speakup

when glove shares drop, everybody talks about Vaccine, lower ASPs, Windfall Tax, ESG.
when glove shares rise, everybody forget about Vaccine, lower ASPs, Windfall Tax, ESG.

2021-04-27 21:35

Sales

People are funny, glove stock so much cash nobody wants. Those stock not much profit a lot of people chasing.

2021-04-28 13:21

Citadel9999

glove so.much cash but dividend so little!!!

2021-04-28 13:47

MF0001

U MUST BE JOKING

RETAILERS THROWING?

RETAILERS CAUSE ALL THE DROPS?

U MAKE UNKER LAUGH LERH

:DDDDDDDDDDDDDDDDDDDDDDDDDDDDDDD

2021-04-28 14:38

Ben Tan

speakup, Sales, Citadel9999, thank you for your comments.

While I agree with you, just a note that even if a company has a lot of cash, we have to see what it would do with it and how it would/could utilize it. Of course in the case of (most) Malaysian glove manufacturers, it may be relatively simple to calculate the excess cash that could potentially be distributed to shareholders.

I will give Supermax and Top Glove as examples.


Top Glove

1. Cash within next 5 years: RM28 billion
- Cash on hand = RM4 billion
- Estimated raised on HKEX = RM4.2 billion
- Estimated net profit 2HFY21 = RM7 billion (70% dividend)
- Estimated net profit FY22 = RM5.8 billion (50% dividend)
- Estimated net profit FY23 = RM3.1 billion (50% dividend)
- Estimated net profit FY24 = RM2.3 billion (50% dividend)
- Estimated net profit FY25 = RM1.6 billion (50% dividend)

2. Total announced capex = RM10 billion

That's approximately RM14 billion leftover for dividend payouts. Of this, the confirmed payout, based on the special dividend of 20% for FY21 and on the company's 50% dividend payout policy, is RM11.3 billion. There will be estimated of RM2.7 billion unallocated funds, which I believe could be distributed as special dividend. For instance, if extra 20% dividend is distributed for FY22 to FY25 (i.e. the dividend payout for the next 4 financial years is 70%), that would be RM2.56 billion - close to the leftover.


Supermax

1. Cash within next 5 years: RM13.85 billion

- Cash on hand = RM3.6 billion
- Estimated net profit CY21 = RM4.9 billion
- Estimated net profit CY22 = RM3 billion
- Estimated net profit CY23 = RM1.4 billion
- Estimated net profit CY24 = RM0.5 billion
- Estimated net profit CY25 = RM0.45 billion

2. Total announced capex = RM3.6 billion
- Malaysian factories = RM1.39 billion
- US factory = RM2.2 billion

That's approximately RM10.25 billion leftover for dividend payouts. In fact, the company can cover its announced capex with the cash on hand it has, and any future profits can be distributed as dividend fully. The company doesn't have a dividend payout policy though.

2021-04-28 14:57

patrico8

Solid fundamentals dont lie. Cash in hand already justify a better current price rate.

2021-04-28 15:01

Mat Cendana

For investors, one simply must have a glove counter or two in his portfolio. Although some analysts talk about ASP dropping, more players etc., these glove companies are in a very cosy position. And this will remain in the foreseeable future.

They have been turning in very impressive profits over the past few quarters. Kossan for instance had reported a monster first quarter last week, and this current second quarter should also be very good. And this company isn't too stingy when it comes to dividends.

Anyway, I've decided to just ignore the daily price action and not think too much about these `reduced ASP', short sellers and such. For as long as the environment remains positive for glove companies, I'm putting most of my investment capital into these counters.

2021-04-28 18:07

zzzz52

@Ben, thanks for the calculation on the estimated cash excess. It would be a good reference.

2021-04-29 07:44

Bgt 9963

Post removed.Why?

2021-04-29 08:47

meistsk3134

today market off. go eat char sieq

2021-04-29 08:56