in upcoming quarter. Valuation wise, Comfort is trading at a relatively attractive FY22f P/E of 11.4x vs. 5Y historical average of 18.4x.

Technical Outlook

  • After enduring a rocky period over the past six weeks, price appears to have found some stability along the daily EMA120 level. The rebound was also accompanied by improved trading volumes, which powered the share price to recover from the oversold region. We may anticipate for the recovery momentum to build towards the next resistance of RM4.35-4.72 with long term target at RM5.17. Support is set at around RM3.06, while cut loss point at RM3.06.

Trading Catalyst

  • Careplus Group Bhd (Careplus) has since turnaround their position in recent quarters owing to the astronomical surge in demand for rubber gloves. Going forward, Careplus will see additional 10 production lines to be installed and commissioned by end-2020 while another 13 will be installed and commissioned 2021. This will more than double its total production capacity from 4.1bn pieces to about 8.8bn pieces by end-2021 In the meantime, Careplus is embarking for further expansion via the proposed acquisition of industrial land measuring 296,800 sqm Rembau which is near its existing factory in Senawang for RM23.0m.

Technical Outlook

  • In a similar move, Careplus’s share price has endured a rough ride over the past six weeks before finding some stability around the daily EMA120 level. After seven consecutive days of pullback, price has rebounded, forming a bullish harami candle. A potential rebound is taking shape towards the next resistance of RM3.00-3.30 with long term target at RM3.78. Support is set at around RM2.25, while cut loss point at RM2.24.

Source: Mplus Research - 14 Sept 2020

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Related Stocks

Chart Stock Name Last Change Volume 
CAREPLS 2.65 -0.13 (4.68%) 11,373,600 
COMFORT 3.69 -0.12 (3.15%) 8,034,800 

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