GLOVES COUNTERS CRASHED! IS IT AN OPPORTUNITY?

Top Gloves, Kossan, Hartalega and  Supermax dropped about 20 - 33% since January 2016, mainly due to appreciation of RM.  Kossan seems to dropped more than the others, in the 30% vs others about 20%.

Kenanga analysts, rerated most of the glove stocks, and gave Kossan a TP of RM8.00.  At time of writing, it is about RM6.34 per share.

A very quick calculation (behind the envelope) of Kossan using DCF and/or Ben's formula with a 7-8% market growth for gloves biz, Kossan is worth RM7.30 to RM8.30.  

Low and High of Kossan is between RM5.50 and RM9.50 for the last one year.  At RM6.40, I will say, it is reasonable, with growth of next 2 years of 14% p.a. as projected by Kenanga Analyst.

As usual, the billion dollar questions is, can Kossan move up to RM8.00 in one year time? As far as fundamental is concern, the price is at the lower band of last 12 month band.  So upside appears more than the downside. (AffinHwang TP RM7.50 @ 18 April 2016)

OVERALL BURSA

My fund manager insist this year should be a bull market since we are down 2 years in a row, which hardly happen in the last 40 years.  A down for 3 years in a row is unprecedented.  Bursa in terms of USD has dropped a lot over last 2 years, in fact, more than expected, despite a growth of about 5% p.a.

Let's see.

TIME WASTED

Unfortunately, almost 18 months has passed and this four letter word "1MDB" seems to appear almost daily in the local newspapers as well as financial magazines.  Worst still, it was published in 53 different newspapers internationally and not to mention the social media and foreign TV.  Many "productive" hours was wasted discussing this issue.

The morale is, when you sign something, you don't need to be responsible for it as long as it is only for compliance and in the name of corporate governance.  Even money is stolen.  Joke of the century?

WHAT NEXT?

I remember asking someone to take some fund back from UK, when sterling was around RM6.50.  Jokingly, I told that person you are buying Malaysian properties at 25-30% discount.  Not sure "that someone" actually did that.  If he or she bought say a completed unit of condo at cash, today, selling at same price, the gain is about 15%.  Just by taking the fund back for 3 months, a gain of 15% is commendable.

What about at today's rate (3.89)? Can our RM goes back to RM4.40 per USD, giving us another 13% return? Maybe not that much, but lately the appreciation in RM is also too much too fast.  Perhaps a 5-10% depreciation of RM from today over the next 6 months.

Let's see