OSK Research has maintained a 'buy' recommendation for Adventa Bhd shares despite revising downwards its target price for the company, with expectations of a stronger fourth quarter financial year 2010 results due to additional capacity from the company's new nitrile glove lines.
OSK said it revised the surgical and dental rubber glove manufacturer's target price to RM3.73 from RM5.37 but despite the downgrade, it continued to favour the company's market leadership in surgical gloves and its niche in the dental gloves segment.
'We think this is more resilient amid normalising demand for examination gloves,' it said in its research note today.
It said Adventa's later announcements of its nine-month financial year 2010 results may come below consensus due to continuous high latex price, lesser new orders and weakening of the US dollar against the ringgit.
'We are downgrading our earnings forecast for Adventa FY 2010-11 by eight to 13 per cent ahead of the announcement, taking into consideration its peer companies like Supermax Corporation Bhd and Hartalega Sdn Bhd that have already experienced quarter-on-quarter fall in performance of about 11 per cent due to high latex prices and an unfavourable exchange rate,' added OSK. -- Bernama
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