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Koon Yew Yin's Blog

Author: Koon Yew Yin   |   Latest post: Wed, 13 Jan 2021, 10:14 PM

 

Supermax will report a new record profit - Koon Yew Yin

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I have written more than 10 buy recommendations for Supermax. Despite my frequent buy recommendations, its share price has been dropping from Rm 11.89 on 6 August 2020 to close at Rm 7.11 today. It has dropped Rm 4.78 or 40% as shown on the chart below. It shows Supermax is on a down trend due largely to short sellers and JP Morgan’s downgraded all glove stocks. Fortunately, JP Morgan did not mention Supermax.   

 

Due to Covid 19 pandemic the demand for glove far exceeds supply and all the glove makers can easily increase their selling prices to make more and more profit.

Currently US has the most Covid 19 cases in the world. It has a total of 23.37 million cases and 389,621 deaths. These 2 figures are still surging as shown on the charts below.

 

 

USA is the biggest market for our Malaysian gloves and Supermax has its own sale outlets in most major cities in America.

Supermax reported its 1st quarter ending Sept EPS 30.58 sen. Its previous EPS was only 15.18 sen. It made 100% more profit than its previous quarter.  Supermax’s 2nd quarter should be another record profit which will be announced in the next few days.

If I assumed it cannot increase its selling price for its gloves for the whole financial year. To be very safe, if I assumed it cannot increase its selling price for the whole financial year, its annual profit will be 4 X 30.58 sen = Rm 1.22. Based on PE 10, it should deserve Rm 12.20 per share.   

Among all the share selection criteria such as NTA, cash flow, dividend yield, debts etc, the most powerful catalyst to push the price up higher is profit growth prospect. Supermax has the best profit growth rate among all the glove stocks.

The truth will set me free. I believe eventually the fundamental analysis for share selection will prevail.    

 

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Labels: SUPERMX

Related Stocks

Chart Stock Name Last Change Volume 
SUPERMX 6.70 +0.06 (0.90%) 24,291,200 

  andrew2020 likes this.
 
gohkimhock *yawn*
13/01/2021 10:30 PM
gemfinder No use. Everyday same story. U x boring i pun bosan
13/01/2021 11:08 PM
freddiehero whwhat happen to superman..
13/01/2021 11:09 PM
patrico8 Despite 10 buy calls, price still drop. If I had followed blindly, would have lost everything including my underwear.
13/01/2021 11:56 PM
Dartmaster After this article tomorrow drop 30 cents ! JP morgan is watching
13/01/2021 11:57 PM
i3gambler KYY, I agree that the EPS will increase further for the next one or two quarters. However, the EPS will soon drop drastically when more supply from existing and new glove manufacturers. How soon I don't know but I believe it is quite soon. It is better to use discounted model to estimate the fair value for SUPERMX.
14/01/2021 4:31 AM
CharlesT The problem is everybody knew their asp n profit will drop significantly in 2022 n 2023

And also the number of shareholders in Supermax has increased drastically by more than 300% in one year's time. A lot of latecomers only started to buy for the "free" bonus issues n most of them are suffering paper loss now and praying for vaccine to be failed n more n more cases of covid 19 so glove co price will rebound n they can have a chance to make some money

While fund manager who bought much earlier at much lower prices disposed their glove shares phase by phase for profit taking n move to recovery plays
14/01/2021 6:12 AM
CharlesT that's the reason why u will likely to see single digit PE for glove cos in 2021
14/01/2021 6:15 AM
CharlesT having said so, if KYY posts 5 articles a day to promote Supermax then maybe he will see some miracle to happen in Supermax's share price leh...

that's the power of faith...
14/01/2021 6:19 AM
LimitupLimitDown uncle u sitting on which penthouse floor? or quitely selling xD
14/01/2021 9:31 AM
sense maker A pathetic speculator is trying to save his skin. Yy just needs to borrow all money he can and put it into supermx and shut up lah.
14/01/2021 11:41 AM
LimitupLimitDown uncle, supermax dropping are you also shorting it xD
14/01/2021 12:34 PM
gladiator I don't see asp n profit will drop significantly in 2022 n 2023 maybe it will drop slightly only, unless 2022 onwards there are zero case of person infected. In March'20 all the analysis projected that covid will go away in 9 months base on previous experience of H1N1 but what do we see now?
14/01/2021 1:34 PM
Philip ( buy what you understand) Why did I sell all my topglove in May and never looked back? Probably because after that I bought myself some kpower and scib. The secret remains the same, sell when people are buying. Buying when people are selling.
14/01/2021 1:48 PM
williamtkb Bull and bear fighting.... We just hold our tickets and chips watching will do. Supermax shouldn't have much impact as Directors family hold more than 50% shares. Floating shares is lesser compare TG.
14/01/2021 1:48 PM
kelvin61 All this write up about the most powerful factor that will drive Supermax share price is rubbish. Majority of traders don't buy this story. They believe the days of old will return to the glove stocks in the not too distant future. The question is how fast. So, the play is concentrated on recovery stocks. Who gives a damn on all these repeated and recycle stories being spun again snd again like a broken record. In fact, the savvy ones are waiting for a big correction in the current prices of the big 4 glove stocks before buying.
14/01/2021 2:03 PM
emsvsi Thought process for glove lovers

1. mRNA vaccines are 94-95% effective and the majority of US and EU countries are going for them

2. Over time more will be vaccinated and new infections as well as mortality rates will come down

3. Demand for gloves will fall, especially from the panic-buying spot / adhoc order market. The non-medical usage will never be able to make up for the pandemic. Then the (very high up to 10x normal prices) ASP's made up of the spot / adhoc orders will fall quickly. As the past has shown countless times in every pandemic

4. So the longer you wait, the more get vaccinated, the lower the demand and the closer you get to ASP's and spot / adhoc demand reversing to the mean / normal

5. You say, "but what about the next few quarters 'supernormal' profit?" I say it is one-off. And the correct question is which institutional fund will buy (and they are the ones who move the market) knowing that it will come down back to pre-covid levels, knowing that after they buy, who is going to buy from them? Retailers?

6. Now, is there still value? Of course. But that is where Valuations come into play, and unfortunately in gloves, there is only sentiment and 'hot news' and short term traders. After all thats what got you into gloves in the first place isn't it, the lure of 'fast money'. Now fast money become long term bag holder
14/01/2021 2:06 PM
onionchong There's no way supermx can sustain profit like this. You shouldn't assume PE 10 for glove companies in the first place.
14/01/2021 2:53 PM
Stockisnotfun Everyone still not fear in gloves leh. They keep on buying. So do i understand they still not afraid so i shouldn't buy at all?
14/01/2021 3:30 PM
cicakman Now blame short selling.
14/01/2021 5:53 PM
Sesuke Seejvin 2
14/01/2021 6:17 PM
1lotman yes... supermax next QR will be record breaking.... but the share price... i dunno.... if only share market so straightforward, QR good then share price must go up.... i think i will be rich....
14/01/2021 6:49 PM
frleong2005 So much profit is no use if does perform well in stock market. Who wants to buy. Investors will lose money buying Supermax.
14/01/2021 9:08 PM
VenFx ME : THX SIFU TO ELABORATE THE UNTOLD POINTS IN SUPERMAX
DAM SCARY !


CharlesT The problem is everybody knew their asp n profit will drop significantly in 2022 n 2023

And also the number of shareholders in Supermax has increased drastically by more than 300% in one year's time. A lot of latecomers only started to buy for the "free" bonus issues n most of them are suffering paper loss now and praying for vaccine to be failed n more n more cases of covid 19 so glove co price will rebound n they can have a chance to make some money

While fund manager who bought much earlier at much lower prices disposed their glove shares phase by phase for profit taking n move to recovery plays
14/01/2021 6:12 AM
14/01/2021 10:33 PM
Vairocana9999 Uncle KYY, it is time to stop writing,no need to hard sell, people are immune to the fundamentals already, they just want to get rich overnight. So just relax, and sip your tea/coffee, watch the show.
15/01/2021 11:08 AM
Kimly2 VenFx, u shd scarry,
coz u miss the chance to sell above RM10.
15/01/2021 11:16 AM
Icon8888 Uncle is alway right
15/01/2021 11:17 AM
stockraider Listen to the daring JP Morgan advice, it make sense mah!
15/01/2021 12:01 PM
newbie8080 Hopefully, the IDSS will be further extended to 31/12/2021.
Else may be a setback to glove and many other stocks.
15/01/2021 2:51 PM
diuleiloumei 10 buy calls, 10 time drop, uncle can sao pei d
16/01/2021 5:50 PM


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