If i have the money, i will buy SPM until i become majority shareholder

Fact:
- Last QR EPS 0.32 , annualized around 1.27
- At 9.70, Gross PE= 9.70/1.27 = 7.7x
- Last QR net cash = MYR2.01bn or 78sen cash per share
- So Net PE = (9.70-0.78)/1.27 = 7.0x

Future:-
- In 2022, capacity will increase to 48bn, from current 26bn
- This will make SPM slightly lower capacity compared to Hartalega (SPM 48bn vs Harta 54bn)
- High chance of getting into KLCI index by year-end

In term of market Capitalization per capacity in 2022, SPM is half the price of Harta:-
- SPM = 24.9bn market cap / 48.4bn capacity = 515 per capacity
- Harta = 61.7bn market cap / 54.1bn capacity = 1,140 per capacity

A shortage of glove is a shortage of glove.

Nitrile and latex gloves are substitute of each other.
A shortage of one = shortage of both

Prices increase for both kind of gloves have been highly correlated to each other. So whole glove industry will have good earning prospects cohesively.

All top 4 manufacturers have reiterated for many many times that shortage is happening until end-2021 at least. In addition, TG production capacity of nitrile gloves are quite huge.

Based on 2019 annual result, 46% of TG revenue is from nitrile sales.

Funny to see some people create their own road block and self-sabotage.

If you all never realize, each phycology level road block yesterday was eaten up almost instantly and then enter into consolidation. Then up again to next phycology level and they makan big chunk again.

It means that some big players are behind collecting during consolidation period. And today open 22 cent higher than yesterday closing.

Now is only 80-90 cent above the divine intervention support level by Tan Sri and EPF also have been collecting below that level. It means that you loss max at RM8.0, vs upside potential of RM9.50-16.0 estimated by analyst. Some well-known investor also optimistic at MYR25-33.

Can we suggest TG to do another stock split?

You know to fulfill the naysayer at RM4

Posted by pysa2020 > Sep 24, 2020 7:18 AM | Report Abuse

Glad my money no more at EPF

Can you work out how much they disposed it for early this year and what they spent to buy it back.

-------------

Not sure the overall allocation....but they have been collecting MBB around 7.++

I think with the huge scale of EPF and the scarcity of fundamentally good companies in Malaysia, glove is still one of the good sector to be in. At least all the glove companies QR echoed the same exponentially improved result, and all say demand requirement is up till the sky and ASP likely to maintain at least for the next 6month to 1 year.

What other sectors can offer such growth story in foreseeable future?
- Bank: Likely declining margin and rising NPL story
- O&G: Has been poor over the last decade.
- Tech: Equally expensive valuation, and mid-term earning outlook uncertain. Malaysia tech is mainly just a subcon to giant like Apple etc.
- Property: Flat, highly unlikely to grow
- Plantation: Good CPO for now, stable industry, unlikely to have exponential growth. CPO price not going to increase 30% every quarter.
- Construction: Wait for government initiated projects. Politically noises again, might all the renegotiation, change in award etc.
- Consumer product: Flat stable industry, valuation expensive.
- Pharma: Mainly doing packaging and distribution. One vaccine, one injection, one "glove" also. Malaysia pharma cater for only Malaysia population, Malaysia glove cater for the whole globe.

Come on....give Macquire chance....they have already revise upward the TP from 5 to 10 again :P


Maybe we should really can report to SC now.
Either 5 is correct or 10 is correct. Cant be both :P

I think worth to mention that yesterday's EPF purchase was the single largest daily increase in shareholding since end-2018. EPF added 13.696mil shares and increased their ownership to above 5% once again yesterday.

They held around 7.7% of TG's share as at Dec-2019. Throughout Jan-Apr 2020, EPF has gradually reduced their exposures in TG and stalled being substantial shareholder in Apr-2020. TG's share price was slightly above 2.00 in April-2020 (post-BI adjustment price).

Yesterday, EPF added 13.69mil shares at roughly 4 times higher price compared to Apr-2020 level. I hope it means that our provident fund have great confidence in TG and the prospect of domestic glove sector.

May EPF increase their position to above 7% shareholding again. :D

Below are the price distribution over the past 3 days (traded value in million):-

Compilation from Bloomberg:

Date SBB + <8.0 + 8.01-8.02 + 8.03-8.05 + >8.05 = Traded Value
21-Sep 99.8 + 262.2 + 25.5 + 13.9 + 52.5 = 453.8
22-Sep 18.9 + 200.2 + 57.7 + 78.1 + 113.6 = 468.5
23-Sep 26.2 + 161.5 + 60.1 + 45.6 + 134.4 = 427.8

Notice a rather positive trend:
1) Amount needed to support below 8.00 is in reducing trend
2) People more willing to take price above 8.05 level.
3) EPF becomes substantial shareholder again
4) Traded value still relatively strong despite political noises today as well as weak equity sentiment after 5-days of global equity selloff

I personally feel that a lot retail still have faith in glove industry. However, after 2 rounds of deep manipulation from various parties, it is understandable to have some buying fear for now by the retail.

Now Tan Sri is forming temporary strong support at 8.0 to avoid unnecessary panic selling of the retail and reduce the adverse impact of the shark game.

Once the sky are blue, the fund/shark will return and they can only collect above 8.0. By that time, the share price might increase quite sharply as it will be compounded by the earlier retail flows.

Of course this scenario only happened if you still have faith in the industry.

@MakeaBuck is share buyback from Top Glove

If you trust glove is not sunset industry, just dont sell below 8 and wait for the fund/shark to comeback. Dont help those opportunist to buy cheap.

If you think glove is sunset, just sell now at around 8.0-8.20. Tan Sri is forming the bottom for you now.

Haha congratz @TeamRocket for convincing mr KYY

Thanks why he is writing articles that TG is badboy for doing share buyback. Because this clearly disturbed his plan to collect cheap at 6.0 or lower just like he did previously.

The final goal of this particular ex-director of IJM is MYR25-33 remember?

So i guess Tan Sri trust his valuation and made some share buyback. Good for all shareholders.

The day if ever KYY write another article to buy TG, we better sell :P

Some look at fundamental to earn money, some look at technical to make money.

I strongly believe many will make money by reversing what's KYY article says.

By logic, they are only 4 groups of people

First Group:
Gloves sky is still shinny. SBB is good for you for medium-long term. Dividend is not say bad, but less good.

Second Group:
Gloves are dead. For this group, SBB/dividend equally bad. Just sell all and run. Go buy banking sector or pharma or something.

Third Group:
The worst group. Creating good/bad fake/real prospect rumors/news/articles. Merely to create market flows and take advantage of it.

Fourth group:
Poor cow being dragged around waiting to be slaughtered and eaten.

Haha @geary. I'm just someone that learning how to apply the thing i learnt from university.

Some people call SBB is stock manipulation. Very subjective and up to interpretation. Can be misused and can be true capital management also.

But for me, you know what is manipulation. Manipulation is some well know sifus/experience investors come out with ridiculous high price target to lure financially illiterate investor to buy, but they themselves slowly take profit.

Then once they sold all their holding, they will write some funny argument to act against their previous sky-high price target and push the price down, slowly accumulate again. Then the said sifus come out with good article again, sky is blue again etc. They keep on repeat the cycles over and over again.

Even if TG "so-called"' manipulating the stock price, at least they announce it at Bursa (for transparency) and legally as per Malaysia/global rules. At least their intention is for good purpose to support stock price and reward loyal true investors. At least Tan Sri Lim is telling those sharks, stop making the 2nd largest market capitalization stock behaving like a penny stock.

I really hope those uncles and aunties will slowly improve their financial literacy and dont follow people blindly.

To show you all how good a share buyback ("SBB") is in monetary perspective (vs dividend), below are the calculation. In Malaysia rules, a company can maximum buyback 10% of share. Lets us look at the maximum scenario.

In term of price target, 17 out of 22 analysts have a buy call on Top Glove. The price target ranging between MYR9.50-16.20.

Lowest Price target = MYR9.50
Consensus EPS for 2021 = 0.96 cent (PAT = 0.96 x 8100 = 7,776bn)
Derived Forward PE = 9.50/0.96 = ~10 times

Max number of SBB = 8100mil shares x 10% = 810mil shares
Post SBB no. of shares = 8100mil - 810mil = 7,290 shares

Post-SBB derived EPS = PAT 7,776bn / 7,209 shares = 1.067
Post-SBB derived share price = EPS 1.067 x PE 10 = 10.67

SBB at MYR8, after SBB derived share price increase to MYR10.67 (if PE maintained at 10). An increment of MYR 2.67.

Compared to dividend:
Amount estimated for max SBB (810mil shares @ MYR8)= MYR6.4bn
(MYR 6.4bn if give out as dividend = 79 cent per share). Your TG price will also adjusted downward by 0.79sen post dividend.


So is 2.67 vs 0.79, with the same 6.4bn cash outlay.
Your choice. SBB for better long term EPS, or run with 0.79 dividend now.


Of course the above calculation is based on majority of buy call analyst view with higher price target. You all can use back the same calculation method if you all want to try price target of MYR25-33, just for the fun of it.

https://www.klsescreener.com/v2/news/view/730667/when-glove-party-ends-not-just-shareholders-get-burnt


Referring to this post, i have different interpretation from Mr.KYY. Disclaimer: I have lesser experience than "Director KYY", here is my 5 cents "Out of University" opinion:

How share buyback will benefit investors:

1) Share buyback reduces number of shares, hence improve EPS of the company. Better EPS on long term it will translates to better share prices. Hence, $$$ for long term investors.

2) Under capital management, it is always good for a company to have reasonable amount of debt. Why?

Accounting 101 says that Funding of a company = Equity + Debt. If company dont have debt, it means 100% funding are from equity, hence you need higher number of shares (i.e. more Dilution), lower ROE.

3) As we know, cost of equity is always Higher than cost of debt. The WACC is TG is around 10% vs current borrowing cost (OPR 1.75% + some bank margin). Yes, since 2019, BNM has reduced interest rate by 1.75%!!! In fact, some big global corporations in US and Europe use debt for share buyback to improve long term ROE. This is call capital management. Even some investors borrowing money for their own investment purposes.

4) TG borrowing is extremely low now. They have reduced their total borrowing by MYR1.8bn from MYR2.3bn to merely MYR500mil now, the remaining mainly for working capital purpose. I believe even some Directors have credit cards for groceries purchase purposes (aka working capital)

5) Accordingly to news, capex requirements next few years would be around MYR8bn for capacity expansion purposes. This can be covered by next year profit where most analysts estimating PAT in the range of MYR8-12bn. So the company is not neglecting future growth from this share buyback.

Whether is "stock prices manipulation" or it is "capital management" is up to own interpretation. Mr KYY once estimated the price target of Top Glove should be MYR100 (after bonus issue MYR33), then revised down to somewhere MYR75 (after bonus issue MYR25). Not sure what's his latest latest fair value.

So what's wrong if the company share buyback at MYR8, when the price target is MYR25-33. I think is brilliant and best move by the company, provided the above fair value is achievable. Remember this fair value was estimated by an experience investor. So i think is "maybe" "possibly" "potentially" achievable.

(just dont know the time frame :P).

Share buyback is for long term planning before the listing of Hong Kong. The company collects the shares now, so it can be released for the dual listing later and reduce/eliminate the dilution impact. This company has the vision to be Fortune 500, so listing in Hong Kong is important for easier foreign investors participation.

Dividend, on the other hand, is for short-sighted nubs, who only want to take the excess cash in the company out.

Haha Tan Sri Lim will just keep on collect around 8 and prepare for Hong Kong listing :P

Any steep price due to lack of liquidity is best time to collect because it will lead to ultra oversold situation. Most of the time it will lead to equally steep come back and a price gap up, just like the previous selldowns.

SO just make sure you have enough bullet when price reduce sharply.

Not much people can be scared/panic sell anymore after 2 rounds of steep swing/revision.

The existing holder has strong holding power, regardless the decision is correct or wrong.

Only time will tell.

Haha....everyone want to buy back cheaper.

If market ever turn and no one want to sell, the price will increase equally steep

EPF will thanks you all for goreng until so high

Whole market soft, not gloves only.
You can swap your money to which sector?

Have faith, investment rather than trading. Value investing rather than goreng.

haha if anyone sell now, you might as well sell before the BI yesterday.

Remember you still have 66% of BI stock not in hand yet.
You sell 33% to TP, but 66% will suffer :P

Cant be coincidentally 2 fat fingers keying in wrongly for both MSCI Index.

Should those IBs receiving buying orders from Index Funds since 1-2 weeks ago. So month end transfer to them at some agreed valued.

Interesting. First time see such thing.

Congratz guys.....Ang Mous are putting at strong support at 22 now. Lets see next week until bonus issue :P

Maybe IB has been collecting for those foreign funds. Today is the last trading of the month before the inclusion tot he MSCI index. So they transfer all the share to them today.

The closing volume and value traded correct?

jumped by 1.3bn to 1.9bn value traded at closing

i think it will get to 18 again....after bonus issue :P

Seems like some big players manipulating the price for the last 3 days.

Everyday same pattern.

Yeah you also know we are talking about survivability of human race here.

Exactly because that reason, no government is going to charge expensive fees.
No corporation dare to charge expensive "distribution" fees.
Else it will cause riot/chaos especially when a lot of people loss their source of incomes.

Hence you see government give out prihatin money
Hence you see bank give moratorium to ease cash flow problem
Hence you see telco give free internet to support work from home
hence you see TNB give discount to your electricity bills.

Simply reason. You dont mess with the mass population when you talk about survivability. The last think government need to worry about the 2 companies are the profitability of distributing the vaccine. These 2 companies won by them anyway. This will be their political weapon for the next general election.

Also need to point out prior to COVID-19, the budget to Ministry of Health has been decreasing for the past few years. From this we can see the trend of government is trying to reduce cost of healthcare burden. Good luck trying to think that government is going to let their own companies earning excessive margin.

@silent Either Free/very low cost. Else dont 32mil demand because 70% of people are poor/unemployed.

1 facemask MYR1.0. If vaccine MYR800, i can buy 800 masks and wear it for more than 2 years?
Can the vaccine last even that long?
The effectiveness of Hepatitis B vaccine need to recheck every 2 years.

Not everyone is rich like multi millionaires here that goreng crypto/glove/penny stocks/and now pharma. If a lot people can afford vaccine, prepare to get lockdown again.

These are GLC companies. Nothing wrong to earn minimum/zero margin at chronic situation.

Either that or government will claim back money from another method :-
- windfall tax on gloves/pharma?
- capital gain tax?
- government not giving free injection?

You choose one la.

Pure goreng stock...just be careful.

@pineapple123 MYR100 per vaccine just for distribution?

Currently both Pharmas are also distributors for so many other vaccines. and their combined revenues are below MYR3.5bn.

And you expect MYR4-6bn revenue just for additional 1 more vaccine?

China says they are selling the vaccine around RMB1,000 (around MYR600) for 2 doses.

Malaysia Population: 32 mil
Cost of Vaccine: MYR600
Pharma distribution cost: MYR200 (according to pineapple estimation)
Total cost: MYR800

32mil x 800 = MYR25.6bn

If government giving free vaccine injections, you expect government to fork out MYR25.6bn?

This will not happen at the time government is poor and very bad for political reason. We just increased the limit of government debt to 60% of GDP (from 55% earlier) due to all the COVID goodies.

I strongly opine that the distribution margin is close to zero/charity. Just like other sectors supporting the country :- bank give moratorium, telco give free data and TNB give discount.

When share price zero, the slogan should change from "everyone can fly" to "everyone can own plane"

Dont kena tangkap la.....all these shark movement....careful

no news...simply over goreng....now slaughtered by shark

The worst is over, but doesn't mean the sun is rising.

Anyone here dare to go vacation yet?

Pharmaniaga and Duopharma are government linked.

If government give free vaccine, the distribution margin will also be minimal - for political reason, for economic reason, for humanitarian reason.

In addition, government fiscal position is also extremely tight, in other word most likely government is not going to pay excessive margin to both of the companies.

In the end, it will be a charity work of distribution.

But i dont discount the possibility of more goreng, simply because election are approaching. A lot "people" need money for that reason.

Yeah we already have lots of vaccines. But extra one vaccine wont 5-fold or 10-fold your valuation. Correct?

haha run la....EPF sold earlier, yesterday another major shareholder sell

beware of bear trap

Bull trap just now.....TP first, collect back later

careful of bull trap :P

Just imagine Vaccine = Hari Raya or some festive season

When vaccine come, we open pasar ramadan and earn money.

Haha a lot people see gloves and pharma are inversely correlated to each other.

I view gloves as complement to vaccine. One injection, one glove.
If government give free injection even better.
Malaysia will need 30mil bottleneck demand for gloves.
if everyone can get vaccine injection, global 7bn demand all come over short period.

The earlier the vaccine come the better. WHY?

New production capacity have time lag and can only be setup in 1-2 years. If the vaccine comes today, Malaysia top 4 gloves makers and some existing smaller producers will sweep the sudden surge in demand. Good luck to those other newcomers that only start to build their factory now.

Simple quote everyone "one injection, one glove".
Oh yeah.....vaccine please come early :D

i think we might have the biggest bull trap ever this round. Be careful guys.

First trap: 2 --->9
Second trap: 6--->24
Third trap: 24--->35 ???

I want to warn you all too. We will see 15 again after bonus issue :P

Why use the word "chase"?

if you believe the stock price will reach 30, all the prices from pre-tsunami high 24.xx to post-tsunami low 15.90 are all relatively "cheap"

If you believe GLOVES ARE DYING, all prices are "expensive".

No such thing as chase low, chase high. Because you nvr know what the highest, what is the lowest point. Use your own judgement on the fundamental value, the act base on it. Ignore the volatility in between.

<3 TeamRocket

He is trying to make the thread most happening again. Cant loss to Top Glove thread right?

Seems like a bear trap before end of day show :P