Comfort Gloves has ample scope to ramp-up production.

Six new lines commenced in 1QFY21. The six new lines commenced operation in Feb 2020. This, alongside the existing 49 production lines in the two plants in Simpang and Matang, Taiping, are running at close to full capacity, which collectively can produce between 430-450m pieces of gloves/month. The commencement of the new lines is timely as it helps to cater for both existing demand as well as the global surge in demand – arising from the unexpected outbreak of the COVID-19 pandemic.

Beyond current expansion, I believe more capacity may be added in the future, as the company had acquired about 39 acres of land in Perak in 2018 that can potentially house more capacity ahead. As demand for nitrile and specialty gloves increase. The potential capacity expansion could help to capture more market share moving forward, given its niche in the premium specialty gloves segment.

Fair Value of Comfort Gloves

Valuations are very subjective hence there is not a single price that should be the fair value for a company. Nevertheless, the share price of a company should trade at a valuation multiple closer to the industry leader/average. Excluding Hartalega, the average P/E ratio of TG, Kossan and Supermax is 31.83x [(44.7+29.0+21.8)/3].

The minimum fair value of Comfort Gloves's share price should be RM1.26 while the maximum fair value is RM1.84. I will exclude the calculation based on Top Glove's P/E ratio because it is too high and there is a specific reason why Top Glove trades at that multiple.
Given the increasing demand for medical gloves, it is evident that Comfort Gloves will continue to deliver a strong financial performance especially for the Calendar Year 2020. The closing price as at 30 March 2020 is RM0.82 indicating a 54% discount to the minimum fair value of its share price (RM1.26). Remember, that number hasn't even incorporate the rapidly rising demand for medical gloves.

Correct! wait for the promotional write up on Comfort soon.

Yes, Uncle KYY is definitely in as this is the most undervalued glove company as suggested by Uncle two days ago in his blog,

KNM FINANCIAL PERFORMANCE FY2018 PER ANNUAL REPORT

The first half of FY2018 saw Brent crude oil experiencing a prolonged low oil prices around US$55 per barrel. Many upstream oil & gas majors continue to battle with strained business conditions and delays in capital expenditure budgets or investments.The crude oil prices began to show a modest recovery in the second half of the year when the crude oil price began to trend upwards, rising to touch USD$70 per barrel following efforts by the Organisation of Petroleum Exporting Countries (“OPEC”) led production cuts to restore supply and demand balance.Our Group’s revenue posted for FY2018 was approximately RM1.43 billion as compared to the consolidated revenue of RM1.36 billion recorded for FY2017.

This is mainly due to higher revenues recorded under the Europe segment in the supply of process equipment which grew by 6.6% as compared with FY2017, and higher revenues contributed from the new bio-ethanol facility in Thailand which commenced commercial operations in September 2017.The losses before tax in FY2018 increased from RM36.60 million to RM412.35 million.

This was mainly due to PRUDENT measures taken to write down the non-profitible investments and other assets including property, plant and equipment, inventories and long overdue receivables from completed projects held by non-performing business units mainly in Saudi Arabia, Canada and China. The amounts written down were mainly non-cash flow items .

OUTLOOK

Construction and services

We anticipate that the outlook for year 2019 to remain challenging. The trade tensions between America and China have yet to be resolved and thus creates uncertainties for the years ahead. Regardless of these trade tensions, the oil and gas industry is predicted to remain steady despite oversupply risks.
One of the major products of the Group is the heat exchanger. According to a new market research report "Heat Exchangers Market by Type (Shell & Tube, Plate & Frame, Air Cooled), Application (Chemical, Petrochemical and Oil & Gas, HVACR, Food & Beverage, Power Generation, Pulp & Paper), and Region - Global Forecast to 2023", published by Markets and MarketsTM, the market size of heat exchangers is estimated to grow from USD 14.68 billion in 2018 to USD 22.59 billion by 2023, at a CAGR of 9.0% from 2018 to 2023. The market is driven by increasing power generation capacities and rise in technological advances in heat exchangers. The rising energy prices and stringent government regulations on the emission of CO2 are also driving the heat exchangers market. (Source: PRNewswire.com dated 15 August 2018). In view of this, management is optimistic on the prospect of this sector.

Renewable Energy

The Management is optimistic on the long-term prospect of the bio-ethanol plant in Thailand. Demand for ethanol between 2018 and 2020 is forecasted to grow by an average of 4% to 4.0-4.5 million liters per day due to yearly increases in fuel consumption that is expected to range between 3-4% year on year coupled with a steady increase in the fraction of the national vehicle fleet that is capable of running on fuel with high ethanol content. (Source: Thailand Industry Outlook 2018-2020 by Krungsri Research)

News report dated 31st March 2017.
Old new but interesting nevertheless.

KNM Group Bhd, which was in the red last year, appears to be turning the corner and is expected to move into the “path of profitability this year” with overseas ventures beginning to kick in.

The one time darling of investors saw its share price plunge from the dizzying heights of RM10 in 2008 to about 56 sen last Friday. KNM chief financial officer Richard Voon said that as at July 2012, its orderbook stood at RM5.1 billion, its waste to energy projects coming up to a total RM2.8 billion and its core products accounting for the remaining RM2.3 billion.

“Our vision is to be among the top five process equipment manufacturers and turnkey systems provider for oil and gas, petrochemicals, minerals, power, environmental, renewable energy and biotechnology industries,” he told The Malaysian Reserve in an email interview.

“When we started KNM group, we were only providing low-end process equipment, but we have evolved to manufacture world class high-end process equipment and are a systems provider with state-of-theart technology.”

The company, which was in the red in 2011, is expected to return to the path of profitability this year with its Asia & Oceania division and Europe division contributing positively but the performance of its Americas division is “still under water,” says Voon.

Analysts tracking the counter said that its weak results in recent years were attributed to increased competition in the lower-to-middle range process equipment segment and reduced demand for process equipment due to economic cyclical factors.

They added that in the high-end process equipment, KNM also saw modest increase in new contracts secured due to general slowdown in capital expenditure by oil and gas majors.

From a geographical viewpoint, the group is exposed to potential macro-economic difficulty in Europe, given the rather high revenue contribution from its European business.

Voon said the South America region continues to weigh down on the Americas performance due to the slowdown on its orderbook compared to previous years, however this is cushioned somewhat in North America’s contribution from the Canadian oil sands projects.

On its immediate plans, Voon said that the company planned to list Borsig on the Singapore Stock Exchange (SGX). The move will have an indicative market capitalisation of between RM1.8 billion and RM1.9 billion, as indicated by UOB Bank Ltd in the preliminary valuation for the company, which is at 15%-20% discount to the current sector average.

OSK Research Sdn Bhd analyst Danny Chan said the Borsig listing could be “the silver lining” that the company was craving for in its return to profitability. He added the reason behind the listing of Borsig was to raise funds to expand Borsig’s compressor business.

“Presently, the compressor division is already running at a maximum capacity and there is a strong order backlog due to the delay in the delivery of the gearbox, a key component to complete the compressor which it outsources from a third party,” he said.

Chan said Borsig was expected to be the main earnings driver for the company in the future. He added that while KNM had been successful in securing contracts in the past, it needed to get “its act together” in the execution and operations of these projects.

Some of the other lingering concerns is that while it appears to be building orderbooks, it appears to be sacrificing margins.

On this, Voon said about 2% of its total orderbooks were from the legacy low-margin projects when KNM had to lower its margins to remain competitive against its counterparts in Korea.

He said this was evidenced in its quarterly results released to Bursa Malaysia where firsthalf margins were 17% compared to 15% in the corresponding period of the previous year.

“Moving forward, efforts are on getting this up to a sustainable average margin of 20% which we hope to achieve by filling our orderbook with more mid- to high-end product segments,” said Voon.

On the status of the UK job, Voon said that its RM2.4 billion Peterborough waste to energy plant was expected to span three years and once completed, will provide the group with sustainable recurring revenue base, to complement and stablise the existing business which is by and large dependent on the oil and gas industry.

“We are nearing financial closure, and Exim Bank being the lead arranger is expected to complete the syndication soon,” he said.

On its gearing, Voon said its gearing was 0.71 times as at December 2011. The company is undertaking a rights issue exercise, proceeds of which will be used to pare down its current debts.

Voon said that upon completion of the rights issue in November, its gearing level was expected to improve at 0.55 and could see gearing level further reduced to 0.28 when the warrants were fully exercised.

Absolutely Mabel. Just hold on the KNM shares patiently and you will be rewarded. This is a solid
company with world class expertise in Waste to Energy technology and is turning around robustly. Currently, most countries are actively looking at ways to convert trash to energy and KNM has the expertise. The next 2 quarterly results is vital and I'm confident its going to get better and better. Going forward I believe the share price will be supported by good earnings. Ignore the corrections that will appear from time to time, its normal, as long as its on an upward trend. Oh yes ignore the naysayers too! My TP is RM1-00 by January 2020.

An impressive writeup with substance. That's how a proper analysis should be done with facts and figures. The 3 IBs should learn from you. I believe the TP should be easily RM2-3 in 6 months time based on your writeup.

By Jim Hyerczyk - Mar 30, 2019, 7:00 PM CDT

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures surged to a new high for the year this week. The markets are being underpinned by the OPEC-led production cuts and the U.S. sanctions against Iran and Venezuela, which have helped tighten the global supply. However, Friday’s spike to the upside is likely being fueled by increased demand for risky assets and firmer U.S. Treasury yields, which have dampened concerns over a U.S. recession later in the year. The catalyst behind the price action is the optimism created by the resumption of the trade negotiations between the United States and China.

Strong First Quarter Performance

Crude oil is set to post its biggest first quarter gain in 10-years. Additionally, WTI futures are in a position to rise for a fourth straight week and are set for a first quarter gain of 31 percent. Brent futures are set to post a gain of 27 percent for the first quarter.

CNBC says, “For both futures contracts, the first quarter 2019 is the best performing quarter since the second quarter of 2009 when both gained about 40 percent.”

Petra Energy to acquire more marine fleet
by Aziz Hassan
BINTULU: Sarawak-based Petra Energy Berhad is looking at buying more work barges, work boats and supply vessels to support its increasing role in the offshore brown field work, particularly in the oil and gas hubs in Sabah and Sarawak.

Executive director and chief operating officer Ahmadi Yusoff said the proposed aquisitions will be premised on a right mix of vessel portfolio and growing opportunities in offshore oil and gas operations. The company’s current fleet comprises three workbarges and two work boats.



He told a media briefing in conjunction with the Kumang cluster onshore tie-in facilities handing over ceremony here last night that the project, involving procurement, construction and commissioning of the tie-in at the Malaysia LNG Sdn. Bhd. SC-2 and Bintulu integrated facilities onshore upgrading and modifications, was completed ahead of schedule on August 30.

In recognition of its health safety and environment standards, Petra Energy received accolades from Petronas Carigali and MLNG for 835,000 safe manhours achievement for the project earlier this month.

Ahmadi, who has been instrumental in the turnabout operations at the Kumang project office, said that currently the group’s major contracts include the hook-up construction and commissioning (HUCC) contract for Petronas Carigali awarded last December.

Another is the Sabah/Sarawak HUCC and major maintenance contract awarded in late 2008.

According to Ahmadi, the company’s immediate priority was to focus on onshore brown field opportunities in Sabah and Sarawak like in Kimanis (Sabah), Labuan and Bintulu as well as developing hubs in Peninsular Malaysia as part of its expansion plans.

These include opportunities in areas of topside major maintenance and construction; hook-up and commissioning in the immediate and short-term besides marginal and small field redevelopment in the medium to long term.

“We also see strong growth potential in fabrications work for the oil and gas industry,” he said, adding that Petra Energy has established a collaboration with Labuan Shipyard and Engineering to undertake minor and major fabrication works and had acquired a facility in Tanjung Kidurong here.

The two new yards will complement its current fabrication facilities in Shah Alam and Labuan.

On human capital needs, Ahmadi said the company, currently supported by a professional, technical and contract workforce of about 2,600, will continue to grow its human capital portfolio in the core business areas.

At present it is working closely with the Dayak Chamber of Commerce and Industry of Sarawak to assist in youth development, especially in skills training programme. At the same time Petra Energy plans to reinforce its partnerships and collaboration with all oil and gas majors in the industry. — Bernama

Yup I'm afraid so, the the impending quarter result will be disappointing by the looks of it. Insiders
are always the first ones to know hence the selldown.

Calvin fret not just accumulate as you will not see this unjustifiably low prices again. Unfortunately Dayang seem to be the bellwether O&G stock now and it is holding up pretty well. By the way I have added more this morning at 97 sen. My TP is RM2-00 by year end. Patience is key Bro and have a good day.

Rozabil collecting man!

Destini will easily close at 42sen today.

Wah!!!! Last minute sat- ka -liau at 1.71. Poowwerfu lah!!

Yup, thats Uncle's and Calvins"s mantra, load up before mass promotion. Nothing wrong if its a stock with good potential to ride the oil and gas wave

Uncle Koon is collecting quietly for all we know as Destini Oil Services is a big player with loads of potential. Their quarterly results is encouraging to say the least.

Interesting writeup Bro Calvin and many thanks for it. Bought a substantial amount on Monday morning at 27 sen. Will keep for at least a year as I believe Velesto has along way to go. This is just the beginning of the uptrend. My TP is RM1-00 within a year.