KUALA LUMPUR: CIMB Equities Research is maintaining its Outperform call on Adventa, premised on the potential re-rating catalysts of improving quarterly earnings coming from the capacity expansion and strong global demand.

It said on Thursday, March 5 that although Adventa's annualised 1QFY10/10 net profit beat consensus estimates by 2% and came in at 88% of its forecast, it was largely within its expectations as its upcoming capacity expansion will lift profits in the remaining quarters.

“The 1Q core net profit advanced 20% qoq and 25% yoy. Average utilisation improved to about 85% which allowed for an increase in sales volume of about 10% qoq.

“Adventa expects its sales to increase progressively this year as the new capacity from the new high-output factory in Kluang and new lines from its Kota Bharu plant will allow it to handle more orders,” it said.

CIMB Equities Research said since the results were in line, it retain its numbers and target price of RM5.44, still pegged to 13.2x P/E or a 20% discount to Top Glove's target P/E of 16.5x.