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Koon Yew Yin's Blog

Author: Koon Yew Yin   |   Latest post: Tue, 14 Jul 2020, 2:17 PM

 

Comfort Glove is playing catch up - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Tue, 14 Jul 2020, 2:17 PM


The following is part of RHB OSK buy recommendation for Comfort Glove with a new target price of Rm 4.80.

RHB OSK Upgrade to BUY from Neutral with new MYR4.80 TP from MYR3.18, and 41% expected total return. The glove shortage has worsened as COVID- 19 cases in the US surged 24% MTD. We raise our earnings estimates and TP on higher ASPs. Our TP is based on CY21F P/E of 25x, which is at a 30% discount against peer average. This reflects its smaller market cap/liquidity to peers. BUY for its FY21 (Jan) 128% earnings growth, supported by 10% ASP increase and 14% capacity expansion.

Capacity expansion. We expect Comfort Gloves to add six production lines in FY21. Upon completion, its production capacity will increase by 14% to 5.9bn pieces pa (ppa).

My calculation

After I studied the buy recommendation by RHB OSK, I calculated the market cap of Comfort to produce 1 glove in comparison with Supermax.

Current Comfort share price is Rm 3.87 and annual production 5.9 billion gloves.

Current Supermax share price is Rm 17.60 and annual production 25.7 billion gloves. 

Comfort market cap 580 million total issued shares X Rm 3.87 = Rm 2.24 billion.

Supermax market cap 1360 million total issued shares X Rm 17.60 = Rm 23.94 billion.

Comfort market cap Rm 2.24 billion divided by 5.9 billion gloves = 38 sen per glove.

Supermax market cap Rm 23.94 billion divided by 25.7 billion gloves = 93 sen per glove.

Based on my above calculation, I agree with RHB OSK Comfort target price of Rm 4.80.

 

President Trump could have saved many lives - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Mon, 13 Jul 2020, 7:16 PM


Currently there are 12,400,000 confirmed Covid 19 cases and 559,000 deaths the world. The daily new cases is more than 200,000. There are 3,097,300 confirmed Covid 19 cases and 132,683 deaths in the USA. The chart below shows that in the US the daily cases started in March and currently there are about 60,000 new cases daily.   

If President Trump had followed the well proven method of coronavirus prevention as soon as Covid 19 cases were first discovered in March, the number of cases and deaths would have been reduced significantly.

President Trump must consider human lives is more important than the economy of the nation. Until a few days ago, he did not even want to wear a face mask. As the US President, he must play the leading role and show by example.

President Trump continues to blame China for spreading the coronavirus to win more votes for his re-election. He calls it Chinese flu and Kongflu. Unfortunately, most Americans like what Trump is doing. As US President, he should have ordered all the state Governors to follow the well proven method of coronavirus prevention to save lives.

The Chinese learned from their experience when they discovered the coronavirus in Wuhan, a city of 12 million people a few months ago. This is a well proven method of coronavirus prevention as follows:

1 Lockdown all the cities and all the people must stay indoors.

2 Contact tracing to find out the people who were in contact with the Covid 19 patients in the last 14 days.

3 Only when the number of daily new cases is not increasing, lockdown is slowly lifted.

4 All the people must wear face masks when they are out of their houses.

5 Practise social distancing. People must not stand nearer to one another than 2 meters.   

The US political system is so rotten that I can foresee the down fall of USA. We are witnessing the fall of a great nation. The US economy will continue to plunge and China is or will soon be the richest nation on earth. 

 

Supermax: Update my target price - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Mon, 13 Jul 2020, 9:15 AM


Currently there are 12,400,000 confirmed Covid 19 cases and 559,000 deaths in the world. The chart below shows there are more than 200,000 new cases daily. 

The Chart below shows that there are 3,097,300 confirmed Covid 19 cases and 132,683 deaths in the USA. The chart below shows that in the US the daily cases started in March and currently there are about 60,000 new cases daily. The US has the largest number of Covid 19 cases in the world.

China and many other countries are testing vaccine on humans. It will take a long time for FDA to approve the use of the vaccine and to vaccinate millions of people.

Due to Covid 19 pandemic, the demand for medical gloves far exceeds supply. As a result, glove price continues to increase higher and higher. All glove manufacturers are taking advantage of the situation to increase their selling price.

After I read the analyst briefing from Supermax on 5 July I need to update my target price based on page 13 as shown below.    

I refer to the above report, total issued number of shares is 1,360 million.

The 3rd quarter ending 31 March 2020, revenue/sale Rm 447 million, PBT Rm 95 million and PAT Rm 71 million. The production cost is revenue Rm 447 million minus PBT Rm 95 million = Rm 352 million and average selling price (ASP) is US$ 60.

As shown on Supermax’ briefing page 13 above, ASP for the 4th quarter ending June 2020, the selling price was increased from US$60 to US$ 160, an increase of US$100 which is pure profit because the additional selling price does not involve production cost.

The 4th quarter ending June 2020, the production cost Rm 352 million divided by 60 X 160 = Rm 939 million which is the revenue/sale minus Rm 352 production cost = Rm 587 million which is pure PBT or PAT Rm 410 million.  

I refer to the table above. The total PAT for 1st quarter Rm 24,747 million, 2nd quarter Rm 30,165 million and 3th quarter Rm 71,065 million. As I calculated, the 4th quarter PAT is Rm 410 million.

The total profit before tax (PAT) for the year ending June 2020 is Rm 536 million.  

EPS Rm 536 million divided by total issued share 1,360 million = 40 sen.

Based on P/E 25 my current target price is Rm 15.00.

I want to be very safe and conservative in calculating my Target price. I assume the company does not have additional production and it does not increase its selling price for the next financial year ending June 2021, its annual profit will be 4 X 4th quarter PAT Rm 410 million = Rm 1,640 million.

EPS Rm 1,640 million divided by 1,360 total issued shares =Rm 1.21.

Based on P/E 25 my target price will be Rm 30.25.

Based on P/E 20 my target price will be Rm 24.20   which is easily achievable.        

 

 

  

  

 

 

Labels: SUPERMX

Tulips to cheer you up - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Sun, 12 Jul 2020, 12:55 PM


I always like flowers. Readers might recall that I posted my mis-adventure in planting Dendrobium cut orchids flowers to export to Japan about 20years ago. Although I could produce enough of cut flowers but I could find enough of cargo space to transport to Japan. All the cargo space was reserved for computer chips at that time. Moreover, there were not so many planes to Japan at that time.

 In my previous house fronting the 8th hole Royal Perak Golf Club, I had a fairly large garden around my house. But, when I built my new house fronting the Meru Golf Course, I found the land was too small for a garden. So, I constructed a vertical garden alongside the dividing wall as shown above.  

Flowers are a great way to brighten up people, especially during this lockdown due to Covid 19 pandemic. Flowers can also brighten up a dull room or turn a garden into a veritable rainbow. A good bouquet can turn any frown upside down. Rosesfor example, are the ultimate expression of love and affection. They are fragrant and sweet-smelling wonders that can make dark and dank forests seem warm. Of all the different flowers in the world, tulips are, perhaps, the loveliest. They come in an unending range of colours, shapes, and sizes. After all, there are over 75 different types of tulips! They pour across massive fields streaking them with blues, pinks, and yellows. Some of the most popular gardens in the world are home to the greatest collections of tulips. Tulips can truly make the world a much more colourful place. Here are some of the most beautiful tulips you can find spread across the globe. 

I visited Keukenhof Gardens in Holland

About 40 years ago, when I first retired as IJM Corporation Bhd executive director, I visited Keukenhof Gardens in Holland.

The flower park has 32 hectares of flowers. There are also spectacular flower shows, surprising inspirational gardens, unique artworks and wonderful events. If you want to know everything about the Dutch tulips, you can visit the Tulipomania exhibition in the Juliana Pavilion in the park.

The flower park has 32 hectares of flowers. There are also spectacular flower shows, surprising inspirational gardens, unique artworks and wonderful events. If you want to know everything about the Dutch tulips, you can visit the Tulipomania exhibition in the Juliana Pavilion in the park.

 

 

 

Supermax: Investors must be more observant - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Fri, 10 Jul 2020, 3:39 PM


From my experience as a listed company director, I know our company used to employ hundreds of people. In the finance department alone, we had about 50 staff to produce the quarterly and annual accounts. When so many people were involved in the preparation of the accounts, it was impossible to keep any secret, especially quarterly and annual accounts.

Supermax share price started to shot up 9 trading days ago. It shot up from Rm 7.72 to close Rm 12.44, an increase of Rm 4.72 or 61% in 9 trading days as you can see from the price chart below.

The price shot up Rm 1.58 yesterday which indicated that the result of last quarter ending June is already known to a few rich investors.

Before 9 am yesterday, I WhatsApp to about 50 friends on my contact list to tell them not to be afraid to use margin finance to buy more Supermax shares.  

To make more money, investors must be more observant and have a lot of common sense. Investors must have entrepreneur spirit and willing to take calculated risk.

Most investors will not buy Supermax today because it has shot up too fast and they want to wait for the price correction or price weakness to buy. Based on the aggressive buying in the last 9 trading days, it looks like the price will continue to go up higher. Conservative investors will have to wait a long time to be able to buy. By which time, the price will have gone up a few more Ringgit. 

In any case, I advise investors not to sell their shares as the Covid 19 pandemic will not be under control for at least another year as many scientists predicted.

World sees record 212,326 Covid-19 cases in 24 hours

THE World Health Organisation reported a record 212,326 new Covid-19 coronavirus cases in the last 24 hours. The WHO has reported more than 163,000 new cases every day for the past week, led by a rise in the Americas.

As shown on the above chart, there are more than 12 million Covid 19 cases in the world and the number of new cases is still spiking. As a result, the demand for medical gloves far exceeds supply. All the glove makers are increasing their selling prices to make unprecedented profit which is being reflected on their share prices.

That is why all the glove makers’ shares are shooting up like rockets. Investors should not sell their holdings because I strongly believe my target price of Rm 18 is achievable when Supermax announces its next 2 quarter results. This is my honest opinion. I am not asking you to buy to push up the share price to enrich me. Readers must remember whether you buy or sell does not make any difference to the share price because the daily traded volume is tens of million shares.      

 

 

Labels: SUPERMX

Supermax has increased selling price - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Thu, 9 Jul 2020, 12:19 AM


My nephew Yap Sung Pang from Manchester, UK sent these 2 posters which show the glove price has shot up from 5.83 pounds to 14.99 pounds for 100 pieces, an increase of 260% due to Covid 19 pandemic. The demand for glove far exceeds supply.

Supermax has its own brand and sale out lets in US, UK and many other countries. Unlike other smaller glove manufacturers, Supermax can easily increase its selling price. Even if I assume that Supermax can double its original selling before the pandemic, its profit would be phenomenal. Bearing in mind that the additional selling price is pure profit because it does not involve production cost.

Based on this new information, I realised that I have under estimated my target price of Rm 18. I believe the share price for Supermax should be above Rm 20 after the announcement of the next 2 quarter results. The next quarter ending June should be announced soon.

RHB and CIMB just informed me that they have increased the capping from Rm 5.00 to Rm 7.00 for margin finance from tomorrow onwards. Investors will have additional margin loan facility for buying more Supermax shares which will push up the share price.

Mr Ooi Teik Bee said that he believes Supermax will be included into FBM KLCI component stock index effective on 18th Dec 2020. This higher rating will also push up Supermax share price.

Labels: SUPERMX

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