Not trying to say anything just learning from my mistakes and other ppl's mistakes. I make mistakes (APM, Favco etc) and investing we can't be 100% correct all the time. Nothing against you or OTB or whoever, but always good to learn from history. What went well, what went wrong etc.
Long time Charles. The difference between freetospeak and you is he throws out flowery numbers, whereas you never had anything meaningful to say. Of course flowery numbers has little meaning too, but at least he is trying his best to predict.
I hope the young investor did not accumulate at the price point. It would be a suicide.
01 Jan 2021 - Market cap: $16 billion Supermax market cap crater from $30 bil to $16 bil but Probability remains bullish "supermax...should shine anytime soon...when market realize it would take years for asp rise to dampen"
"Take years for ASP rise to dampen". Sorry Probability. It was already happening as soon as your sentence reaches i3's server.
21 Feb 2021 - Market cap: $13 billion "we have EPF and big funds to buy...you can imagine why they will never bring down the ASP for next 2 years" - Probability
One of the most famous quotes from Probability "ASP not coming down for next 2 years aka until 2023". He never appeared in Supermax forum since.
06 Aug 2020 - Market Cap: $31 billion Freetospeak made an out of the sky prediction: "For FY2021. My latest projection for SUPERMAX QTR 1 is about 800 m PAT to 1 billion PAT. That is about 3.2 bill ANNUALLY (2.56x of Bloomberg consensus) or eps of RM2.46 x pe 20 = TP50.00 (ex-bonus tp 25) or market cap of $68 billion"
You read that right. He set a TP of $50 (currently $0.89) or market cap of $68bil (currently $2.4bil).
"my judgement is based on analyst consensus PE of 25. and the intense research i made to predict the earnings going forward (both from management guidance and the reality of the pandemic implications which had change demand structurally)"
Intense research - don't play play. I'm not sure where freetospeak is right now. While he is extremely good at coming up with qtr earnings and fair value market cap, he was never able to explain how Supermax can earn $4 bil consistently every year for years to come.
Another i3 investor who called himself an ex-CFO of a public company said this to me: "You remind me of many accountants and financial analysts I've come across (I speak with the experience as a CFO of many years standing) who are fantastic bookkeepers, but can't cross the bridge to business speak, business acumen and strategy, from the great vantage point they already have with financial numbers.
I'm afraid you are so wedded to your theories (which are fine in themselves if applied to the appropriate scenarios), basing them on historical data, which has been upended by dynamic industry shifts you have failed to comprehend and/or paid scant regard to.
As for your disdain for @freetospeak's estimate of RM3.2 bil in future profit, why don't you try to work out how he arrived at that number, and then critique it? I'll give you a clue: Supermax is lifting its production capacity to 42 bil per annum by 2022."
I wonder who fails to comprehend. Where is Supermax so-called $3.2 bil future profit?
Lesson: When someone start using big words (i.e business speak, business acumen, strategy, upended, dynamic industry shifts) but cannot explain what that means. You know you're seeing BS.
20 July 2020 - Market cap: $24 billion One investor cited the Global Disposable Gloves Market Report where “the disposable gloves market size is expected to grow at a CAGR of over 14% during the period 2019–2025”
Some were anecdotal “I just bought lots of 10 boxes supersafe glove, powdered, XL in preparation of my 20 shops opening.There are many industries that thrive with COVID. Glove , fresh food, graphic design." While others justify $24 billion is a good price because the company director is accumulating at this price point.
And then the big picture is that people believe Supermax is a great medium to long-term investment because of capacity expansion, higher utilisation rate and high ASP. Most investors believe COVID is going to create a ‘new normal’ for glove demand for years to come.
Let’s look at the problems. The information that 14% CAGR growth in glove market size for the next 5-6 years has little value. A market with a high growth rate tells nothing about how a company is going to perform in that industry. And more often than not, a high growth market attracts more competition because of higher profitability, lower barrier of entry (lowers minimum efficient scale), and easier to get funding. Think internet during the 90s, automobiles in the 1910-30s etc.
There are not many businesses that can increase volume while maintaining its selling price. So capacity expansion, higher utilisation rate, and high ASP cannot go hand in hand, unless under extreme circumstances. Capacity expansion will lead to lower utilisation and lower ASP. And the biggest thing people missed is that if Supermax is going to expand capacity, what about other glove companies? If all other companies made the same decision, what gives?
Some people bought Supermax because the CEO/founder/management are accumulating shares. But you don't need me to tell you how silly this thinking is as a way to justify purchasing an investment. Just ask Lim Wee Chai on how much he spent buying back TG shares at the peak.
Lesson: What has changed from Supermax valued at $2 billion (early 2020) to being valued at $24 billion (Jul 2020)? Did Supermax discover a new manufacturing method to dramatically improve their cost efficiency? No. Did Supermax do anything different? No. Some investors mentioned competitive advantages such as OBM line, proximity to customers, etc. These so-called advantages are already there pre-Covid.
Supermax: A valuable lesson It has been 2 years now since the hype on gloves stock began right into the Covid. Here are some of the interesting i3 conversations (specific mention: Probably, RTH888, freetospeak) on their 'prediction' back then how much Supermax is worth.
05 Jun 2020 -Supermax Market Cap: $4.7 billion “Market capitalization for Supermax should be 61% of Harta at 36,762 mil x 61%= 22,424 Mil”
This i3 investor applied various discounts just to be ‘safe’ and ‘conservative’ to show Supermax remains a bargain at $12 billion.
Lesson: Someone applying various discount % is a sign he doesn't know what he is talking about rather than a way to validate the safeness of an investment. One subtle yet important thing is there’s a difference between applying a margin of safety so you don’t overpay for a stock and applying a nonsensical P/E multiples to value a stock so you can apply a ‘discount’ to justify the price you pay. In the first case, you know what the business is worth with a mindset that things can still go wrong. The latter case is you don’t know the risk you’re taking but nonetheless you try to measure it in a way that persuades yourself it isn’t risky. The investor above shows the latter.
That aside, if anyone that is investing, too often people get influenced by the share price. If you're buying for the long term aka betting on the fundamental of the business, you should assess the business i.e profit, cash flow, ROC, not where the share price is going. You shouldn't let the price or sentiment affect what you think Harta should be worth.
@Anxious if your initial plan is to buy and sell i.e akin to trading. You're likely to be making a mistake right now to hold it just because the price has come down.
You have to know whether you're investing or trading. Not one is better than the other, but the most dangerous thing is changing your story.
Imagine if tomorrow Harta would go up by 100%, you'll be tempted to change your story again, thinking it will continue to go up etc. If you're trading, stick to it, even if that means selling at a loss.
Market is both efficient and inefficient. If you're active investing i.e not buying index fund, you're making the assumption that the market is inefficient so you can buy things on the cheap and sell it at a fair price, which is when market become efficient.
Market is not always efficient but it is efficient most of the time. In the sense that most people don't make money from market timing.
@JohnFarmer458 net profit is not everything. It is how much capital required to generate a dollar amount of profit that is the key right? Hypothetically, MyDIY can justify such a valuation if it has a very high ROC. And also do consider there's also more more new entrant interested in manufacturing gloves than selling DIY tools.
Everyone relax. I consulted cjp74132rn (ex-CFO) and freetospeak last year, we all have very lively discussion back in June-Aug 2020, they both strongly believe Supermax easily worth $30 bil market cap. Means an upside of 200% from current price. They believe Supermax easily $2 billion profit per year. Please check with them.
Especially cjp74132rn. He wrote "I have been an investor in Supermax for the past 3 odd years, and, fortunately, at an average price of $1.19, buying on the dips as they occurred. You bet I'm pleased with the Supermax management team because I think there is more upside to come in the next 12-18 months." Now only 6 months, he must have surely bet everything on Supermax at this price.
Here's a template of reasons when someone badmouth, downgrade a stock you own: 1. [The person/company] just want to depress the price to buy more. 2. [The person/company] is jealous. 3. [The person/company] has bad motive.
I didn't know this subforum is only for ppl that own Supermax only. Is this a cult group? If ppl that don't own Supermax has hidden agenda because they're here. Does that mean all the Supermax investors have hidden agenda behind their positivity? Can't be true.
I would say the similarity between Scientex and glove stocks are both are very low margin business. Scientex's property division has good margin, but plastic division is a very low margin biz. Margin slightly improved when they move up the value chain from stretched film to consumer food packaging over the past 5 years. So survival in this business is to run the business as efficient as possible, and something I think Scientex is really good at. And also another reason I think them applying this mindset to their property division allow them to sell affordable housing while still making a really good margin.
Which is also another reason Scientex can make so much acquisition while keeping their debts under control because they make sure all of the companies they acquire produce the synergy they expected and apply the same level of efficiency allow them to immediately produce a lot of free cash flow to pair down their debt and make more acquisition, something that other plastic manufacturers haven't been able to do.
So Lim Peng Jin's brilliance lies in his management skills in controlling cost and running Scientex as efficient as possible. Without him, I would think Scientex will just be another average company. There's not many advantage selling plastics. Just like there's not many advantage selling gloves. IT comes down to controlling cost. And I think Harta is the best at doing that.
Now in the glove biz, it is happy hour, high ASPs due to high demands and tight supply. But watch when all the additional supplies come online, and a sudden squeeze on ASP either from oversupply or soft demand, most newbies in the glove industry like Mahsing will get destroyed.
I owned Scientex since 2012 and I can tell you nothing is guaranteed in this world, including Scientex. That part of 'no need to think no need analyse no need work hard' is nonsense.
Scientex's CEO buy shares almost every year therefore him buying in October tells you little about what next qtr is going to be. But one thing for sure is he and his bro have 'skin in the game' because most of their fortune sits in Scientex.
If you're a long-term investor, your return for any stock will be very similar to the business return on capital. What is Scientex historical ROC? Around 13-15%. So that is what you'll expect. Sure, if you own 2012, your return will be close to 1,000% but expecting you'll make that same amount of gain for the next 10 years will be unrealistic. Because that simply mean you think Scientex will grow from $6+ bil market cap to $30-60 bil market cap by 2030.
Just my hypothesis: covid and lockdown for countries in general is positive for scientex. More people are likely to cook at home instead of dine out at restaurant. Higher demands for consumer food products and food packaging are likely to be positive for Scientex.
I remember when I expressed skepticism on Supermax's valuation, many ppl asked me to read IB's reports, saying how wrong and outdated I'm. And now these people accuse IB's of market manipulation and talking about karma? Please, don't blame your own stupidity on others, it makes you looks more stupid. When IB give a rosy TP, you agree. Now IB give a bleak TP, and you said IB manipulated the market.
And everyone on this counter is busy talking about vaccine. Seriously? Vaccine is the LEAST important thing. There are hundred of ways Supermax's price can collapse even without any vaccine. Vaccine is just one out of a hundred of possibilities. If you're going to speculate, be ready to accept the consequences.
Why form a private chat group? A group that exclude naysayers so everyone can cheerleading one another?
I understand that there are many trolls in I3 (whether they're those that wants to Supermax to go up and down), and you should just ignore them i.e not replying.
But forming your own group where everyone agree with you? That's the best way to lose money. Because everyone in the group will agree with one another (confirmation bias on cocaine), reinforce each others' belief, worst, become a cult where belief escapes reality.
If there's one thing you can learn (or not learn) from your uncle, is to first ask "Uncle, where is your circle of competence?" And if he act as if he can answer any stock that come his way, then clearly you shouldn't listen to him at all.
Relax everybody. The share price doesn't move just because some people call it down or up. And on the same note, if people are allowed to call TP of $33 or $50, there's nothing wrong for others to call it with a low TP, fair enough? So don't call others sore loser or dog if the price move opposite of your favor.
@ cjp74132rn Mind to tell me why should I remodel my mind and profit estimate for Supermax? I'm not fantastic bookkeeper. I'm just reasoning from first principles on the fact that the odds of Supermax generating $ 2 bil consistently is so low. Far from saying it is impossible, but not possible without massive reinvestment. And that's far from saying Supermax cannot generate extremely high profit in the near term. Consistency is the key. If I am to own Supermax for $30 bil, what's important is not how much it can earn this quarter or this year, which is the obsession of everyone here, my interest is how much can it generate consistently for the next 5-10 years.
You asked me to critic how freetospeak gets his $3.2 bil. which he get by extrapolating $800 mil per quarter. And how does he get $800 mil? I've no idea. He doesn't show any calculation. But that's based on the assumption of doubling NPAT from recent quarter. And do I need to look into the details? Model it with a current profit margin and volume until you get to that number. I can show you how to model $5 bil if you like me to? Modeling is easy. Skepticism is rare.
And by looking how he takes OBM/OEM ASP USD to project profits, now sure, assuming next 3 months' ASP don't change, you'll get that amount. But that goes back to the question, how likely can the ASP maintain at that level for the next 3-5 years? And there's a high probability that it won't. Why? I'll give you a clue: Supermax is lifting its production capacity to 42 bil per annum by 2022. And many others too, inside and outside Malaysia.
Are you hoping that ASP to maintain at $85-$150 ASP when volume goes up by 50-100% in next 1-2 years? And not just Supermax but almost every glove company in this planet? And what does such a massive production ramp up has the effect on nitrile cost? And I haven't even get into the possibility of stock-up along the entire distribution channel. Not every piece of glove sold by Supermax gets consumed Mr. CFO. No one knows how many get stacked up somewhere in the warehouses or the level of over-ordering because everyone is worried they don't get what they order so they over-order. And projection from freetospeak shows OBM ASP is almost 70% higher than OEM ASP. I can be wrong, but what's so special about the OBM aside from whacking their own branding? Technological superiority? I don't know. If it is just another piece of glove with its own brand, 70% is really high. Hartalega which 98% revenue is OEM, must be so dumb not to grow their own brand. And you assume OBM can get higher ASP without higher investment? What kind of magical world is this?
Like Mr. CFO, you don't think about all these when you invest? You just whack ASP with volume then whalla there goes your profit? I'm sure im doing business speak here, not bookkeepers.
@katherine lim. Wow $1 bil this quarter. That's more aggressive than freetospeak. Freetospeak said $.32 bil per annum, now you're going $4 bil. Let's see how long that $1 bil per qtr last lol. 大炮不用本钱. Shit even if Mr Thai don't want to enter Fortune 500 also cannot. More like Fortune 100 soon! Easily beat PBB's profit soon. What's the hype with Tesla when you can own Supermax
Now, is my writing more convincing or whacking a PE 25 and call it a TP$50 more convincing, of course it is the later. No one wants to think. $3.2 bil. extrapolation, and everyone start salivating. Well, if $3.2 bil is that easy as writing on a piece of paper, every business would prosper.
The value of a business, or what the fair value of a stock is worth, is not precise, but it doesn't mean it can be anything either. If it can be anything, what's the point of reading financial statement right. So it has to be a range. The width of the range depends on the range of future outcome of the business i.e the more uncertainty a business, the wider the range has to be.
Now, if I have $100 bil hypothetically, would I spend $40 bil to own Supermax (SPM) in its entirety? Let's reverse engineer this. To pay something $40 bil, I need to be sure I'll get more than $40 bil out of it for the next 10, 20 years (the reason of investing). So SPM got to produce enough cash flow to entice me to willing to spend $40 bil. How much is that? We don't have to precise, but safe to say something like $2-5 bil annual cash flow. That's a good range. I don't pull that from thin air, because if one is willing to accept less than $2 bil in cash flow, that you are stupid. Simply for the fact that fixed interest is 2.5%~, only idiot would be willing to invest in stock for a yield of less than 5%.
We are one step closer; to pay $40 bil for a business, it need to at least produce $2 bil cash flow or earnings per annum. And I mean $2 bil starting right now, not some distance future. If SPM can only start produce $2 bil p.a 5 years later, then I'll won't want to pay $40 bil, but less. So question is can SPM produce $2 bil starting tomorrow? Well for a company that even if you extrapolate the most recent stellar quarter result to get $300 mil, $2 bil is a shit stretch. But of course you say, SPM is in supergrowth mode in this pandemic era! Margin is expanding, volume is growing. Maybe $2 bil is possible. So simple logic, to go from $300 mil to $2 bil, 700% increase, SPM got a few levers to pull. Volume increase, sure but that takes time i.e install machines, ramp up production etc, you don't increase volume by 700% with a flip of a button. Margin expansion! Yes, if something that has 10% profit margin, just expand that to 50% profit margin. Done. But that neglect 2 things: Price increase means less demand (basic economics); and volume ramp up (by competitions) means margin expansion is only a short-term solution. This is where the logic breaks down. I can't see how SPM can go from $300 mil to $2 bil overnight. I never come across business that can do that after studying businesses for 8 years.
Cash flow or earnings growth have to come from reinvestment (you don't get growth from the sky). So I mean, SPM need to reinvest all $300 mil in earnings to grow at 100% revenue yoy. Assuming a return of 100%. That will still take 3 years just for SPM to get to $2 bil cash flow. This mental thinking isn't hard to do. And I have no clue how SPM can get to $2 bil in the shortest time, hence paying $40 bil is close to praying there is a greater fool willing to pay you even more to buy the business from you.
P/S: If you intend to write how Supermax's share price has gone up to show that you're right and I'm wrong, please save your time. Relying on the share price proves how little you can think.