PART 3 – VACCINE, A GOOD FRIEND OF GLOVES??? WALKING HAND-IN-HAND??? OR DO THEY COMPETE WITH EACH OTHER???
(THIS IS PART 3 OF 6)
“We all HOPE vaccines can truly work to combat Covid-19. Covid-19 vaccine helps to prevent Covid-19 or reduces its severity when a person is infected, however it is “NOT A MAGIC PILL” at this moment – therefore, panic selling of valuable, profit-making glove related stocks may be overdone! So far, there are no vaccines that have 100% efficacy, efficiency and safety rate in the prevention of Covid-19 (surely we hope they will be one in the future). The news that some vaccines are more than 90% effective is every encouraging and welcoming in fighting the virus. We are well aware that vaccines will be released soon after permission is granted. However vaccines’ efficacy, efficiency and safety issues would still need to be further peer-reviewed before one can reach a more concrete conclusion. It needs approval from the relevant authorities. Their protective level in the long run is still under observations.”
“INJECTIONS OF COVID-19 VACCINES STILL REQUIRE THE USE OF GLOVES. GLOVES ARE STILL NEEDED IN HIGH DEMAND IN THE NEXT COMING YEAR!”
“GLOVES AND VACCINES HAVE TO USED TOGETHER – THEY ARE NOT COMPETITING WITH EACH OTHER IN THE COMING YEAR!”
“GLOVES DEMAND AND PROFIT WOULD ONLY DECREASE ONCE COVID-19 IS “UNDER CONTROL!”
“Covid-19 vaccines, for now, are NOT SUPERMEN that have SUPERNATURAL POWER. It is NOT THAT ONCE EVERYONE IS INJECTED, ALL COVID-19 VIRUSES ARE GONE AND IMMEDIATELY DISAPPEAR FROM THE EARTH. Despite of this, people still SELL GLOVE RELATED STOCKS AS IF COVID-19 VACCINES WORK LIKE SUPERPOWER.”
(6) HOW ABOUT VACCINES? WOULD THE RELEASE OF VACCINES DECREASE GLOVES DEMAND, WHICH IN TURN, WOULD DECREASE GLOVE COMPANIES’ PROFIT, AND SUBSEQUENTLY DECREASE LUXCHEM’S PROFIT?
((IT IS “GLOVES USED TOGETHER WITH VACCINES” – NOT “GLOVES VS. VACCINES” for the coming year!))
IT IS VERY EYE-POPPING THAT THE STOCK MARKET ACTS IN PANIC MODE – SELLING GLOVE-RELATED STOCKS WHICH LEADS TO MUCH DIP IN SHARE PRICES! The market reacts so negatively as if a truly 100% effective, safe vaccine is already found, proven and used by people worldwide – as if there is no more gloves demand, and the profits of glove companies are going downhill and so does LUXCHEM! Wait! Is this logical? Maybe not! Of course, people can definitely reason in their own way. The (demand) order for gloves are fully booked till next year. Profits are still increasing – QR released by glove related companies recently show fantastic results due to high demand and ASP!
But when there is news of potential vaccines (which still need further observations, studies, confirmations and reviews despite of the welcoming news – not yet finalized or conclusive at the moment) coming out – the market reacts so strongly in selling glove shares! The market is being irrational, illogical and overly-sensitive!
“ONE VACCINE NEWS CAN BEAT THE ‘PROVEN PROFIT RESULTS’ OF GLOVE RELATED COMPANIES (DUE TO HIGH GLOVES DEMAND)! ISN’T IT A BIT OVERDONE?”
This is truly IRRATIONAL, PANIC SELLING - OVERLY-SENSITIVE SENTIMENT. DOES THE GOOD NEWS OF POTENTIAL VACCINES (WHICH NEED FURTHER ANALYSIS AND CONFIRMATION) MEAN “IMMEDIATE REDUCTION/DECREASE OF GLOVES DEMAND AND ITS PROFIT?” NO! GLOVES ARE STILL NEEDED WHEN VACCINES ARE RELEASED – MORE NEEDED WHEN PEOPLE ARE VACCINATED!
WHY CAN’T ONE THINK DEEPER AND MORE REASONABLY WHEN IT COMES TO GLOVE-VACCINE NEWS? We think the market is fearful, rigid and conservative in its thinking – unable to think rationally. For a vaccine to be proven and truly work, it needs time – it has to go through “peer-reviewed studies” and W.H.O. also has to monitor it before it is said to be conclusively effective, safe and working (to what extent) – though it might still not be perfect/near-perfect or offer 100% protection. Of course, there are a number of vaccines which will be released soon (good news), however this is the starting point to understand more about the vaccines – we are still exploring. And this is just the beginning to discover more. Why does Mr. Market react like this? Mr. Market is just overly-sensitive! By right, one should think deeper, have more critical thinking and analysis of this issue.
Well, in the short run, the huge profits (of glove companies) would be less likely affected, with rare exception. The orders (demand) for gloves have been fully booked for the next coming year. At this moment, there are a number of vaccine trials in their final stage and would be eventually released as announced. Some reported having good, positive results (of course, this is a welcoming news people are waiting), and this causes all glove related shares to decrease – fearing that the vaccines’ good outcomes might negatively affect the demand of gloves - and subsequently glove companies’ profit. WELL, WE NEED TO DIFFERENTIATE BETWEEN PEOPLE’S PANIC SELLING OF SHARES AND PROFIT OF GLOVE COMPANIES WHEN VACCINES ARE RELEASED! Well, the stock market, particularly glove related stocks are very sensitive to vaccine news – usually when there is some “positive news, claims or announcements” regarding vaccines,” the related stocks are the ones which would see a “drastic decline in share prices due to panic, heavy selling”. This has happened MANY, MANY TIMES before we see these glove related stocks “REBOUNDED AND PEAKED AGAIN” since their fundamentals are still strong.
How do we explain this situation? Usually, there is a “KNEE-JERK REACTION!” People do panic selling due to the potential efficacy and efficiency of the vaccines – the glove stocks are super-sensitive to vaccine news for numerous times since months ago – though PROFITS FOR GLOVE COMPANIES GO HIGHER AND HIGHER OVER THE TIME. The market is OVERLY-FEARFUL. REMEMBER, THE VACCINES’ SAFETY AND EFFICACY CONCERN STILL NEED FURTHER CONFIRMATIONS AND REVIEWS! We do hope vaccines can truly work to combat Covid-19, however to ensure their true efficacy and safety, it needs qualified, professional, long, careful and tedious studies. Here are the reasons:
From the above discussion, there are a few important things when it comes to vaccines’ role in fighting Covid-19:
With this presentation, how do we relate all these to GLOVES USE? To put it simply, this is what we are most likely (these are possibilities subject to their own situation – non-absolute) getting:
When positive news about vaccines is released in the media, hospitals and people worldwide still use gloves. THEY DON’T STOP OR REDUCE USING GLOVES! GLOVES ARE NEEDED!
When vaccines are approved by governmental bodies, mass produced, released, sold and distributed worldwide, hospitals and people worldwide still use gloves. THEY DON’T STOP OR REDUCE USING GLOVES! GLOVES ARE STILL NEEDED!
When vaccines are peer-reviewed, evaluated, approved, confirmed, concluded to be safe and effective (either moderate, good, near-to-perfect/perfect vaccine) – and announced by W.H.O. to be reliable as well as authentic, hospitals and people worldwide still have to use gloves. THEY DON’T STOP OR REDUCE USING GLOVES! GLOVES ARE ALSO NEEDED!
When front liners, medical staff, the weak, the needy start getting vaccinated (early vaccinations), hospitals and people worldwide still use gloves. THEY DON’T STOP OR REDUCE USING GLOVES (except if truly effective, safe vaccines are found)! MOST LIKELY MORE GLOVES ARE NEEDED FOR VACCINATIONS!
When ordinary, common people start getting vaccinated (vaccination years - which would take years), hospitals and people worldwide still use gloves. THEY DON’T STOP USING GLOVES (exception - the same with the above)! EVEN MORE GLOVES ARE NEEDED FOR CONTINUOUS VACCINATIONS!
During post-vaccination years (almost everyone [who is willing to take the vaccine] has been vaccinated), hospitals, medical staff, and people worldwide still use gloves, however gloves demand WOULD SLOW DOWN AND HAVE MUCH DECREASE – HOWEVER, THEY DON’T FULLY STOP USING GLOVES! BUT WHEN IS THAT? No one can exactly tell (it depends on the vaccines’ progress), but we just roughly guess (non-exact). The fastest maybe 2022, maybe 2023, maybe 2024, etc. (if the progress is not smooth)……….
WHAT DOES THAT MEAN THEN? It means that the panic selling of glove related stocks occurred in these few months’ time are overdone (though some selling actions at certain period of time can be considered reasonable. It is also caused by profit-taking activities after the prices peaked). Nevertheless, GLOVES ARE STILL HIGHLY DEMANDED THAN EVER!!!!!
When should one consider selling glove related stocks? Of course, people can freely buy and sell shares (according to one’s own decision and judgment) in the short run during “up-down-up corrective period,” but what is meant here is in the general context – the whole scenario (the bigger picture) of gloves demand. These are some scenarios under consideration:
Many people think that gloves and vaccines stand opposite to each other – which in fact, are not. They think that when vaccines are found, people stop using gloves. It is as if this is a battle between gloves and vaccines – GLOVES VS. VACCINES. If there are gloves, there are no vaccines. If there are vaccines, there are no more gloves use. And since there is a number of potential (good) vaccine news releases, there would be no more gloves demand. We find this thinking a bit funny and irrational. It is as if vaccines are competing with gloves. It is as if there is either GLOVES or VACCINES - cannot have both – as if they are substitute goods. It is as if you have to make a CHOICE and pick only 1 – GLOVES OR VACCINES? It is like we only use ONE of them at a time. However, the reality is FAR FROM THIS UNDERSTANDING!
The fact is, gloves have to be used together with vaccines. GLOVES AND VACCINES are COMPLEMENTARY GOODS for now – NOT SUBSTITUTE GOODS. BOTH HAVE TO BE USED TOGETHER. Gloves are used when there are no vaccines. When vaccines are found, GLOVES ARE EVEN MORE NEEDED BY MEDICAL STAFF to inject vaccines (for vaccinations). IN SHORT, with the release of vaccines and vaccinations, gloves are more needed than ever. The vaccination process would take a few years and during this period of time, gloves usage would also be increased. When vaccines are released and people receive vaccinations, the surge in demand for gloves would lead to increase in profits for glove related companies! Therefore, MORE VACCINATIONS, MORE GLOVES DEMAND, MORE GLOVE CHEMICALS ARE NEEDED, MORE PROFITS EARNED!
To conclude, gloves demand would only decrease when almost all people are fully vaccinated (they are effectively protected from Covid-19), or when Covid-19 is no longer a threat, danger, risk to humans. However, that scenario would be POSSIBLY at least 2-3 years from now to materialize. And remember, so far there is NO vaccine which could offer 100% protection (or near perfect) from Covid-19! If vaccines do not offer enough protection, people will still get infected with Covid-19 even after vaccinations. And if that is the case, GLOVES ARE STILL NEEDED FOR “DOUBLE PROTECTION” SINCE THERE IS NO FULL CERTAINTY VACCINES WORK IN EVERY CASE (the problem is only solved when there is a certainty of truly effective, safe vaccines!) Gloves would still be in HIGH demand – this could be the new norm the world is going to practise for now!!!!!
Demand for gloves would only decline once Covid-19 can be fully controlled from spreading! BUT WHEN WOULD THAT HAPPEN? NOT SO SOON! NOT NEXT MONTH! MOST LIKELY NOT NEXT YEAR! THE EARLIEST COULD BE 2022, 2023 OR …..????? So for the moment and next year, gloves would still be in HIGH DEMAND!
For now, IT IS “GLOVES USED TOGETHER WITH VACCINES” – NOT “GLOVES VS. VACCINES!” Gloves and vaccines are complementary goods for now (while people receive vaccinations) – they are used together. They are good friends. Only when Covid-19 vaccines are truly effective, efficient and safe, and people worldwide have been vaccinated, then we can say it is “Gloves vs. Vaccines” – from complementary goods, they now become substitute goods.
EVEN IF CERTAIN PEOPLE ARE WORRIED THAT SOME HEALTHCARE STOCKS COULD BE OVERVALUED (ANYWAY, THEY MIGHT STILL REBOUND IF REPORTING HIGHER PROFITS IN THE TIME TO COME), THE SAME DOESN’T APPLY TO LUXCHEM! LUXCHEM IS VERY MUCH UNDERVALUED AND ITS PRICE DOESN’T MOVE MUCH IN TANDEM WITH ITS INCREASING PROFIT!!!
GLOVES + VACCINES = “FRIENDS, TOGETHERNESS, WALKING HAND-IN-HAND FOR NOW”
(7) WHAT IS THE POTENTIAL GROWTH AND FUTURE SCENARIO OF LUXCHEM?
((POSSIBLE GROWING, MAINTAINING PROFIT DUE TO CONTINUOUS INCREASE IN GLOVE DEMAND BY NEXT YEAR))
Well, much have been written for the previous question, therefore we are just going to provide a short, precise and exact discussion here. Well, THE POTENTIAL GROWTH FOR LUXCHEM – ITS FUTURE SCENARIO (IN THE COMING YEAR) SEEMS TO BE VERY POSITIVE, BRIGHT AND CLEAR!
Given the situation that Covid-19 cases are still increasing and spiking in many countries, the demand for healthcare, PPE and glove related products are high and many glove supplies are fully booked for the next coming year. Glove chemicals, as sold by LUXCHEM and by other chemical provider companies, are also FULLY BOOKED. There are no more glove chemicals for sales.
Due to this overwhelming demand for glove materials and chemicals, some companies no longer take orders. Mr. Sim of LUXCHEM has ceased taking orders from mid-2021. This means that the demand for glove chemicals is so high and increasing over the time – to the extent they are overly-booked until no more stocks. In addition to this, chemical provider companies have also increased their ASP prices due to shortages and they can increase the prices in the future. In the case of LUXCHEM, it has increased its ASP prices by more than 100%. And these ASP increases have been reflected in its latest QR result – the net profit has increased to 14,169,000. This figure has been shown in PART 2, however it is presented here again to make the point that LUXCHEM has truly benefited from the increase in worldwide demand of gloves.
NET PROFIT (PROFIT AFTER TAX) = 14,169,000 (EXCELLENT - increases from 7,581,000 for the current year previous quarter)
NET PROFIT GROWTH RATE = 86.90% (more than 10% - a very high profit growth)
There is an INCREASE OF RM6,588,000 PROFIT (to 14,169,000 from 7,581,000) – equivalent to 86.90% profit growth rate compared to the previous quarter of the current year. This is much higher than the 10% growth rate for usual growing company. This was contributed by higher profit in the trading activities of LUXCHEM.
With this, one can see that the profit for LUXCHEM is growing. And this profit will probably be maintained or growing much more for the coming quarter and year. Gloves in 2021 is still high in demand, leading to HIGH DEMAND FOR GLOVE CHEMICALS as well, thereby INCREASING LUXCHEM'S PROFITABILITY. It is a good company with high potentiality and bright future.
DISCLAIMER: Please read and understand this disclaimer. This article is written upon observations and it is intended to be a SHARING – for informational and educational purpose only. The intention is to share knowledge with you all. None of what is written here is to influence your decision to buy or sell shares. REMEMBER, IT IS NOT A BUY CALL, IT IS ALSO NOT A SELL CALL. This article is from one’s point of view – consisting of various opinions. You are welcome to read this article, however you need to do your own research first before buying or selling any shares. You should be aware that you buy or sell shares at your own responsibility and risk. This article doesn’t recommend any buy or sell call decision in shares. Share market investment comes with risk, and no one can guarantee everything. It is only a sharing. AS ALWAYS, you need to do your own diligent and prudent research before investing. To buy or sell any shares ENTIRELY DEPENDS on your own decision, judgment and choice. You make your own call either to buy or sell.
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