Dear Fellow Investing Fraternity of i3 Forum,
Looking back to year 2020 (Covid 19 time) we relive by reading the Excerpts from NEVER FULLY INVEST AT ALL TIMES on Supermax
Here is the Excerpts (pp 148to 153)
TheCovid-19 pandemic triggered a huge increase in the demand for rubber gloves. This meant that 2020 was a bumper year for rubber glove stocks. It was also one of the best years for Pheim as we benefited hugely from our investments in rubber glove shares through Supermax Corporation Bhd.
Supermax is the fourth largest rubber glove company in Malaysia. Its financials met Pheim's investment criteria - it had relatively low gearing, a good profit record, and the company was well managed.
However, thecompany was out of favour in 2019 as although its profit was rising, it was not significant. Things changed in early 2020. We noticed that the profit for the first quarter of 2020 was more than double but the share price remained flat.
The average selling price (ASP) of rubber gloves started to rise as demand increased in the wake of the pandemic, and this was expected to contribute to the bottom line more than usual due to the economies of scale. We decided to increase our exposure in the stock to the limit that we wanted.
Sure enough, the company's profit after tax jumped significantly from RM71.1 million in 1Q2020 to RM399.6 million in 2Q 2020, a surge of 462.6%. Asa result, the share price started to move sharply during 2Q2020
During one of thecompany's briefings, the management guided that the profit will rise substantially in the coming quarters mainly due to the increase in selling price. Supermax did not disappoint investors in terms of profit made. Its profits continued rising to RM789.5 million in 3Q2020 and hit RM1,059.5 million in 4Q 2020.
In less than four months in 2020, Supermax's share price shot up by more than 1,000%, hitting a high of RM23.91 (for RM11.96 after adjusting for the 1:1 bonus issue) on August 7, 2020.
Seeing the stock price scaling to such heights, we started asking ourselves if we remained comfortable with the share's valuation. Only a few months earlier, we had bought the stock at less than RM1.
We started to reduce our exposure in thestock. We managed to sell some of our positions before and after the stock's peaked at RM23.91 on August 7, 2020. Our selling prices ranged from RM21.30 to RM21.55 or RM10.65 to RM10.78 per share after adjusting for the1:1 bonus in September 2020
We decided to sell even though some brokers were then still very bullish on the stock, with some saying that it would continue to climb. We received many comments from our stakeholders and brokers asking why we had sold theshare, when the whole market was still very bullish on the sector.
We sold our last batch of Supermax shares in the middle of November 2020 at lower prices just above RM15 before adjusting for the1:1 bonus issuewhen thecompany reported rising profits.
After that, Supermax's share price trended lower, interspersed with short bouts of rebound. By end of 2020, it was more than 50% off its peak. Supermax closed on December 31, 2020 and Nov 30, 2021 at RM5.37 and RM1.83 respectively.
Interestingly, the share price hit the record high in August 2020 and began to fall during 4Q 2020 even though the company reported a record high profit for the year ended December 2020. It was a classic case. The share price had moved ahead of its actual profit.
Pheim Malaysia did not manage to sell nearthe highest price of RM23.90. The best price we got for the shares we sold was RM21.55. Based on our lowest purchaseprices of RM0.78 to RM1.00 paid for our investment in thestock brforeMay 2020, our profit was 2,055% to 2,662.8%.
What a break for the portfolios!
The rubber glove shares provided us with a massive return by giving us substantial profit when the overall Malaysian market was bad in 2020. Supermax was the best performing stock for Dana Makmur Pheim in 2020
To be continued....
Please come back for more
Calvin comments:
I first read Dr. Tan Chong Koay's "RISING ABOVE FINANCIAL STORM" & i got many many "Aha" moments as Oprah Winfrey said when i think i agree with 96% of his writing. Dr. Tan Chong Koay's investment phylosophy is what i had learnt all along
His second book NEVER FULLY INVEST AT ALL TIMES is another refreshing read. I thought i was the author (by similar sentiment. Of course I am such a small insignificant investor.)
To give thanks for what Dr. Tan had taught I have bought into market crashes. And bought when there was blood on the street. Even buying when i was bleeding blood, so to say
From a humble small investment fund of only Rm200,000 in year 2013 it has grown to Rm3 million or about 1,500% in 11 years or 136% per year for the last 11 years from 2013 till now 2024. I am so thankful and grateful for the great Sifus like Dr. Neoh Soon Kean of Dynaquest, Fong Siling aka Cold Eye & here our great CHAMPION CONTRARIAN SIFU DR. TAN CHONG KOAY OF PHEIM FUND
Many many thanks & happy returns
Calvin Tan
Dated 26 December 2024
​
This book by Dr Tan Chong Koay is a par excellence book on Investing in KLSE
A "Must Read" for anyone who wants to succeed in the minefields called "Bursa De Casino"
calvintaneng | Joined since 2013-09-18
Just as the eagle loves the storm because he soars above it Calvin welcome market crashes. To be fearful when others are greedy and to be greedy when others are fearfully selling. See The Way of the Eagle in The Air at www.inspiretopray.com & www.eaglevisioninvest.com & www.johorinvestment.com
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Supermax 1
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https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/2024-12-26-story-h496889328-SUPERMAX_CORPORATION_BHD_Supermax_As_told_by_Dr_Tan_Chong_Koay_of_Pheim_
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https://klse.i3investor.com/web/blog/detail/www.eaglevisioninvest.com/2025-01-30-story-h498586274-SUPERMAX_7106_IN_CYCLICAL_UPTURN_NOT_AFFECTED_BY_DEEPSEEK_AS_IT_IS_INTO_
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