Adventa Bhd

Adventa Bhd involves in manufacturing and distributing of healthcare products. It looks interesting according to Kenanga Research, with a target price of RM2.48 Adventa closed at RM1.70 today, add on another 7 sen.

Below are the major points from the research report:

Glove manufacturer with a difference, being only a handful of manufacturers capable of making a meaningful entry into the high end surgical glove market. First Malaysian company to be TUV certified since 1997 which can count upon reputable clients including John Hopkins Hospital of USA and large Group Purchasing Organisations;
Aggressive capacity expansion should see output rising from 2 billion pieces to 3.5 billion by FY09, a 34% CAGR increase;
High barriers to entry for the surgical glove segment, unlike the normal examination glove where requirements are demanding and qualification time consuming. Surgeons “stickiness” to a particular brand can pose a huge barrier for new aspirants. With quality and competitive pricing, the Group has been able to make successful inroad into this segment under OEM and their own brand basis;
Foray into Uruguay should bear fruits in the medium term. Cost advantages couple with the ability to provide a higher level of service to a market size of 500m in terms of population is an opportunity not to be missed. The South American production facility allows for the scaling of the tariff wall and cut short the lead time for customer order to eventual receipt of the goods; and
Compelling valuation at 6.3x FY09. Fair value of RM2.48 based on 6.5x FY09F (January year end) represent a 25% discount to the market average of 12.8x. The discount is mainly to account for its smallish size and the execution risk with its overseas forays. With increase investor familiarity and proven execution, the discount factor can and will be narrowed. Buy with an upside of 52% from the current RM1.63 level.

Lastly, Adventa has been delivering consistent quarterly financial performances as well: