KUALA LUMPUR: In the manufacturing sector, the prospects for can makers are weighed down by escalating raw material costs, higher anticipated labour costs and increased competition, said AmInvestment research. "The research house said this has eroded the margins of local can makers such as as Kian Joo Can Factory. "While downgrading its overweight stance on the manufacturing sector to neutral over the next 12 months, AmInvestment is positive on household product manufacturers such as VS Industry, ATA IMS and Luxchem Corp.It said VS Industry and ATA would benefit from the rising trend in trading up in the floor-care market, particularly due to their ties with a key customer in the segment. "However, we believe that the positive earnings prospects for both companies have been factored in at their respective share prices. "In chemicals manufacturing, Luxchem and Samchem have very diverse end-applications while their diversified, large customer based should mitigate supplier switching concerns and excessive reliance on clent performance.AmInvestment added that Luxchem would benefit from its exposure to the glove sector amid stricter hygiene standards globally.Its top picks for the sector are Luxchem (Buy, FV 74 sen), ATA IMS (Hold, FV RM1.83) and VS Industry (Hold, FV RM1.31).

Source: The Star December 20, 2018 01:30 UTC