UG Healthcare

UG Healthcare | Buy

Aug 24 close: 22 cents

Target price: 32 cents

Broker: RHB Research, Aug 24

UG Healthcare recorded FY2018 net profit growth of 77 per cent, on the back of revenue rising 20 per cent.

In the new manufacturing block, an additional 500 million per annum glove capacity production should be in full commercialisation by October, which is likely to drive output.

FY2019 utilisation rate is expected to be higher year on year due to production efficiency. We forecast FY2019 revenue and net profit growth of 14 per cent and 16 per cent respectively.

The group sees limited effects from the United States-China trade war on its exports as UG's gloves are for medical usage, and not produced in the US.

Key risks include higher gas and raw material prices, which could narrow margins.

Maintain "buy" with target price of 32 cents, offering a 39 per cent upside.

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