ESCERAM ICE-CREAM

ESCERAM sounds like ice-cream.. Can they perform as a MAGNUM ice-cream or just a normal ice-cream?

Formers

ESCERAM is a company which produces ceramic formers subscribed by the glove industry throughout Malaysia. Initially, they started with producing formers for examination gloves, but now they have expanded the range to surgical, household, industrial, balloons and speciality formers. Take a look at this video, i think you will understand what formers are and a process to produce gloves,  https://www.youtube.com/watch?v=A9PMs_N33fU.

Having operations and factories in Malaysia and Thailand, ESCERAM had 15 years of experience and produced and sold more than 30 million formers.[1] Why ceramic hand formers? They are for continuous industrial use under heavy-duty conditions, to withstand the complex processes which involving heat and chemicals to produce gloves, the formers need to have a high degree of resistance to industrial chemicals, exceptional mechanical strength, high thermal shock resistance and a very narrow of dimensional fluctuations. The types of gloves vary and have different processes. 

1) Fundamental Analysis:

This company is slowly growing. By observing its revenue and its net profit, although suffer losses in 2011, but it is producing better results. The revenue for 2013 and 2014 is quite similar (RM24,673k), but the net profit increases 113%. The company is putting some effort in cost efficiencies and effective cost management in the company, such as reducing wastage. They have better products mix which help to boost the net profit. [2] [4]

Let's take a look at the report by The Edge Financial Dailiy. [5] The company had been paying off debts. Debts can be classified as long term debt and short term debts and ESCERAM, currently only have RM7k of short term debt. [4] Cash rich company is more preferable as they can go through the economic hard times easier and more investors will normally go for cash rich company. I do not manage to find the customers for ESCERAM. Just a wild guess, maybe some of the glove companies are their customers. Those big glove counters, such as, KOSSAN, HARTALEGA, TOPGLOVE, SUPERMX. No solid proof available in the internet or their annual reports.

2) Technical Analysis:

The chart itself is very interesting. It breaks a double bottom and continue to maneuver up the trend. The support is looking strong at 0.345, these few days had been a great support as it doesnt want to go down. The next resistance will be 0.36. Another interesting thing will be the T+3. In most investment firms, the investors are entitled for T+3 without picking up the order, if there is no cash to pick up the order, the investors will be forced to sell at T+4. That is where normally we will see a force sell and another group of investors will be fishing at the bottom. The only negative thing is the big bearish candle on 8 October with a bearish engulfing. The price might be going down aligning to the overbought signal indicated by the upper Bollinger Band. Do respect your cut loss point, if the price drops below the support areas.

With the Q1 result for Financial Year 2016 will be announced in this month of October, the share price seems to react and indicating that its revenue and net profit will be performing. I am also looking forward to have a look at the their annual report to see if there is any surprises from the management.

Summary: 

ESCERAM is highlighted by The Edge Financial Daily. It should be monitored under our radar as well. The company is seriously taking some positive action in this current economy condition.

- Q1 2016 Result will be announced this October 2015.
- Revenue and Net Profit is increasing, with the management taking cost control steps to reduce wastage and the company have a better products mix.
- Net cash company with RM0.0683 per share.
- Huge volume on 6 October 2015 and it is now T+3.

- Our FBMKLCI is performing good due to the rise in oil price, oil price prompt the RM to strengthen

ESCERAM... a Magnum ice-cream for you? Your call...

Let's Ride the Wind and Gainvest

Gainvestor 10sai

10 October 2015

7.30am

Sources:

[1]: http://www.esceramics.com.my/
[2]: Annual Report 2014
[3]: How It's Made- Rubber Gloves: https://www.youtube.com/watch?v=A9PMs_N33fU
[4]: Q1, Q2, Q3, Q4  2015 Report
[5]: The Edge Financial Daily: 7 October 2015