Breaking News!

Short Selling postponed till further notice.

The review of stocks in the list of regulated short selling (RSS) approved securities will temporarily be postponed until further notice, said Bursa Malaysia Securities Bhd.
Yesterday, Bursa Malaysia announced that the list of RSS approved securities will be updated after the temporary suspension of short selling frameworks has been lifted.
Rakuten Trade Sdn Bhd vice-president of research Vincent Lau opined that the postponement of the review of RSS approved securities is a positive move for the market, given the uncertainty and challenges that the Covid-19 pandemic brings.
“With no short selling, this will stabilise the market.
“It will be a good time to resume short selling activities after the market is stabilised and recovered, and when sentiments are better, ” he said.

Recall that the Securities Commission (SC) and Bursa Malaysia had extended the temporary suspension of short selling from April 30 to June 30,2020.

This comprises the suspension of intraday short selling and RSS, as well as intraday short selling by proprietary day traders.

The move comes as part of a slew of proactive measures to mitigate potential risks arising from heightened volatility and global uncertainties as a result of the Covid-19 pandemic.

Supermax Corporation - Quantum Leap
Date: 03/06/2020

Source : KENANGA
Stock : SUPERMX Price Target : 10.90 | Price Call : BUY

Contrary to our earlier assumptions, the industry ASP has risen further month-on-month in anticipation of tighter supply and supernormal demand due to the pandemic. We highlight that SUPERMXs OBM distribution model could yield higher price and margins. Industry ASP over the next few months is now higher by between 5% and 15%, as opposed to the previous monthly 5% hike. With a diverse customer base, we expect SUPERMX to have better pricing power, potentially getting higher than industry average selling prices. Hence, we raised our FY20E/FY21E net profit by 11%/43%, to account for higher margins. TP is raised from RM7.60 to RM10.90 based on unchanged 26x CY21E EPS. Reiterate OP.

Dual-stream incomes from manufacturing and distribution. We gather that it is confident of raising ASP by between 5% to 10% each month from June till Dec 2020, vs. our previous expectation of 5% monthly increase from June to Sep 2020 indicating supply tightness have further propelled ASP higher. Specifically, Supermax is expected to gain from higher margins from both its gloves manufacturing and distribution. We expect higher margins going forward due to higher product mix skewed towards OBM distribution which accounts for 95% compared to 70% pre Covid-19 which we believe had caught us as well as the market by surprise at a time when supply is tight due to aggressive stockpiling of critical medical supplies including gloves. Supermax is getting enquiries from foreign government agencies, non-government organisations, retailers and restaurants chains. Amplifying the pent-up demand, buyers are paying between 30% to 50% deposits in advance to secure glove supply and timely delivery. From a conference call with its investor relations, we understand that demand has continued to climb over the past 2 weeks indicating that lead time is now 12 months compared to 10 months and order-book filled up to June 2021. This led to higher utilisation rate of >95% as compared to pre-COVID-19 level of 80-85%. Case in point is Supermax’s overseas distribution centres which are experiencing fast inventory depletion from the normal 4 months to within 6 weeks. Supermax expects the heightened demand to continue for the next 1 to 1.5 years.

Outlook. Plant 12 consists of Block A and Block B, each consisting of 8 double former lines with 2.2b pieces each (total 4.4b pieces). As of now, for Block A, its remaining 3 lines started commissioning in end March 2020 on top of the 5 lines already in commercial production. For Block B, all 8 lines are expected to be fully commissioned by 2H 2020. Upon full commercial production by 2H 2020, installed capacity will rise 13.4% to 26.2b pieces per annum.

Raised FY20E/FY21E net profit by 11%/43% after raising pre-tax margin assumption from 16%/18% to 17%/25%.

Undemanding FY21E PER valuation of 18x compared to earnings growth of >100%. Correspondingly, our TP is raised form RM7.60 to RM10.90 based on unchanged 26x CY21 revised EPS of 41.9 sen (at slightly above +2.0SD above the 5-year historical forward mean). We like Supermax because: (i) the stock is trading at an undemanding 18x FY21E EPS compared to expected earnings growth of >100%, and (ii) of its OBM model, where it can extract higher margin from distributor prices, compared to the OEM model at lower factory prices. Reiterate Outperform.

Key risk to our call is longer-than-expected commercial operations of new plants.

Source: Kenanga Research - 3 Jun 2020

Latest Report by RHB - TP RM 10.50

Supermax Corp (SUCB MK)
OBM = Lightning In a Bottle! Stay BUY

Maintain BUY, higher DCF-derived MYR10.50 TP from MYR6.66, 32%
upside and 1% yield. We organised a webinar with Supermax. Three key
takeaways are that lead time has surged, exposure to nitrile gloves has
increased and products sold via its original brand manufacturer (OBM)
business have inched up to 55%. We increase our TP after assuming better
ASP and higher nitrile gloves exposure. Our TP implies FY21 forward P/E
of 31.2x (20% discount vs sector average). This is justified due to lower
market cap/liquidity.
 Demand-supply imbalance continues... From the webinar with
Supermax, we gather that gloves demand has continued to increase in the
past 1-2 weeks. Its latest lead time is now 12 months (c.10 days ago: 10
months). The company’s orders are secured up to Jun 2021. The utilisation
rate is now almost full at 90-95% as compared to the normal level of 80-
85% before COVID-19.
 Higher exposure to nitrile gloves, now at 63%. For 9MFY20, Supermax’s
sales breakdown has seen higher exposure to nitrile gloves. The ratio of
nitrile to latex is now at 63:37 vs the historical 45:55. We are positive on this
as nitrile gloves margins have tended to be more stable in the past. The
price for nitrile gloves is higher as it is sold to developed countries.
 OBM = Lightning in a bottle! After many years of investing and persisting
with its OBM model, Supermax is reaping the fruits of success now. We
expect its ASP increase to be above industry as the company captures
higher ASPs on both the manufacturing and distribution levels. Additionally,
the company has tactically increased its OBM exposure. Before COVID-19,
OBM contributed about 40-50% of business volume. Post COVID-19,
Supermax responded well by increasing its OBM exposure to 55%. This
means that its margin should continue to expand for FY21-22.
 Best EBITDA margin in gloves industry in 1QCY20. Note that the
superior business model has proven itself in 3QFY20 earnings. During the
quarter, Supermax’s EBITDA margin of 25% is the highest historically for
the company. More importantly, it is higher than its peers’ EBITDA margins
which range from 18.3% to 22.1%.
 BUY with a higher TP of MYR10.50. We have increased our FY20-22F
earnings by 8-62% after increasing ASP assumptions and higher nitrile
gloves contribution. Our FY20F average ASP increase has been updated
to 11% (previously 9%). In the near term, we expect Supermax’s 4QFY20
net profit to surge 61% QoQ. In the long run, Supermax is a beneficiary of
the long-term uptrend of gloves consumption globally at 8-10% annually
(even without COVID-19).

Latest CIMB Report on Supermax - TP rm 9.80

1-Positive surprise from longer order visibility and more ASPs hikes

Supermax (SUCB) indicated that its order lead time has lengthened to Jun 2021 (end- FY6/21), which is 12 months (vs. our previous assumption of 10 months). This is on the back of favourable supply-demand dynamics in the glove sector, owing to Covid-19. We also gather that SUCB is confident of raising its ASPs by 10% each month from Jun till Dec 2020, vs. our previous expectation of a 10% monthly increase from Jun to Sep 2020.

2-Collecting deposits to ensure minimal cancellation of orders

In order to ensure no cancellation of orders, SUCB is requesting that its customers pay deposits (30-50%) in advance to lock in their orders. This is particularly for orders from non-recurring customers and/or spot buyers. At this juncture, we estimate that up to 15- 20% of SUCB’s capacity mainly caters to spot (ad-hoc) orders (mainly from government
542 and non-government organisations), which typically have higher selling prices (premium

3-Focusing on its OBM business model

Since the Covid-19 outbreak (Mar 20), SUCB has been selling more gloves under its original brand manufacturing (OBM) at 95% of its total sales volume vs. 70% pre-Covid- 19. This is via its own distribution centres (7 glove distribution centres globally – 55%) as well as via third-party distributors (40%). In our view, this manufacturing-cum-distribution model (focusing on selling OBM gloves) allows SUCB to garner higher margins and better pricing power as it is able to sell directly to end-customers.

4-Expecting robust qoq and yoy results in 4QFY20

For the upcoming 4QFY6/20 results, we expect SUCB to record sequentially stronger earnings of RM130m-135m. We also believe that sequential results will remain strong up to 2QFY6/21. This is on the back of: i) higher glove sales, ii) increase in average selling prices (+25% qoq), and iii) higher economies of scale. Note that any upside beyond our ASP assumptions would provide positive surprises to its 4QFY20 results.

Reiterate Add, TP raised to RM9.80

With a longer order book visibility and factoring in higher ASPs (current assumption of a 10% monthly increase in 1HFY21 from only 1QFY21 previously), our FY21-22F EPS is raised by 33.3-38.7%. Accordingly, our TP rises to RM9.80 (28x CY21 P/E). We continue to like SUCB for its attractive valuations (35.1% discount to the Malaysian glove sector average CY21F P/E of 35.1x) and OBM business model, which allows it to garner better margins vs. its peers given the current strong surge in glove demand.

Assuming maintain of only eps of 2 cents per quarter which constitute of 8 cents and pe of just mere 15 would give them a Rm 1.20 cents value!.

Rubber Gloves Segment HLT completed the acquisition of the 55% issued share capital of HLRI on 17 May 2018. HLRI commenced operations in 2003 and since its establishment it has proven track record on delivering quality products and services to its multinational customers. The rubber glove products include, amongst others, natural rubber gloves such as powdered and powder-free latex examination gloves, and synthetic rubber gloves such as powdered and powder-free nitrile examination gloves. Over the recent financial years, our products have been sold within Malaysia, and to other countries such as Taiwan, United States of America, Spain, Singapore, New Zealand, China and United Kingdom. In addition, HLRI is also certified to comply with the ISO 13485 : 2016 and EN ISO 13485 : 2016 requirements on medical devices quality management system for manufacture of non-sterile latex and nitrile examination gloves and ISO 9001 : 2015 requirements on quality management system for manufacture of non-sterile latex and nitrile examination gloves, both accredited by the United Kingdom Accreditation Service.
HLT is in the business of making dipping lines for the gloves industry ..... and they have just signed an exclusive licensing agreement on patented triple dipping glove manufacturing line. HLT also owned a 55% subsidiary HL Rubber Industries with production capacity of 1 billion piece per year. With such capacity at current ASP, we shall be seeing HLT turning in good profit

HL Rubber Industries Sdn Bhd (HLRI) was established in the year 2003 with proven track record for quality products and services coupled with the support of our multinational clients. HLRI's management team has more than 20 years of experience in marketing, dipping engineering and process technology. In the Glove Manufacturing Industry, our experience and expertise combined with continual research and development translates into assurance for our customers of not only premium quality products but also innovative products that meet the increasingly high standards demanded by the global market.Our R & D team will look into any other new innovative product, special cost saving glove, always work together with customer on how to develop a new potential market driven product.

HLT warrants price are at deep Discount to mother price now Good alternative to buying mother share..

HLT: Growth Glove Company Yet to Realised Its Actual Value

For FYE 2019, the rubber gloves of HLT -subsidiary - (HL Rubber Ind. SB )segment posted a revenue of RM90.673 million. Export sales contributed 92.30% of the total revenue of rubber gloves segment

At HL Rubber Industries Sdn Bhd, we are totally committed to quality and consistently delivering only the highest quality products.
We provide vital support to our customer through the following value added service:-
Product consistency
Excellent quality
Prompt delivery of quality products
Customer satisfaction

Another strong points lies with our Research and Development
Where we are continuously working on new innovative products, improving process, working on improvement, energy saving and others. We believe in working together with customer in realizing any products/gloves that are potentially catered to the market needs – market driven products/gloves.

If you are looking for special feature glove,
We will also cater to your needs,
Example,

Long length glove (NR / NBR) – 10 inch, 12 inch, or more;
Different thickness glove (NR / NBR) – 5 mil, 6 mil, 8 mil, 10 mil, or more;
Different color apart from our standard color – White / Blue, we can match the color that you requested;
Different new latex material – we are willing to undertake / study together with customer on the new latex material.
Silicone Free Nitrile and Latex Powder Free Gloves.
Black Nitrile and latex gloves.
Extra thick Surgical & Procedure Gloves
15 mil Hi - Risk latex gloves

Superman is taking a well deserved rest after flying non stop for the past 2 week or so. Need to consolidate first before flying further.
Superman has a long way to go.
Patience is the key folks.
TP of Rm12-00 when 4Qtr results out in 3 months time.
Cheers!

New Director Appointment- with extensive knowledge in finance.


Dato' Chan was formerly a Managing Director of a leading investment bank in Southeast Asia. He has over 24 years of experience in some of the largest mergers and acquisitions in Malaysia, IPOs, equity and debt fund raisings and corporate restructuring exercises, as well as regional private banking in Southeast Asia. He was named as one of the top 10 investment bankers in Asia (ex-Japan) by Brendan Wood International Journal in 2006.
Dato' Chan is currently the President of the Malaysian Mergers and Acquisitions Association, a body representing M & A practitioners in Malaysia. He was a past speaker/moderator in some of the conferences organised by Bursa Malaysia.
He is also presently the Deputy Chairman of the Finance and Capital Market Consultative Committee of the Associated Chinese Chambers of Commerce and Industry Malaysia.
Directorship of Public Companies

This bodes well for Rubberex moving forward.

Latest update on Comfort Gloves Bhd by Uncle KYY

As all investors should know that due to Covid 19 pandemic the demand for gloves far exceeds supply. As a result, the price for gloves continues to go higher and higher and all glove manufacturers are making increasing profit which is being reflected on their share prices. Among all the glove makers, I consider Comfort has the best profit growth prospect which is the most powerful catalyst to push up share price. Comfort’s financial ends in January 2020. Since February the company has added 6 new production lines to its original 49 lines. The increase production is most timely to take advantage of the higher selling prices of their gloves. Unfortunately, Comfort is relatively a small manufacturer and it does not have so much of publicity as Supermax which has shot up Rm 1.15 today. Today Comfort went up 22 sen.

From my experience during the SARS pandemic when I was the 2nd largest shareholder, I noticed that the demand for gloves would continue even after the Covid 19 pandemic was under control because the people who needed to use gloves got used to the routine of using gloves. In any case, many scientists predicted Covid 19 pandemic will not be under control for at least another year until a vaccine is approved by FDA.

US Import Alert

Some investors might be concerned about the US Import alert warning published on 25 May 2020 to control the quality of imported gloves to US. THIS IS A GENERAL NOTICE AND COMFORT IS NOT SPECIFICALLY MENTIONED. In any case, US is not the only buyer of gloves. Comfort can sell to China, Europe and many other countries.

Dato Lau Eng Guang selling

Some investors might be concerned by the sale of shares by Dato Lau Eng Guang, He has been selling a couple of million shares a day. He sold a total of 13,750,000 shares which could not have dampened the share price because the daily traded volume is 80-100 million.

Institutional Investors:

Institutional investors usually hold many counters in their portfolio. Most of their holdings are being depressed by Covid 19 and they have to sell to cut loss. There are not many stocks for them to buy except Comfort, Supermax etc. That is why the daily traded volume is 80 to 100 million shares. This shows that many rich institutional investors are interested in this stock.

My purpose of writing this piece is help readers to make good decisions. You must remember, whether you buy or sell does not make any difference because the daily volume is so huge.

What you should do?

I see from the i3investors forum, some commentators are wishing the price to go up, some are wishing the price to drop and some are so confused and they do not know what to do. Since it has been fluctuating quite wildly, day traders can buy and sell to make some money. But remember, long term investors can make more money by just buy and wait for it to go high and higher until the demand for gloves is reduced or when the company starts to report a reduced profit. You should not sell as long as the company can continue to report increasing profit.

In a world ravaged by Covid19 pandemic where people and politicians are not interested to fight it especially in Brazil and USA., gloves are going to be selling for at least the next 2 years.

And even when we have a vaccine, it will take 6-8 months to make enough doses, and a few more months to distribute it. All that time we will need more gloves and finally when the pandemic is over, nations and hospitals around the world will have to resupply.

So glove companies especially Own Brand Manufacturers (OBMs) are going to be making super profits for a few years.

Yes, keep flying to Rm12-00 Supermax.

No country should count on a Covid-19 vaccine - former Harvard Medical prof William Haseltine

As South Africa moves to level three of the lockdown, President Cyril Ramaphosa told the nation that the early intervention in the Covid-19 epidemic did help to contain it, but until there is a vaccine available, the virus will continue to spread in the population. Biznews spoke to former Harvard Medical Professor William Haseltine, who is known for his pioneering work on HIV/Aids and cancer, about the steps that South Africa could take to deal with the pandemic. His message was that ‘no country should count on a vaccine’; and there are other steps that South Africa could take against the virus. He also said there was more hope in treatments and practices that worked in other parts of the world. Prof Haseltine who has founded a dozen biotechnology companies and is the chair and president of ACCESS Health International also shared an equation he came up with how we can determine our risk of infection during the Covid-19 pandemic. – Linda van Tilburg

Does Novavax Have What It Takes to Win the COVID-19 Vaccine Race?

Novavax is developing a COVID-19 vaccine candidate, and recent spikes in its stock price and trading volume indicate that investors suspect such a treatment could give the company another chance at life.

Novavax is far from a healthy business, however. The company's vaccine trials in 2016 and 2019 ended in embarrassing and costly late-stage failures due to a lack of clinical efficacy, and it's never successfully brought a product to market.

With each failure, Novavax sustained severe losses that required large reductions in its workforce and fixed capital. These reductions have taken a toll on the company's ability to start new collaborations and to credibly develop new products. Things have started to look increasingly dire for Novavax -- in the past 12 months, it generated just $18.7 million in revenue, against a cash outflow of $136.6 million.

Nonetheless, many think the company still has a role to play in fighting the pandemic, as shown by a recent infusion of $388 million provided by the Coalition for Epidemic Preparedness Innovations to support Novavax's development of a COVID-19 vaccine.

With its cash flow issues solved for the moment, Novavax has breathing room to work on what might become a blockbuster vaccine. But its prior clinical-trial failures raise the question of whether the company is positioned to succeed. Given Novavax's turbulent history, what should the market expect from its COVID-19 vaccine development efforts?

Low coronavirus transmission rate 'could jeopardise vaccine trial'

An Oxford University vaccine trial’s chances of success could be halved ( 50% chance of success)

Scientists at Oxford University's Jenner Institute and the Oxford Vaccine Group started to develop a coronavirus vaccine in January, using a virus taken from chimpanzees.

Following an initial phase of testing on 160 healthy volunteers between 18 and 55, the study is now set to progress to phases two and three.

This involves increasing the testing to up to 10,260 people and expanding the age range of volunteers to include children and the elderly.

Supermax Healthcare Canada -Aurelia Gloves Canada donates gloves to the needy in Montreal, Canada on 18th May 2020.

Our donation of over 300 000 Aurelia gloves has been delivered to @MoissonMontréal. These gloves will be distributed to over 40 Montreal charities and non-profit organizations active in supporting the homeless and anyone in need of shelter, food, social or medical support. The gloves will meet the needs of all the workers and volunteers in these organizations for the next 6 to 8 weeks.

WASHINGTON: The United States recorded a further 1,260 deaths from Covid-19 on Friday, bringing its total to 95,921 since the global pandemic began, according to a tally kept by Johns Hopkins University.

The country has also officially logged more than 1.6 million cases of the virus, far more than any other nation, the tracker kept by the Baltimore-based university showed at 8:30pm (0030 GMT Saturday).

Why might a vaccine fail? ( The Guardian UK dated 22/5/2020)


Earlier this week, England’s deputy chief medical officer Jonathan Van-Tam said the words nobody wanted to hear: “We can’t be sure we will get a vaccine.”

But he was right to be circumspect.

Vaccines are simple in principle but complex in practice. The ideal vaccine protects against infection, prevents its spread, and does so safely. But none of this is easily achieved, as vaccine timelines show.

More than 30 years after scientists isolated HIV, the virus that causes Aids, we have no vaccine. The dengue fever virus was identified in 1943, but the first vaccine was approved only last year, and even then amid concerns it made the infection worse in some people. The fastest vaccine ever developed was for mumps. It took four years.

Scientists have worked on coronavirus vaccines before, so are not starting from scratch. Two coronaviruses have caused lethal outbreaks before, namely Sars and Mers, and vaccine research went ahead for both. But none have been licensed, partly because Sars fizzled out and Mers is regional to the Middle East. The lessons learned will help scientists create a vaccine for Sars-CoV-2, but there is still an awful lot to learn about the virus.

A chief concern is that coronaviruses do not tend to trigger long-lasting immunity. About a quarter of common colds are caused by human coronaviruses, but the immune response fades so rapidly that people can become reinfected the next year.

Researchers at Oxford University recently analysed blood from recovered Covid-19 patients and found that levels of IgG antibodies – those responsible for longer-lasting immunity – rose steeply in the first month of infection but then began to fall again.

Last week, scientists at Rockefeller University in New York found that most people who recovered from Covid-19 without going into hospital did not make many killer antibodies against the virus.

“That’s what is particularly challenging,” says Stanley Perlman, a veteran coronavirus researcher at the University of Iowa. “If the natural infection doesn’t give you that much immunity except when it’s a severe infection, what will a vaccine do? It could be better, but we don’t know.” If a vaccine only protects for a year, the virus will be with us for some time.

The genetic stability of the virus matters too. Some viruses, such as influenza, mutate so rapidly that vaccine developers have to release new formulations each year. The rapid evolution of HIV is a major reason we have no vaccine for the disease.

So far, the Sars-CoV-2 coronavirus seems fairly stable, but it is acquiring mutations, as all viruses do. Some genetic changes have been spotted in the virus’s protein “spikes” which are the basis of most vaccines. If the spike protein mutates too much, the antibodies produced by a vaccine will effectively be out of date and might not bind the virus effectively enough to prevent infection.

Martin Hibberd, professor of emerging infectious diseases at the London School of Hygiene and Tropical Medicine, who helped identify some of the virus’s mutations, called them “an early warning”.

THE BULL RUN FOR RUBBER/NITRILE GLOVES (EXTRACTED FROM CHOIVO CAPITAL'S ARTICLE)

The Nuances of the Various Factors that drove Prices

1-UNPRECEDENTED Level of Demand for Rubber Gloves

Not much needs to be said here, every time someone gets swabbed for a COVID 19 test, one pair of gloves will be thrown away, and this applies to even mass testing’s, house visits, contract tracing etc.Demand became so strong, that glove companies today take a 20% deposit (this is unprecedented) on any orders made today, with delivery only happening 1 year from now (earliest).

2-STRUCTURAL CAPACITY CONSTRAINTS

Why don’t I hear rubber tappers or condom manufacturers going into glove manufacturing? Its simple, in order to qualify for surgical gloves, YOU NEED FDA APPROVALl, a process which can take longer than ONE YEAR for new companies.In addition, in order to produce these gloves at an economical level, you need machinery and factories that can produce at least a few billion of them per year.This means any additional capacity, can only come from the incumbents like Top Glove, Hartalega, Supermax etcAnd these additional capacities can only arrive earliest by year end, with the additional supply likely to be nowhere near enough.In the case of increasing production capacity of rubber gloves, its one of those things that just take time, no matter how much money you have to pour into it.

3-PRICE INCREASES

So limited supply, meets unprecedented demand, coupled it inability to increase capacity quickly.
What does this mean? Price increases for OEM surgical gloves at the rate of 5% or so per week. WITH OWN BRAND MANUFACTURING (OBM) BY 200%-400%.

4-LOWER COST

Due to the virus, demand everywhere else is much lower. Which means much lower costs for the glove companies.Rubber Prices are down 30% from the start of the year.Butadiene (For Nitrile Gloves) are down 50% from the start of the year.Labour Costs is down or even as people have no other jobs to go to. Staff are also a very easy to train unlike the textile industry.Gas prices are down still down around 40% from the start of the year due to lower demand.

CONCLUSION

If what you’re looking for, is potential for upward price movements in the short, mid (or, at a stretch) long term, there is quite simply very little else to look at in the market today.
Even hospital revenues are technically down, as other surgeries are all down from people either delaying their surgery out of fear, or reduced by management in order to make capacity for Covid Testing.Needless to say, whether you’re a fund manager, retailer or institutions, everyone piled into the rubber glove companies

MIDF downgraded to rm 4.09. Absolute clowns.!

Well, some people just like dancing in their coffin. lol. I say all the best.

It’s dangerous for investors to follow a coronavirus ‘vaccine playbook,’ strategist warns

Investing by a “vaccine playbook” is a dangerous approach to take, one strategist has warned, after news flow from the pharmaceuticals industry bolstered market volatility earlier this week.

Speaking to CNBC’s “Squawk Box Europe” on Wednesday, Fahad Kamal, chief market strategist at Kleinwort Hambros, said recent market moves had demonstrated “how dangerous it is to follow any kind of vaccine playbook.”

Biotech firm Moderna sent markets higher on Monday after reporting positive data on an early stage trial for its Covid-19 vaccine. However, markets snapped back later in the week after vaccine experts expressed skepticism about Moderna’s data, and the economic damage from the crisis reentered focus.

The firm’s chairman told CNBC that it would never put out data on its potential vaccine that was different from “reality.”

Kamal noted that most scientific experts believe it will take at least 12-to-18 months for a safe-to-use vaccine to be rolled out to the market.

“The few people who seem to be more optimistic than that appear to have political agendas,” he told CNBC. “So I would err on the side of science and say we’re still quite a way away from that.”

President Trump has voiced ambitions for a vaccine to be developed and distributed by the end of this year, in a project dubbed “Operation Warp Speed.”

However, medical experts — including Dr. Anthony Fauci, the U.S. government’s top infectious disease expert — have cast doubt on Trump’s goal, expressing skepticism over the timeframe.

Kamal also emphasized that a vaccine would not be a miracle fix for all problems created by the coronavirus outbreak.

Excellent latest Quarterly Results @ EPS of 5.42 sen. Prospects looking absolutely bright for Supermax. May even overtake Harta for all we know lol.
Target Price of RM8-00 is achievable by end of year.
Be patient folks and you will be rewarded handsomely.
God bless..

Dow slides 391 points on reports that Moderna's COVID-19 vaccine study lacked key data.

Comments by Dr Zhong ( China's top advisor on Covid 19)

Dr. Zhong Nanshan, the Chinese government's senior medical adviser and the public face of the country's fight against Covid-19. ( in the US it's Trumps buddy lol, Dr Fauci)

Zhong is known as the "SARS hero" in China for combating the severe acute respiratory syndrome epidemic in 2003.

This time around, he has led the country's coronavirus response -- especially in the critical early stages of the outbreak.Zhong said three Chinese vaccines are under clinical trials in the country -- however a "perfect" solution was likely to be "years" away.

"We have to test again and again and again ... by using different kinds of vaccines. It's too early to draw any conclusion which kind of vaccine is available for this kind of coronavirus ... that's why I suggest that the final approval of vaccine (will) take much longer," he said.

Latest update on Covid 19 pandemic.

Global cases: More than 4.6 million
Global deaths: At least 311,821
Most cases reported: United States (more than 1.4 million), Russia (272,043), United Kingdom, (241,461), Brazil (233,511) and Spain (230,698)

The data above was compiled by Johns Hopkins University as of 16th May 2020.

Outlook for Supermax Corporation Bhd

Absolutely bright!

Plant 12 consists of Block A and Block B, each consisting of 8 double former lines with 2.2b pieces each (total 4.4b pieces). As of now, for Block A, its remaining 3 lines started commissioning in end March 2020 on top of the 5 lines already in commercial production. For Block B, all 8 lines are expected to be fully commissioned by 2H 2020. Upon full commercial production by 2H 2020, installed capacity will rise 13.4% to 26.2b pieces per annum.We highlight that Supermax’s potential higher distribution margins from its Own Brand Manufacturing (OBM) is under-appreciated in this pandemic and tight supply situation. The higher margin for Supermax’s lies in its associates’ (Canada, Brazil, Australia and Europe) distribution channels. Using its own distribution channels and brands (Aurelia and Maxter), Supermax has penetrated into the South American market and create its own distribution channels. Longer delivery lead times are indicating that demand will outstrip supply at least over the medium-term. We understand that the industry has raised prices by 3-5% in anticipation of higher demand and also noted the industry current high >90% utilisation rate for nitrile-centric players which is a stark contrast compared to the lacklustre demand in 2019. However, we are more bullish on higher ASPs in 2H 2020 due to the present tight situation of buyers jockeying for position to secure allocation.

Latest from WHO. ( Major boost for the Hand Gloves Industry)

GENEVA (May 14): The coronavirus that causes COVID-19 could become endemic like HIV, the World Health Organization said on Wednesday, warning against any attempt to predict how long it would keep circulating and calling for a "massive effort" to counter it.

"It is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away," WHO emergencies expert Mike Ryan told an online briefing.

"I think it is important we are realistic and I don't think anyone can predict when this disease will disappear," he added. "I think there are no promises in this and there are no dates. This disease may settle into a long problem, or it may not be."

Uncle Koon Yew Yin's advice:

As many people are so confused by the wide price fluctuation and do not know how to react. I advise them to remember that statistics shows day traders cannot make much money on a long run. Only long-term investors can make more money. Patience is the key to successful investing. You can make more money by just waiting.

Covid 19 is affecting every country’s economy around the world and most of the listed companies, with a few exceptions. Due to Covid 19 pandemic the demand for gloves exceeds supply. As a result, the glove price continues to rise and all glove manufacturers are making more and more profit which is being reflected on their share prices.

I believe Comfort Gloves has the best profit growth prospect which is the most powerful catalyst to push up share price. From February it has added 6 production lines to its 49 original production lines. It is producing 430-450m pieces of gloves/month or 5.4 million gloves annually. The commencement of the new lines was timely as it helps to cater for both existing demand as well as the global surge in demand – arising from the unexpected outbreak of the COVID-19 pandemic.

Since many scientists predicted that Covid 19 pandemic will continue for 1 or more years until a vaccine is approve by FDA of USA. Under the circumstances, Comfort share price can go up higher for a long time until the demand for gloves is reduced.

I am obliged to inform you that I have used up all my funds to buy Comfort shares. If you decide to buy or sell Comfort shares, you are doing it at your own risk.

Target Price by CIMB per their report dated 7th May 2020.

Reiterate Add, with a higher TP of RM3.48

We raise our FY20-22F EPS by 24.5-32.5% to account for: i) higher glove ASPs, ii) better sales volume, and iii) higher margins (from distribution business). Accordingly, our TP is raised to RM3.48, based on a higher CY21 P/E of 24.5x (pegged to a 30% discount to weighted average CY21 P/E of Malaysia glove sector ex. SUCB of 34.8x) from 20.5x before. We continue to like SUCB as a laggard play in the glove sector; it is trading at 20.1x CY21F, a 40.4% discount to Malaysia’

A massive shot in the arm for Careplus Gloves Bhd after obtaining shareholders approval for JV with world renowned glove manufacturer, Ansell Limited based in Australia. The timing is perfect to capitalise on the surge in demand for gloves worldwide due to Covid 19 pandemic.

"The proposed joint venture will serve as an avenue for Careplus to grow Careplus (M) Sdn Bhd's business, leveraging on the knowledge and cooperation of Ansell, one of the global players for glove manufacturing in the market," the company said in a filing with Bursa Malaysia today.

"Ansell group’s existing global footprint offers new market opportunities for CMSB’s upstream segment to grow its business," Careplus said.

Top Glove Manufacturers of hand gloves in Malaysia as at. 31st March 2020 -

1. Top Glove 81.9 billion
2. Hartalega 43.7 billion
3. Kossan 32.0 billion
4. Supermax 27.4 billion
5. Riverstone 10.4 billion
6. Comfort 5.4 billion
7. Careplus 4.1 billion
8. Ruberex 1.0 billion

Careplus produce both latex and nitrile examination gloves with more lines producing nitrile gloves in 2018. Capacity utilisation for 2018 has also improved as compared with 2017’s performance. In addition, the total annual capacity grew slightly

from 3.9 billion pieces to 4.1 billion pieces with the installation of a new double former line in Careglove Global Sdn. Bhd.

Our business strategy includes changing our product types to those that can yield better profit margins. We are also looking at producing more surgical gloves to expand our market base.

With Ansell's global reach and quality support, Careplus is set to achieve good profitability in future.

Interesting article Neutral Investor, may I know your source of information with regard to their current production capacity of 4.14 billion glove per annum. Thanks.

MR CHEANG PHOY KEN
Managing Director
Malaysian / aged 66 / Male
Cheang Phoy Ken was appointed to the Board of Directors of Comfort Gloves Berhad as Managing Director on 11 January 2013.

Cheang Phoy Ken graduated with a Bachelor of Business Administration from the University of Houston in 1978. He has more than twenty years’ experience in manufacturing and marketing of medical examination gloves industry. He was the Founder and Chief Executive Officer of Disposable Medical Product, Inc from 1987 to 1994, a medical glove marketing and distribution company focused on the dental and medical industry. From 1994 to 2007, he was involved in the management of Pacewell Asia, subsidiary of Seal Polymer Industries. From 2007 to present, he conducts medical examination glove consulting and sourcing initiatives on behalf of select clients.

Glaring Error By Uncle KYY.

"I am sorry that I wrongly stated Comfort’s annual production was 450 million gloves. It should be 450 million per month and its annual production should be 5.4 billion gloves.
Comfort Gloves

Currently Comfort is producing 450 million gloves per month or 5.4 billion gloves annually. From February it has added 6 new production lines to its existing 49 lines. The production increase is timely to take advantage of the higher sale prices.

Comfort has issued 580 million shares. Based on its current share price of Rm 1.55, its market capitalization is Rm 900 million.

Rubberex

Currently Rubberex is producing 1 billion gloves annually. Its new production plants which is scheduled to start operation in June has a production capacity of 2 billion gloves annually. The total production will be 3 billion gloves annually.

Rubberex has issued 252 million shares. Based on the its current share price of Rm 1.75, its market capitalisation is Rm 441 million."

Many thanks for putting the record straight Uncle KYY as such an error is misleading.

Excerpts from an Interview with Dr Jemilah today as published in the Star. The salient points are -

"Covid-19 will not end for next two years. There will be small spikes and must not panic but there must be aggressive tracing and quarantine and treatment.
"A vaccine earliest, may be available next year.
"We need to live with Covid-19, just as we need to live with dengue," said Dr Jemilah.


Super normal profits in sight for the glove industry in Malaysia for the next few years.

Here is sobering and wise quote from Uncle Koon with regards to shares in general and Comfort in particular.

'No stock can go up continuously in a straight line for whatever reasons. After sometime, the price will correct due to day traders’ selling. Good share, like Comfort which has very good profit growth prospect, will continue to go up higher and higher. Never sell if the company can continue to report increasing profit every quarter.'

Demand for ceramic formers looking good. Here are the expansion plans for Kossan, Harta Supermax & Topglove

Planned Expansion - Hartalega
The first 4 lines of Plant 6 (installed capacity of 4.7b pieces) have commenced commercial operations and the remaining 8 lines are expected to be gradually ramped up. Plant 7 is expected to be commissioned by early 2021, which will focus on small orders as well as specialty products with an installed capacity of 3.4b pieces. All in, Plant 5, 6 and 7 will add a total capacity of 12.1b pieces, raising installed capacity to 43.7b pieces per annum.

Planned Expansion - Kossan
Kossan is embarking on an aggressive capacity expansion as opposed to their past historical conservative expansion stance. Recall, beyond plant 19, land clearing is underway in the Bidor plant, and the first plant is expected to start commercial operation sometime in 2021, earlier than the previously targeted 2022.

Planned expansion - Supermax
Acquired two pieces of land over the past 12 months. Looking ahead, growth beyond FY21 is underpinned by capacity expansion via two land acquisitions. SUPERMX recently acquired a piece of industrial land for RM20m measuring 4.1 acres while back in July 2019 the group had acquired a piece of land measuring 16.1 acres for RM65m. Both lands are adjacent to its current Maxter Plant in Klang the merged and enlarged land tract and subsequent expanded facility within the vicinity of its Maxter Plant should yield operational synergies and greater economies of scale. The 16.1 acres land is earmarked for plant 13,14 and 15 with an estimated capacity of 4.4b pieces for each plant over the next few years. The 4.1 acres land is slated for one plant with an estimated capacity of 4.7b pieces per annum.Expansion plan. Despite the MCO in Malaysia, Top Glove does not expect any delay in the commissioning of the 1st Phase of its F40 Plant (+2.7bn pcs nitrile gloves pa), which was scheduled to start operations in 2QCY20.

Planned Expansion - Topglove
Top Glove does not expect any delay in the commissioning of the 1st Phase of its F40 Plant (+2.7bn pcs nitrile gloves pa), which was scheduled to start operations in 2QCY20.
25/04/2020 10:42 AM

Demand for ceramic formers looking good. Here are the expansion plans for Kossan, Harta Supermax & Topglove

Planned Expansion - Hartalega
The first 4 lines of Plant 6 (installed capacity of 4.7b pieces) have commenced commercial operations and the remaining 8 lines are expected to be gradually ramped up. Plant 7 is expected to be commissioned by early 2021, which will focus on small orders as well as specialty products with an installed capacity of 3.4b pieces. All in, Plant 5, 6 and 7 will add a total capacity of 12.1b pieces, raising installed capacity to 43.7b pieces per annum.

Planned Expansion - Kossan
Kossan is embarking on an aggressive capacity expansion as opposed to their past historical conservative expansion stance. Recall, beyond plant 19, land clearing is underway in the Bidor plant, and the first plant is expected to start commercial operation sometime in 2021, earlier than the previously targeted 2022.

Planned expansion - Supermax
Acquired two pieces of land over the past 12 months. Looking ahead, growth beyond FY21 is underpinned by capacity expansion via two land acquisitions. SUPERMX recently acquired a piece of industrial land for RM20m measuring 4.1 acres while back in July 2019 the group had acquired a piece of land measuring 16.1 acres for RM65m. Both lands are adjacent to its current Maxter Plant in Klang the merged and enlarged land tract and subsequent expanded facility within the vicinity of its Maxter Plant should yield operational synergies and greater economies of scale. The 16.1 acres land is earmarked for plant 13,14 and 15 with an estimated capacity of 4.4b pieces for each plant over the next few years. The 4.1 acres land is slated for one plant with an estimated capacity of 4.7b pieces per annum.Expansion plan. Despite the MCO in Malaysia, Top Glove does not expect any delay in the commissioning of the 1st Phase of its F40 Plant (+2.7bn pcs nitrile gloves pa), which was scheduled to start operations in 2QCY20.

Planned Expansion - Topglove
Top Glove does not expect any delay in the commissioning of the 1st Phase of its F40 Plant (+2.7bn pcs nitrile gloves pa), which was scheduled to start operations in 2QCY20.

The hand gloves industry in Malaysia will see massive expansion to ramp up production. Esceramic will definitely benefit as formers (hand glove) will be in big demand. They are probably the biggest in the world. My TP is around 60 cents .

Posted by chief999 > Apr 22, 2020 5:25 PM | Report Abuse

hi, goldberg, based on TP 3.20 what is the estimated PE by then?

Hi Chief999, I estimate a forward PE of 21 with EPS of 15 sen for FYE 2021. Just my rough
estimate

Wow, there's share buy back of 2,660,600 shares today with a price range of 2.08 to 2.14.
Management are of the view that Supermax shares traded in Bursa is deeply undervalued.

Here are the updated PEs as at today for the main glove counters:-

Harta. 62
Top glove. 46
Kossan. 31
Supermax. 27
Rubberrex 29
Comfort. 22

Supermax is still relative cheap as its a tier 1 glove counter - same league with Harta , Topglove & Kossan.

Conservative year end TP for Supermax - RM3.20

With the massive share buy back recently, Supermax management is sending a powerful message to the investing fraternity that the impending quarterly result will be fantastic and deserve a re-rating.

Comfort Gloves Berhad is set to meet TP of Rm2-00 by year end and Rm2.50 next year.Just buy and keep to maximise profits.
Cheers Uncle Koon, you have made a fantastic call. God bless.

Comfort Gloves has ample scope to ramp-up production.

Six new lines commenced in 1QFY21. The six new lines commenced operation in Feb 2020. This, alongside the existing 49 production lines in the two plants in Simpang and Matang, Taiping, are running at close to full capacity, which collectively can produce between 430-450m pieces of gloves/month. The commencement of the new lines is timely as it helps to cater for both existing demand as well as the global surge in demand – arising from the unexpected outbreak of the COVID-19 pandemic.

Beyond current expansion, I believe more capacity may be added in the future, as the company had acquired about 39 acres of land in Perak in 2018 that can potentially house more capacity ahead. As demand for nitrile and specialty gloves increase. The potential capacity expansion could help to capture more market share moving forward, given its niche in the premium specialty gloves segment.

Fair Value of Comfort Gloves

Valuations are very subjective hence there is not a single price that should be the fair value for a company. Nevertheless, the share price of a company should trade at a valuation multiple closer to the industry leader/average. Excluding Hartalega, the average P/E ratio of TG, Kossan and Supermax is 31.83x [(44.7+29.0+21.8)/3].

The minimum fair value of Comfort Gloves's share price should be RM1.26 while the maximum fair value is RM1.84. I will exclude the calculation based on Top Glove's P/E ratio because it is too high and there is a specific reason why Top Glove trades at that multiple.
Given the increasing demand for medical gloves, it is evident that Comfort Gloves will continue to deliver a strong financial performance especially for the Calendar Year 2020. The closing price as at 30 March 2020 is RM0.82 indicating a 54% discount to the minimum fair value of its share price (RM1.26). Remember, that number hasn't even incorporate the rapidly rising demand for medical gloves.