Ebola

Ebola: OCBC has a report out on the counters impacted by Ebola. THe house notes that Malaysian-listed rubber glove manufacturers have performed well since the start of last week, which it believe is due to the worsening outbreak of the deadly Ebola virus in Africa. Demand for rubber gloves are expected to rise because of this. Stocks which have benefited include Hartalega (+3.5%), Top Glove (+2.3%), Supermax Corp (+5.5%), and Kossan Rubber Industries (+4.1%). On the contrary, the share price of Singapore-listed rubber glove maker Riverstone fell 2.1% since the start of last week. This was despite the fact that it recorded a solid 7.1% and 11.3% YoY increase in its 2Q14 revenue and net profit to MYR96.9m and MYR16.1m, respectively. Although management said during the analyst briefing that it does not foresee a sudden jump in demand due to the Ebola outbreak, its current capacity has frequently been taken up (2Q14 utilisation rate of 91%). Even before this outbreak, demand for its healthcare rubber gloves has been strong. On another positive note, Riverstone will see an increase in its production capacity by 1.1b gloves to reach 4.2b by end 2014. Management said that its new capacity has already been taken up by customers until the end of the year. Agricultural sector Biggest impact would probably be on Olam (SELL, S$1.87 FV), given its extensive African operations. The house also expect some impact on Wilmar (HOLD, $3.36 FV), GAR (HOLD, $0.55 FV) and GMG (Not Rated) as they have plantations there – biggest impact would be on GMG as the first two are relatively small and not contributing to earnings yet. Wilmar may also feel some impact following its recent acquisition of a sugar distributor that services the MENA region. Hyflux (SELL, S$0.75 FV) may also feel some heat, given that it is still keen to tender for projects in MENA. Airline sector Impact is expected to be minimal for SIA (HOLD, $9.97 FV) as revenue generation is small. In FY14, West Asia and Africa together only made up 4.4% of revenue by sale origin. SATS (HOLD, $3.20 FV), SIAEC (HOLD, $4.71 FV), Tigerair (SELL, $0.30 FV) - operations limited to APAC.