Koon Yew Yin's Blog
Technology Index is two-decade high - Koon Yew Yin
Koon Yew Yin
Publish date: Wed, 17 Feb 2021, 06:31 PM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
Many investors must have sold their glove stocks to buy tech stock. Is this a wise move?
Bursa Malaysia's Technology index is more than two-decade high of 90.08 points on Monday, the highest level since the burst of the dot-com bubble in 2000.
All the glove stocks have been dropping in last 5 months. For example; Supermax dropped from Rm 11.07 to close at Rm 6.09, a drop of Rm 4.97 or 45%. It defies investment logic. It rebounded 23 sen today to close at Rm 6.09.
Many investors must have sold their glove stocks to buy tech stock. Is this a wise move?
While the glove stocks are trying hard to regain lost ground after falling off the peaks, the technology stocks are gaining. Tech stocks are primarily involved in semiconductor-related business.
Reaching fresh peaks has become a daily affair among some tech stocks in recent months amid news that the semiconductor industry is facing a happy problem — supply growth could not keep pace with the strong surge in demand. The auto industry is one of them currently suffering from severe semiconductor chip shortage.
Tech stocks that have gained less than 30% year to date would have been considered laggards among their peers. The best performers which have chalked up at least 40% gain since the start of the year are UWC Bhd, Malaysian Pacific Industries Bhd (MPI), Unisem (M) Bhd, and Greatech Technology Bhd.
Over a longer horizon, all of their share prices have at least doubled since March 18 last year when the global equity rout, which was triggered by the panic selling amid pandemic fears, rocked the global markets. UWC tops the winner list with gain of over 1,000% since March 18, followed by Greatech, whose share price has leapt 631%.
The surge in share prices lifted Bursa Malaysia's Technology index to a more than two-decade high of 90.08 points on Monday, the highest level since the burst of the dot-com bubble in 2000.
Tech Stocks Exorbitant valuation
With share prices having risen in such a meteoric fashion, some of the tech stocks have reached historical price-earnings ratio (PER) of over 100 times — something that has not happened since the dot-com boom.
For examples, UWC has a PER of 135.05 times, and Unisem holds a PER of 125.54 times. The lowest PER among the semiconductor companies is MPI, with a PER of 43.88 times.
Glove Stocks under valuation
Glove stocks has been dropping in the last 5 months. Investors must have sold their glove stocks to buy tech stocks aggressively.
This is not a wise move based on fundamental valuation.
For example, Supermax’s 1st quarter ending Sept EPS 30.58 sen. Its 2nd quarter ending Dec EPS 41.14 sen, totalling 71.72 sen for 1st half year. The 2nd half year should be more than the 1st half year because of the surge in demand for gloves due to the Covid 19 pandemic.
Glove stocks have bright future
Many scientists predicted the Covid 19 pandemic will take at least another 4 or 5 years to be under control despite massive vaccination because at least 70% of the world population must be vaccinated. Otherwise, the virus will continue to spread. Moreover, many poorer countries cannot afford to buy vaccines to vaccinate their citizens. Based on this fact, the demand for glove will continue to exceed supply and all the glove makers can easily increase their sell prices to make more and more profit.
Assuming its 2nd half year profit is the same as the 1st half year, its annual profit will be 71.72 X 2 = Rm 1.43 EPS. Based on PE 10, its price should at least Rm 14.30 per share.
Supermax has the best profit growth rate among all glove stocks. Based on the current price of Rm 6.09, it is sell at PE 4 while most of the tech stocks are selling at PE about 100.
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Discussions
Be the first to like this. Showing 50 of 51 comments
That's how Jeff Bezos and Elon Musk amass their wealth and become the richest men in the world. Technology is ever changing and revolving. Hard for new comers to compete unless your ideas are really good. Glove making, on the hand, is easy-peasy. Every Tom Dick with money can venture into it.
2021-02-17 19:24
Hi KYY, tell u something very secret, now I forewarned you much earlier to better get out of all Gloves stocks as the euphoria of total collapse is happening soon.
2021-02-17 20:05
This KYY old fox, also a crocodile promoting gloves and he will silently dump all...beware of all the glove stocks, is on total collapse soon.
2021-02-17 23:47
Tech is the future.
If you notice, Forbes top 10 richest man in the world, 7 of them doing tech biz, 1 of them invest in tech and 2 not tech.
Times had change
But none of them doing gloves
2021-02-18 10:17
again singing the same old song. kuat promote means KYY wanna take the chance to sell his glove stock. when KYY suggest something, just do the opposite direction. he suggest buy, then you should sell.
2021-02-18 10:35
KYY loss 90% if his fortune due to margin call in Dayang. Now, he bought gloves when it is at its peak.
2021-02-18 10:51
He started to promote topglov when its rm25. Then, he switched to supermx. While others are busy selling to take profit. The market now cashes in early and prices are driven by expectation, not results.
2021-02-18 11:03
Why this Koon so desperate? I remembered he was selling while promoting Dayang & Jaks, same tactic again?
2021-02-18 11:03
koony is so desperate. he's trying to talk kok again. deleting my earlier comment.
because of your arrogance, thinking you can move markets with yur lazy articles, the market has humbled you.
sell and move on. quit your moaning. BE A MAN.
and don't be surprised at negative feedback when you write nonsense.
2021-02-18 11:12
Geezer can't understand smart investment strategy. Investors buy tomorrow's earnings potential not historical earnings. Only this dumb geezer look at historical earnings like Dinosaur.
2021-02-18 14:19
skyz again singing the same old song. kuat promote means KYY wanna take the chance to sell his glove stock. when KYY suggest something, just do the opposite direction. he suggest buy, then you should sell.
18/02/2021 10:35 AM
Wah long time no c u....still alive...
2021-02-18 14:26
Hi Uncle KYY, you don't use PE to value a tech company. You got it all wrong. Else, no one buying into wonderful tech companies like Amazon, Google, FB, Tesla etc. We need to base tech companies on revenue growth, strong balance sheet and business model. And pandemic theme is slowly evaporating in the air. Now they have high margins and volume but how 2 years down the road
2021-02-18 15:14
glove stocks can categorised as sunset industry,while tech/chips/wafer stocks are rising star industry.which would u prefer.
2021-02-18 16:31
uncle koon, jangan sedih, ramai retail investors bukan ada budget besar untuk blue chips, hanya mampu penny stocks, jom join kami, uncle happy kita happy
2021-02-19 08:05
I have been following Kyy for more than 5 years. Hes the king of recommending coffin stocks. Newbies please be careful
2021-02-19 11:13
just noticed unisem , chip maker ,continue to climb new high , while alas ,grove stocks are sinking
2021-02-19 11:30
Agree with uncle that tech stocks have gone too high and bubble might burst. Happened every Ox year for the past 5 cycles. Fortunes are made and lost. See what Jeremy Grantham has to say. However, gloves also cannot reach back the highs they attained last year
2021-02-19 17:21
Besides the Techno Index, we also want our whole mkt to be at 2-decade HIGH !!!
2021-02-19 17:24
Tech is future, you better believe it,I suggest young people's BUY and HOLD
2021-02-21 12:41
Such a pity for him, while watching tech stock fly higher and higher, he's hugging gloves stock which is sinking lower and lower. What a waste of opportunity.
2021-02-21 12:48
With so many venture into glove making...what make supermax,topglove that special that others will only buy from them?
2021-02-21 12:48
Uncle, The IT 4th Industrial Revolution will last another 20 years but the Glove Euphoria already bursted since 5 months ago. Careful, uncle.
2021-02-22 16:19
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I wrote yesterday that yy would next use what title under which to promote supermx yet again. Haha, he is now using technology valuations to beg you not to sell supermx.
2021-02-17 19:11