汇丰银行-马来西亚-材料行业-马来西亚手套制造商：不要为起伏的增长路径买单

《汇丰银行-马来西亚-材料行业-马来西亚手套制造商：不要为起伏的增长路径买单》由会员上传分享，免费在线阅读，更多相关内容在行业资料-天天文库。

1、16October2017MalaysiaGloveMakersEQUITIESMATERIALSDon’toverpayforachoppypathtogrowthMalaysiaTop3firmshavegaineddominanceinthesector,butearningsShishirSingh*andsharepricevolatilityhasrisenwiththeirscalesince2014Analyst,ASEANMaterialsTheHongkongandShanghaiBankingCorpora

2、tionLimitedshishirkumarsingh@hsbc.com.hkFurthermarketsharegainswithstablemarginslikelybutwill+85228224292comewithgrowthvolatilityintroducedbysupplymanagement*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulations.Avoido

3、verpayingforgrowth;value-focusedstockselectionleavesKRIastheonlyBuy;remainHoldonHARTandTOPGRisksfromgrowingscale:ThecombinedmarketvalueoftheTop3glovemakershasgrown2.5xvs.adeclineof16%inMSCIMalaysiainthelastsevenyears(bothUSD-denominated).Theircollectiveshareofthemarket,wh

4、ichhasgrownataCAGRof6%duringthistime,hasincreasedby12pptto36%.AsMalaysiacompaniesgaineddominanceinrubberglovemanufacturing,competitivepressuresstartedemergingduetotheiraggressiveexpansion.Bothearningsandsharepricevolatilityincreasedmateriallyduringthelastthreeyearssinceke

5、yfirmsarenowlargeenoughindividuallytoinfluencethewholemarket.Isgrowthvolatilitypricedin?Sure,long-termdemandgrowthof6-8%p.a.issupportedbylowglovepenetrationinemergingAsia.ThecompetitiveadvantageofthetopfirmshasalsoincreasedwithscaleandaweakMYR;however,stillmarginpressurew

6、illlikelyintensify,asin2014and2016,unlessthekeycompaniesactivelyalignnewsupplywithdemandgrowth.Theircommitmenttodosoencouragesustobelieveinthebasecaseofmarketsharegainswithsteadymargins.However,capacitymanagementwilllikelytakeatollongrowthfromtimetotime.Inessence,downside

7、riskstothebasecaseriseasthesizeofthecompaniesincreasesrelativetothesector.Webelievethismustbereflectedinvaluations.Avoidoverpayingamidhigherrisks;KRItheonlyBuy:Thesectorisjustifiablyexpensiveduetoitssolidtrackrecord,lackoffinancialleverage,andgrowingoligopolisticfeel.Alls

8、tocksaretradingnearlife-timehighsandourtargetpricesarebasedonone-yearforwardEV/EBITDAoftwostanda