KimSua - why will demand greatly reduce after 3Q? You can't just say it and offer no explanation

what is the outlook to go to RM9+?

Snowpiercer - ASPs stay higher for longer and analysts are forecast to upgrade their numbers which are currently assuming a collapse in ASPs from 2H21 - I just don't see that happening

1) The world is still going be dealing with the pandemic for the rest of 2021 and 2022

2) Governments haven't had the chance to build up any stockpiles

3) Supply hasn't been able to respond fast enough - it takes many month to build a glove factory, and the process is currently being hindered by lack of workers, shortage of raw materials, restrictions due to the MCO etc

Analysts will be forced to raise their 2021-23 forecasts substantially and also TP

Nice jump on the SGX today +3.2%

5,725 cases... Yeah... Let's buy reopening plays

Gloves the only way wan

The pandemic is far from over - US gloves expert sees not drop in demand or even prices anytime soon. See note out from Credit Suisse Malaysia today. Glove prices to stay higher for longer! Top Glove has hugely underperformed China’s Intco (up 64% THIS YEAR)!

* Key takeaways from our call with an expert in the US healthcare supply chain: The recent supply disruption caused by Covid outbreaks at the Malaysia glove factories have seen some US buyers diversifying imports from other countries such as Turkey.

* Beyond Covid, demand growth for gloves in the US is expected to be in the 20% range, vs 6-8% in the past. The key driver of demand has been changes in user behaviour, instead of an oversimplified view of testing rates.

* Based on current data points, he believes ASP in 2021 will be at least on par, if not higher than the end-2020 levels. A correction in ASP will only take place when supply finally catches up with demand, which seems unlikely in the foreseeable future. Even so, the ASP decline is expected to be gradual, rather than a steep decline.

* Whilst sector fundamentals appear to be intact, the Malaysia and Thailand gloves' share price performance has been flattish YTD. We reiterate our Outperform on both Top Glove and Sri Trang Gloves.

Supermax result out when?

What a day!

Looking forward to the afternoon

7 handle coming

Thank you gLOVErs

Looking forward to it!

When is the Supermax result out?

Top Glove is a legitimately cheap stock that trades at 5x PE and 16% divvy yield. Worth at least 2x what it currently trades at

Or join the Telegram one wan

Top Glove boleh!

Today we'll get at least a 80c move

Big day today

Singapore now closed

Make it happen on Bursa tomorrow

https://www.reddit.com/r/bursabets/comments/l6q9yt/thank_you_rwallstreetbets/

YES

https://www.asiatimesfinancial.com/asia-could-be-next-as-reddit-squeeze-on-hedge-fund-shorts-goes-global

BOOM

https://www.asiatimesfinancial.com/asia-could-be-next-as-reddit-squeeze-on-hedge-fund-shorts-goes-global

Top Glove next? Boleh!

Who's organizing d squeeze?

Buy, buy and buy somemore

Also note the reason they and Hartalega are hiring foreigners is they can get access to foreign workers. This is only going to slow the expansion plans versus target and push up gloves prices even more. The demand:supply mismatch will remain for a few years according to KH Kuan

No wonder no one reads FM

What's the relevance here? Australia has had one of the toughest lockdowns and border restrictions of any country globally. And is an isolated island with very low population density.

Very positive update from Hartalega management as per Citibank note. Guiding for pricing to go higher even in the 2H21. Target price RM21.40

Briefing Takeaways – Triple Digit ASPs Not Ruled Out

* Volume and order visibility: The flattish sequential volume in 3QFY21 came as a result of shipping delays as some deliveries meant for Dec-20 were pushed into Jan-21 although the situation has gradually improved. Order visibility remains excellent; the still-dire COVID-19 situation amid third waves globally means near-term demand would remain strong, evidenced by the Group’s pandemic allocation being taken up until Oct-21 (c.7% of capacity). Hartalega has not seen its lead-time contracting unlike another peer, likely due to the Group’s more gradual ASP hikes. In the near term, the time to ramp vaccine production capacity and to achieve herd immunity will likely keep demand elevated. Beyond that, a structural pick-up in gloves consumption, especially in DMs, is likely, according to the world’s second largest glove-maker, thus driving a higher-than-historical demand growth for a few years.

* ASP and competitive dynamics: By our estimate, the 40-50% QoQ ASP hike guidance implies ASPs of closer to US$80, which would still be lower than some peers who were already quoting US$100 for Nov-20 deliveries. To that end, management did not rule out for Hartalega’s ASP to hit triple-digit, pointing to a potential further QoQ ASP increase in the June-quarter. As to when ASPs will taper off would depend on when the demand-supply gap will narrow, which Hartalega doesn’t believe will happen so soon. For one, quality and sizeable new lines will take time to build. Any capacity coming in too quickly is likely rushed, and may not meet the required standards by key clients, and further capped by feedstock constraint and labour shortage as borders are closed and unlikely to be reopened anytime soon.

* Capacity and expansion plans: The Group’s NGC 1.5 (19bn capacity) will commence its first line towards 4QCY21 (unchanged), for which piling works had begun late-last year. NGC 2.0 (32bn capacity) will start early next year (also unchanged); for both, the Group aims to increase automation and reduce manual labour by as much as 20%. To cope with labour shortage, the Group is looking at rehiring illegal workers and retrenched workers via various government programs whilst at the same time working to encourage more local talents to join the industry.

* Our target price for Hartalega of RM21.40 is based on relatively conservative 18.2x average CY21/22E EPS, set at -1.5sd of its 5-year mean PE. Whilst we do expect strong earnings momentum ahead, we believe the lower-than-mean multiple is fair as investors may look to price in a more normalized operating environment beyond CY21E. We have used PER methodology across our glove coverage universe given that the industry has historically traded on PER with earnings being the biggest share price driver

Very positive update from management as per Citibank note. Guiding for pricing to go higher even in the 2H21. Target price RM21.40

Briefing Takeaways – Triple Digit ASPs Not Ruled Out

* Volume and order visibility: The flattish sequential volume in 3QFY21 came as a result of shipping delays as some deliveries meant for Dec-20 were pushed into Jan-21 although the situation has gradually improved. Order visibility remains excellent; the still-dire COVID-19 situation amid third waves globally means near-term demand would remain strong, evidenced by the Group’s pandemic allocation being taken up until Oct-21 (c.7% of capacity). Hartalega has not seen its lead-time contracting unlike another peer, likely due to the Group’s more gradual ASP hikes. In the near term, the time to ramp vaccine production capacity and to achieve herd immunity will likely keep demand elevated. Beyond that, a structural pick-up in gloves consumption, especially in DMs, is likely, according to the world’s second largest glove-maker, thus driving a higher-than-historical demand growth for a few years.

* ASP and competitive dynamics: By our estimate, the 40-50% QoQ ASP hike guidance implies ASPs of closer to US$80, which would still be lower than some peers who were already quoting US$100 for Nov-20 deliveries. To that end, management did not rule out for Hartalega’s ASP to hit triple-digit, pointing to a potential further QoQ ASP increase in the June-quarter. As to when ASPs will taper off would depend on when the demand-supply gap will narrow, which Hartalega doesn’t believe will happen so soon. For one, quality and sizeable new lines will take time to build. Any capacity coming in too quickly is likely rushed, and may not meet the required standards by key clients, and further capped by feedstock constraint and labour shortage as borders are closed and unlikely to be reopened anytime soon.

* Capacity and expansion plans: The Group’s NGC 1.5 (19bn capacity) will commence its first line towards 4QCY21 (unchanged), for which piling works had begun late-last year. NGC 2.0 (32bn capacity) will start early next year (also unchanged); for both, the Group aims to increase automation and reduce manual labour by as much as 20%. To cope with labour shortage, the Group is looking at rehiring illegal workers and retrenched workers via various government programs whilst at the same time working to encourage more local talents to join the industry.

* Our target price for Hartalega of RM21.40 is based on relatively conservative 18.2x average CY21/22E EPS, set at -1.5sd of its 5-year mean PE. Whilst we do expect strong earnings momentum ahead, we believe the lower-than-mean multiple is fair as investors may look to price in a more normalized operating environment beyond CY21E. We have used PER methodology across our glove coverage universe given that the industry has historically traded on PER with earnings being the biggest share price driver

Buy gloves to hedge all round lah

Buy TOPG/Super, sell Intco

Ignore the IBs and focus on the fundamentals = stronger than ever. Eventually share price will follow earnings higher and there will be nothing the short sellers can do

Virus is going to be with us for a long time. Glove up!

Vaccines have been oversold as the pandemic exit strategy
https://www.ft.com/content/17c44c96-39f2-4ada-badd-d65815b0a521

One source of gloom emerged at a briefing last week. Academic researchers warned vaccination alone might not induce sufficient herd immunity to stamp out the virus. An unhappy combination of imperfect vaccine efficacy, suboptimal take-up and super-infectious variants could derail attempts to reach the herd immunity threshold, when R falls below one and the virus begins to dissipate. Modelling from the University of East Anglia corroborates this unpalatable possibility.

Another major worry is that countries with poorly controlled transmission might be acting as production lines for dangerous new variants. While current vaccines work against high-profile variants including B.1.1.7, now dominant in the UK, this good fortune might not last.

One variant, first documented in South Africa, shows some resistance in the laboratory to neutralising antibodies, scientists reported in an unreviewed research paper last week. Moderna also said that its vaccine might not be as effective against this variant and has started developing a new formulation that could be given as a booster in the autumn.

The key genetic mutation responsible has also been clocked in a Brazil variant. Yet another has been linked to a surge in California, where 3m cases have been recorded.

Bonus issues are meaningless. Focus on dividend yield (nearly 20%) and PE (just 5x)

Even JPM admitted the Hartalega result was strong

Still believes there will be a sharp decline in ASPs in the 2H without providing any reason why. Hard to see how with the current state of the global Covid situation

Also, he does not appear to understand how margins/operating leverage work - nitrile raw material prices rose 50% or so qoq,
but gross margins are at 63%, and raw materials just 40% of COGS, so the impact on overall margins is minimal - and well offset by ASP price hikes (another 40-50% qoq expected in the 4Q, which JPM conveniently forgot to mention)


Hartalega (HART) in 3QFY21 reported another strong set of results, in
line with JPMe and consensus expectations, driven by higher ASP (c.60%
q/q). But the potential of ASP hitting inflection point by 2HCY21, in our view, could lead to near term valuation de-rating to discount the possibility of earnings cuts. We thus reiterate our UW rating and PT of MYR8.50.

* Results in line with JPMe. HART’s 3QFY21 net profit of MYR1bn
was up 84% q/q and 7x y/y. Although 9MFY21 net profit of MYR1.8bn
represents 61% and 69% of JPMe and consensus FY21E respectively, we
see this as in line with expectations as there is still room for HART to hike its ASP which is still at a c.50% discount to other producers.

* Record high q/q ASP growth. Implied blended ASP increased 58% q/q
to MYR224 in 3QFY21, 4% higher than JPMe of MYR215. There is still
room for HART to play catch up as the highest nitrile glove price is at MYR427. But we are worried that the industry’s peak ASP could soften by as early as July-21.

* Flattish q/q volume growth but cost is rising. Sales were flattish q/q in 3QFY21 at 9.5bn pieces, mainly dragged by a 32% q/q decline in latex gloves while nitrile rose 1% q/q. Sales volume missed JPMe by 2%. 3QFY21 raw material cost was 41% higher than JPMe. Labor cost was
also 26% higher than JPMe due to one-off foreign worker remediation cost.

* 3QFY20 DPS of MYR9.65c. HART announced an interim dividend of
MYR9.65c, which implies 33% quarterly payout ratio. This dividend
goes ex on 10 Feb 2021. Our FY21 payout expectation of 60% implies
FY21E DPS of MYR51c and 4QFY21 DPS of MYR36c. Implied FY21E
yield is 4%.

* Expansion plan. To date, 12 production lines in Plant 6 of NGC facility and four out of 10 lines in Plant 7 have been fully commissioned. Plant 7 will contribute a total of 2.7bn pieces upon full commission, bringing annual installed capacity to 44bn pieces by FY22 from the current 41bn pieces, according to management.

Even JPM admitted the Hartalega result was strong result

Still believes there will be a sharp decline in ASPs in the 2H without providing any reason why. Hard to see how with the current state of the global Covid situation

Also, he does not appear to understand how margins/operating leverage work - nitrile raw material prices rose 50% or so qoq,
but gross margins are at 63%, and raw materials just 40% of COGS, so the impact on overall margins is minimal - and well offset by ASP price hikes (another 40-50% qoq expected in the 4Q, which JPM conveniently forgot to mention)


Hartalega (HART) in 3QFY21 reported another strong set of results, in
line with JPMe and consensus expectations, driven by higher ASP (c.60%
q/q). But the potential of ASP hitting inflection point by 2HCY21, in our view, could lead to near term valuation de-rating to discount the possibility of earnings cuts. We thus reiterate our UW rating and PT of MYR8.50.

* Results in line with JPMe. HART’s 3QFY21 net profit of MYR1bn
was up 84% q/q and 7x y/y. Although 9MFY21 net profit of MYR1.8bn
represents 61% and 69% of JPMe and consensus FY21E respectively, we
see this as in line with expectations as there is still room for HART to hike its ASP which is still at a c.50% discount to other producers.

* Record high q/q ASP growth. Implied blended ASP increased 58% q/q
to MYR224 in 3QFY21, 4% higher than JPMe of MYR215. There is still
room for HART to play catch up as the highest nitrile glove price is at MYR427. But we are worried that the industry’s peak ASP could soften by as early as July-21.

* Flattish q/q volume growth but cost is rising. Sales were flattish q/q in 3QFY21 at 9.5bn pieces, mainly dragged by a 32% q/q decline in latex gloves while nitrile rose 1% q/q. Sales volume missed JPMe by 2%. 3QFY21 raw material cost was 41% higher than JPMe. Labor cost was
also 26% higher than JPMe due to one-off foreign worker remediation cost.

* 3QFY20 DPS of MYR9.65c. HART announced an interim dividend of
MYR9.65c, which implies 33% quarterly payout ratio. This dividend
goes ex on 10 Feb 2021. Our FY21 payout expectation of 60% implies
FY21E DPS of MYR51c and 4QFY21 DPS of MYR36c. Implied FY21E
yield is 4%.

* Expansion plan. To date, 12 production lines in Plant 6 of NGC facility and four out of 10 lines in Plant 7 have been fully commissioned. Plant 7 will contribute a total of 2.7bn pieces upon full commission, bringing annual installed capacity to 44bn pieces by FY22 from the current 41bn pieces, according to management.

Even JPM admitted it was a strong result

Still believes there will be a sharp decline in ASPs in the 2H without providing any reason why. Hard to see how with the current state of the global Covid situation

Also, he does not appear to understand how margins/operating leverage work - nitrile raw material prices rose 50% or so qoq,
but gross margins are at 63%, and raw materials just 40% of COGS, so the impact on overall margins is minimal - and well offset by ASP price hikes (another 40-50% qoq expected in the 4Q, which JPM conveniently forgot to mention)


Hartalega (HART) in 3QFY21 reported another strong set of results, in
line with JPMe and consensus expectations, driven by higher ASP (c.60%
q/q). But the potential of ASP hitting inflection point by 2HCY21, in our view, could lead to near term valuation de-rating to discount the possibility of earnings cuts. We thus reiterate our UW rating and PT of MYR8.50.

* Results in line with JPMe. HART’s 3QFY21 net profit of MYR1bn
was up 84% q/q and 7x y/y. Although 9MFY21 net profit of MYR1.8bn
represents 61% and 69% of JPMe and consensus FY21E respectively, we
see this as in line with expectations as there is still room for HART to hike its ASP which is still at a c.50% discount to other producers.

* Record high q/q ASP growth. Implied blended ASP increased 58% q/q
to MYR224 in 3QFY21, 4% higher than JPMe of MYR215. There is still
room for HART to play catch up as the highest nitrile glove price is at MYR427. But we are worried that the industry’s peak ASP could soften by as early as July-21.

* Flattish q/q volume growth but cost is rising. Sales were flattish q/q in 3QFY21 at 9.5bn pieces, mainly dragged by a 32% q/q decline in latex gloves while nitrile rose 1% q/q. Sales volume missed JPMe by 2%. 3QFY21 raw material cost was 41% higher than JPMe. Labor cost was
also 26% higher than JPMe due to one-off foreign worker remediation cost.

* 3QFY20 DPS of MYR9.65c. HART announced an interim dividend of
MYR9.65c, which implies 33% quarterly payout ratio. This dividend
goes ex on 10 Feb 2021. Our FY21 payout expectation of 60% implies
FY21E DPS of MYR51c and 4QFY21 DPS of MYR36c. Implied FY21E
yield is 4%.

* Expansion plan. To date, 12 production lines in Plant 6 of NGC facility and four out of 10 lines in Plant 7 have been fully commissioned. Plant 7 will contribute a total of 2.7bn pieces upon full commission, bringing annual installed capacity to 44bn pieces by FY22 from the current 41bn pieces, according to management.

Bullish results note out from Nomura. TP RM25

Quick Note - Hartalega (HART MK) (Buy) - 3QFY21 results: Another record quarter

Ahead of expectations as 4QFY21F likely to be even stronger with rising ASPs
Hartalega posted another record quarter in 3QFY21 as 9MFY21 core profit of MYR1.70bn formed 61%/70% of our/consensus estimates. We deem this ahead of expectations as we expect 4QFY21F to be even stronger, driven by still rising ASPs. Management expects ASPs for 4QFY21F to rise by 40-50% q-q, even after a >50% jump in 3QFY21 (at an estimated average of USD55 per 1,000 pcs) and >30% jump in 2QFY21. This is due to still rising COVID-19 cases across the world, mainly in the US and Europe after the confirmation of new COVID-19 strain. On similar lines, 3QFY21 revenue of MYR2.13bn was up 167% y-y and 58% q-q and partly due to economies of scale (as capacity utilization remained above 95%). Core profit for the quarter of MYR965mn was up 8x y-y and 81% q-q. This is despite the increase in raw material price and foreign worker remediation payments in the quarter.

Demand is still very strong while capacity growth plans remain unchanged
According to management (and this is in line with our view as well), demand in the short term will stay strong due to increasing number of COVID-19 cases. In the long term, increased hygiene awareness and higher usage in emerging economies where per capita glove consumption is very low as compared to developed nations will help demand growth sustain above pre-COVID-19 levels. However, we may see a normalization in ASPs from 2H21F or 2022F as the COVID-19 vaccination covers a significant part of the population. Overall, we expect the cost pass-through mechanism to be readopted in the industry upon normalization of demand. On a separate note, management reiterated its capacity expansion plans. All 12 lines at Plant 6 (total capacity 4.7bn pcs p.a.) and four out of 10 lines in Plant 7 (total capacity 2.7bn pcs p.a.) have been commissioned, taking the total production capacity to ~43bn pcs. Management expects the total capacity to reach 44 bn pcs by the end of FY2022 with the completion of Plant 7. In the long term, management expects to increase total production capacity to 95bn pcs by 2027, with the addition of Plant 8-11 at NGC Sepang and expansion at NGC 2.0 at Banting. First line at Plant 8 is expected to be commissioned by 4QCY21 while first line at NGC 2.0 is expected to start in CY22.

Bullish results note out from Nomura. TP RM25

Quick Note - Hartalega (HART MK) (Buy) - 3QFY21 results: Another record quarter

Ahead of expectations as 4QFY21F likely to be even stronger with rising ASPs
Hartalega posted another record quarter in 3QFY21 as 9MFY21 core profit of MYR1.70bn formed 61%/70% of our/consensus estimates. We deem this ahead of expectations as we expect 4QFY21F to be even stronger, driven by still rising ASPs. Management expects ASPs for 4QFY21F to rise by 40-50% q-q, even after a >50% jump in 3QFY21 (at an estimated average of USD55 per 1,000 pcs) and >30% jump in 2QFY21. This is due to still rising COVID-19 cases across the world, mainly in the US and Europe after the confirmation of new COVID-19 strain. On similar lines, 3QFY21 revenue of MYR2.13bn was up 167% y-y and 58% q-q and partly due to economies of scale (as capacity utilization remained above 95%). Core profit for the quarter of MYR965mn was up 8x y-y and 81% q-q. This is despite the increase in raw material price and foreign worker remediation payments in the quarter.

Demand is still very strong while capacity growth plans remain unchanged
According to management (and this is in line with our view as well), demand in the short term will stay strong due to increasing number of COVID-19 cases. In the long term, increased hygiene awareness and higher usage in emerging economies where per capita glove consumption is very low as compared to developed nations will help demand growth sustain above pre-COVID-19 levels. However, we may see a normalization in ASPs from 2H21F or 2022F as the COVID-19 vaccination covers a significant part of the population. Overall, we expect the cost pass-through mechanism to be readopted in the industry upon normalization of demand. On a separate note, management reiterated its capacity expansion plans. All 12 lines at Plant 6 (total capacity 4.7bn pcs p.a.) and four out of 10 lines in Plant 7 (total capacity 2.7bn pcs p.a.) have been commissioned, taking the total production capacity to ~43bn pcs. Management expects the total capacity to reach 44 bn pcs by the end of FY2022 with the completion of Plant 7. In the long term, management expects to increase total production capacity to 95bn pcs by 2027, with the addition of Plant 8-11 at NGC Sepang and expansion at NGC 2.0 at Banting. First line at Plant 8 is expected to be commissioned by 4QCY21 while first line at NGC 2.0 is expected to start in CY22.

Moderna admits its vaccine is less effective against South African variant. Is launching a trial of a new vaccine.

This pandemic is only going to rumble on and demand for gloves will remain elevated. Hedge yourself again this risk.

Moderna develops new vaccine to tackle mutant Covid strain
https://www.ft.com/content/c0c8f72c-e58e-4319-80c4-0db153ad85db

Moderna admits its vaccine is less effective against South African variant. Is launching a trial of a new vaccine.

This pandemic is only going to rumble on and demand for gloves will remain elevated. Hedge yourself again this risk.

Moderna develops new vaccine to tackle mutant Covid strain
https://www.ft.com/content/c0c8f72c-e58e-4319-80c4-0db153ad85db

I have a feeling and Kuan and sons know a little bit more about gloves than Jeffrey Ng...

Supermax cumming Friday

More pain tomorrow for those jokers.
Don’t mess with Malaysia

No analysts had forecasts so high. They will be upgrading

No one is forecasting it will continue forever, but current period of strong demand and limited supply will last longer than analysts are currently forecasting. Also the decline in ASP won’t be as sharp as forecast

9.65 sen per share

5.4x more than last years

BOOM

“If we implement the MCO for four weeks until early February, and then followed by a conditional MCO for three months, we hope we can reduce the number of Covid-19 cases to double figures, ” said Dr Noor Hisham, at a virtual press conference on Monday (Jan 25).

Double figures - joking or what?

Spare a thought for Jeffrey Ng as he raises his forecasts

Further upgrades from analysts to come. Both this FY and next

Overall demand > supply next few years = no sharp decline in ASP

Dividend up 5.4x v last year. Very nice

How much are casinos paying out lah?

Just like their gamblers, lose money on those ones