Published January 15, 2009

Glove makers may attract interest: CIMB

By EMILYN YAP

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A MALAYSIAN glove maker's plan to buy up industry peers may spark market interest in Singapore-listed Medi-Flex and Riverstone Holdings, CIMB said yesterday.

Spillover interest: CIMB reckons interest may spill over to Medi-Flex and Riverstone because of Top Glove's acquisition plans. But it cautioned that technical analyses have yielded bearish outlooks for both stocks.

Bursa-listed Top Glove Corp, which claims to be the world's largest rubber-glove maker, was reported by Bloomberg to be in talks to buy rivals in Malaysia and Thailand.

According to the report, Top Glove aims to control more than a third of the market by end-2012. Falling company valuations in a recession are encouraging acquisitions.

'While Singapore-listed rubber glove makers may not be the intended acquisition targets, some interest may flow into Medi-Flex and Riverstone,' CIMB said in a report yesterday.

The research house noted that Top Glove already owns more than 60 per cent of Malaysia-based Medi-Flex, which produces gloves for the cleanroom, medical and industrial sectors.

For the financial year ended Aug 31, 2008, Medi-Flex suffered a net loss of RM6.7 million (S$2.8 million). It is carrying out a rights issue to raise gross proceeds of up to $20 million.

The Catalist counter has been thinly traded and last closed at four cents on Jan 9.

Riverstone, which has manufacturing plants in Malaysia, Thailand and China, also produces cleanroom gloves. For the quarter ended Sept 30, 2008, it posted a net profit of RM7.2 million.

Riverstone's stock closed unchanged at 48 cents yesterday, but only three lots changed hands.

While CIMB reckons interest may spill over to Medi-Flex and Riverstone, its technical analyses have yielded bearish outlooks for both stocks.

Medi-Flex is 'testing its 30-day SMA (simple moving average)' and 'falling below it would suggest more weakness ahead,' said the research house.

And as for Riverstone, 'technical indicators have turned negative, suggesting further consolidation ahead'.