SUPERMAX : SKY IS THE LIMIT

During H1N1 pandemic, during initial outbreak , Supermax announce a net profit of 19.7 million, quarter 31 March 2009. Its profit jump to 51.5 million during its profit peak on quarter 31 March 2010, a multiple of 2.61 increase in profit. The share price during that time  increase from 0.81 to 3.49 , an increase by multiple of 4.3.

For the current Covid 19 pandemic, its profit already jump from 71 million (Q3 March 2020)  to 399.6 million (Q4 Jun 2020). Thus, Supermax register a x5.62 times increase in net profit from Q3 to Q4 2020 result. Thus its share price supposingly should increase by 9.26 times based on the ratio. Share price of RM4.59 (Q3 2020) should become 42.50, if the history repeat itself. The target price of RM42.50 for Supermax is achievable. Don’t forget it is only two quarters  of increasing profit which market is  expected still have few quarters of increasing profit to come . This is an amazing stock during the Covid pandemic. Don’t forget its cash pile already balloon to RM1.18 billion as of 30 June 2020. The dividend will be lucrative if management declare it later. This will further boost up its share price. For Q1 2021, if its profit register a 700 million in profit (estimated conservatively due to increase in ASP and capacity), which is an increase by multiple of 9.85 compare to Q3 2020. The share price may increase by a multiple of 16.2 based on the ratio. Thus the ultimate target price will become RM74.50 for Supermax. It is really hard to believe, but the calculation is there to guide all the investors. As long as the fundamental is intact, it will finally become a realistic in the imminent.

Please remember : Share price will keep on increasing with higher and higher reporting profit. This has already proven in last H1N1 crisis for Supermax and Topglove. History most likely to repeat itself. On 28/3/2010 Supermax reach its 3.60 highest price. (before the highest profit quarter announce on 19/4/2010). Vaccine has introduced into the market by 1^st October 2009 actually. So when vaccine news on street or even introduce, is the good timing to buy on every dips to earn big. Glove demand will not directly plunge as people are people are more health conscious ,so demand of gloves still will increase  to a saturation point, then only the figures will reverse down. Now is only 1^st quarter of reporting increasing profit, at least another 3-4 quarters to go before the peak of reporting profit. Currently, no vaccine has been approved yet. Thus invest and hold for a longer term for Glove counters is a better investment decision in my opinion.

As long as you stick to the fundamental, you won’t go wrong. Always refer to this chronology if you have doubt, then you will make a wiser investment decision. Don’t look at share price, look at its fundamental value. Asking yourself what is the cause of unprecedented demand for gloves?

1 (most important root cause)-> 2-> 3-> 4-> 5 (outcome)

Always refer to the main factor which lead to share price increase for glove stocks when investors have doubt. Then we will make a wiser decision. Currently the Covid cases is still in the increasing trend and no sign of reversal yet.

https://klse.i3investor.com/blogs/savemalaysia/2020-09-01-story-h1513282471-Dr_Noor_Hisham_expresses_worry_after_predicting_rise_in_Covid_19_import.jsp

KUALA LUMPUR, Sept 1 ― The director-general of the Ministry of Health (MOH) today expressed worry after predicting a rise in Covid-19 import cases in Malaysia, owing to the onset of winter abroad.

Tan Sri Dr Noor Hisham Abdullah said as a result, most countries in the Americas, Europe and South-east Asia expect to see a spike in Covid-19 cases, as reported by the World Health Organisation (WHO).

https://www.bloomberg.com/news/articles/2020-07-18/covid-most-of-world-to-face-virus-without-vaccine-expert-says

The epidemiological behavior of this virus will not be that much different from other respiratory diseases. During winter, they come back.

There will be another wave, and it will be very serious. More than 90% of the population is susceptible.

https://www.thejakartapost.com/life/2020/08/29/more-contagious-coronavirus-mutation-detected-in-indonesia.html

DISCLAIMER

This post is completely for education and discussion purpose only. The author of this post does not have the required licenses to provide any investment advice or induce any trade for the readers here.  Therefore, it should not to be taken as investment advice or inducement to trade and the Author take no responsibility for any gains or losses as a result of reading the contents herein. Please invest at your own risk.