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Supermax produces various types of natural rubber and nitrile latex gloves to over 165 countries such as the USA, European Union, Middle East, Asia and South Pacific countries. The company is also involved in trading of latex gloves, generation of biomass energy, trading and marketing of healthcare products, medical devices and property holdings activities.

As Malaysia’s very first home-grown contact lens manufacturing company, It has obtained the necessary license and approvals to export its products to over 60 markets globally, including the USA and Japan markets which are two of the largest contact lens market presently. The contact lens brand, namely AVEO is distributed via its own global distribution network located in 8 countries, through joint ventures and appointment of authorized dealers in over 50 other countries as well as via e-commerce online sites available in three countries such as USA, Malaysia and UK. The brands owned by Supermax such as Supermax, Aurelia and Maxter are trusted and recognized by laboratories, hospitals, pharmacists, doctors and surgeons around the world. As we knew all of those countries are affected by COVID-19.

United States

Confirmed 1.37M +20,377

Recovered 211K

Deaths 80,602 +941

Worldwide

Confirmed 4.13M +61,554

Recovered 1.42M

Deaths 283K +8,499

From my perspective and prediction there is a big-boom sales from this country alone (USA). So we dont need to figure out the other sales from other countries llike Europe.

FINANCIAL REVIEW

Supermax has achieved a revenue growth of 17.92% from RM1.304 million in FY2018 to RM1.538 million in FY2019. Based on 3 years of CAGR basis, SUPERMX has a revenue growth of 14.19%.

The increase in revenue was attributed on the back of increased of volume production arising from its ongoing rebuilding and replacement program as well as the ongoing efforts to fine-tuning and boost operational efficiency and production capacity.

The commendable performance was achieved in the face of challenges such as uncertainties caused by the on-going US-China trade war and Brexit, high volatility in raw material costs and increased competition in the global marketplace. Nevertheless, the company is committed to continue working towards maximizing the company’s performance and stakeholders’ interest and values.

So, my positive thinking and view as follows :.

1. Share buyback refer to a company repurchasing its own shares. 

2. Share buyback boost share prices by reducing the number of outstanding shares in the market. 

3.Share buyback can benefit shareholders if they tick certain boxes. The best use of cash, if there is not another good use for it in business, if the stock is underpriced is a repurchase.

4. Share buyback should also be most beneficial when shares are bought back below their true value.

So, in simple terms.. share buyback means repurchase of shares by the company. It can happen in three ways.. :

1. Either the company purchases its own shares in open market
2. Issue a tender offer and lastly
3. Negotiate a private buyback

Also, for me there a some reason companies go for share buyback such as :

1. Attempt to boost earnings per share (EPS)
2. Reward shareholders
3. Undervalued shares
4. Lack of growth opportunities
5. Tax advantage

For this SUPERMX case, I had chose no. 3 (Undervalued shares) When the company feels the shares are undervalued, a share buyback is used to pump up the stock price, which acts like a support or new base for the stock.

There could be a number of reasons why shares of a particular company are trading lower despite stable fundamentals. A buyback reassures investors that the company has confidence in itself and is determined to work towards creating value for shareholders. 

So, this is the time company protect their value of price. Of course its among the best Glove Counter which is still 3rd liner lower P/E 38.76 now from the lowest P/E 25 on Feb-Mar 20. My target P/E is 70-80

Currenty Big 4 (Four) P/E now : 

Harta = 60.77
Topglov = 49.09
Supermx = 38.76
Kossan = 33.28

I just want to focus my fav Supermax. As we know this company is spending RM1.1 billion to increase the production capacity from the current 24 billion pieces per annum to 27.4 billion pieces by 2020 and 44.1 billion pieces per annum by 2024. I noticed the last pevious announcement that company bought a 5-acre piece of industrial land in Meru, Klang Selangor for RM20 million for future expansion of its manufacturing capacity. This is a simple reason that we can see how much the confidence level from management. 

The plan is to construct a new manufacturing plant No. 16 over the next few years, which will increase the group's production capacity by about 4.5 billion pieces of gloves per year.  This acquisition is in the best interest of the group as it enables the group to expand and grow their business to ultimately accrue long term benefits to the shareholders.

So, from RM1.29 till current price. The movement has been done approx 130%. With the available cash company, I am strongly believe the bonus issue will happen again this year when significant prices has reach. My estimation at RM5-RM6. If this happen, its good? or bad sign?