It really amuse me when a user try to promote Genting by comparing with gloves and said that Genting is one of a kind compared to the ubiquitous gloves.

The user even go as far as saying that there is a moat for Genting. Actually it is the other way, the moat is at Supermax having established its brand loyalty in US and Canada. Any price war will benefit Supermax as they can source cheaper gloves for their distribution. This is a competitive moat, not a gaming service like Genting. Online gaming has been eating the market share of gaming operators and online gaming will only get bigger from now on. There is no license requirement for such online gaming, which is mushrooming now. The gaming operators will encounter the same fate as many traditional services that are disrupted by technology.

Everyone can make glove but there is more to glove than you think. Not everyone can make gloves the way the big 4 do. There are advance science and R&D behind the gloves. But everyone can operate an online gaming business. That is not rocket science.

Thanks @pjseow for the reply. I guess so as well that 600+mil PBT is only for manufacturing income. Supermax has spent the last 20 years building their own brand and distribution in various countries. This is coming to bear fruit and will contribute significantly to the bottom line from now onwards, even at 40% of total production. Don't be surprise that one day the distribution income is higher than manufacturing income. Analyst will not understand this. As for the PE, this is an arbitrary number analyst often use to justify a price level to reflect the current sentiment (or a level they feel the price should be). There is no logic behind the PE multiple analysts used.

@pjseow Thanks for the summary of analyst reports. For CIMB to arrive at EPS of 22 sen post pandemic, what are the assumption? Even at ASP of US22, I find the EPS too low. Did CIMB exclude the capacity expansion to 48bil? Or did they ignore the distribution income?

Haha, reading from the comments, did TA really gave a TP of RM2+ for Supermax? I remember recently HLG gave a TP of RM14+ for Harta. In about 16 months, Supermax capacity will be the same if not more than Harta, and it has dual income from distribution as well. What is TA analyst smoking?

It's been a long while since I visited this forum. Looks like those annoying paid trolls are still very much active here trying to bash down Supermax.

Supermax has recorded EPS of 149 sen for FY2021. Consensus is that the EPS will be around 50 to 60 sen post pandemic, expected to be in 2023, with two key assumptions, ie capacity of 48bil and ASP of US30/1000.

The only unpredictable variable is the PE ratio, which is based on sentiments, ie investor emotions. At conservative EPS of 50 sen, PE of 5 will only value the share price at RM2.50, whereas a PE of 20 will be RM10. As @pjseow already reasoned in his excellent post, what would be a reasonable PE for such a growth stock? Will the market continue to be overly bearish on gloves sector to give it a PE of less than 10, even when the pandemic is over. Historically, a PE of less than 10 is for sunset industry, without any growth. Are gloves becoming sunset industry by 2023? Or one that will continue to grow at 10% to 15% yearly. By the way, did I mention about the billions in cash that the top 4 gloves makers have at thier disposal for further expansion.

Father time will tell. Meanwhile, let us all enjoy the dividend while we wait.

Peace out to all the genuine investors of Supermax.

Pjseow, if I use distribution margin of 40% instead of 20%, and add another 12bil capacity from US plant to make it 60bil, the EPS will be 130 cents a year. The US plan can contribute directly to profit coz it is funded by cash, not borrowings, that's the beauty of being a net cash company. Even at normalised scenario post pandemic, the company is still able to deliver EPS above RM1, if our assumptions are correct. In any case, our assumptions are not that far fetch. How many companies in Bursa can achieve this.

Peace out.

I only visit this forum when I am bore, just to read pjseow posts, which I find very informative and logical for genuine investors. I have been holding SPMX since Mar last year and I believe there is long term value in this company, despite the many naysayers here, who find joy in talking bad about this glove counter, for whatever reason.

PJseow, I have also calculated the post pandemic scenario for SPMX. These are my assumptions :
Capacity 48bil
Utilisation 80%
Blended ASP USD37 (90% nitrile ASP USD40 10% latex ASP USD19)
OEM margin 10%
Distribution margin 20%
USDMYR 4.15
Own distribution 40% of total production instead of current 58% as mentioned by management that it will revert back post pandemic
End distributor price USD80 as per pre pandemic

The EPS is still at 60 cents a year. We can assign whatever PE to it as this is subjective, depending on market then. In a bull market run, a PE of 20 is not unreasonable for glove counters.

All the above is not counting the US/UK plans.

The key is the expansion in capacity to 48bil by end 2022. With the cash pile, I don't see any reason why this can't be achieved, and management has reiterated their commitment many times.

Just sharing my thoughts with pjseow.

Peace out.

pjseow I admire your patience for the trolls, whom are obviously not interested in facts and numbers but just to sow fear and negativity in this forum, for whatever agenda they have, in a despicable manner. You are indeed a virtuous person.

The following are my opinions on why valuation is below fair value for Supermax.

1. Supermax has high retail holding compared to TG and Harta, therefore easier to manipulate through sentiment play by parties with hidden agenda. This explains the high volatility. The swings are fertile hunting ground for short term traders, thus the many trolls in this forum.

2. Funds have never been interested in Supermax, unlike TG and Harta. It is the smallest in capacity among the top 4, with a tainted past (political, insider charge, etc) and a non-existent investor relations dept. Even when Supermax was included in Shariah and KLCI index last year, the funds never really showed interest. In addition, the fund quota for glove exposures was likely maxed out by TG and Harta even before Supermax was included in the index.

3. Despite all the above, what cannot be denied is the strong fundamental of Supermax. Based on DCF method of valuation, RHB gave a price of above RM10, if I remembered correctly.

4. Even without the US plant, Supermax is worth at least RM8+ in a normal market with the assumption of 48bil capacity by 2022 and ASP dropping to USD40, based on PE valuation of 15, when the pandemic dust settles.

5. Funds may start to look at Supermax differently in the future, we don't know. The strong catalyst from its US/UK ventures and OBM model may pique the interest of foreign funds. Unfortunately, the current political situation in Malaysia does not help in attracting such funds.

Happy investing and may your investment brings you abundance.

Reading through the comments here, where 90% are rubbish postings from trolls, I really take my hat off for user pjseow, who is so patient to block off the noise and remain focus on providing good analysis based on facts and numbers. Kudos!

For genuine investors, not gamblers, just remember, the most bearish analyst in town, JPMorgan, gave a TP of RM8.50 to Harta, post pandemic at ASP of US30/1000, likely in 2023. By then, Supermx capacity is 48bil (without US/UK plants) with 2.7bil shares, while Harta capacity is 44bil with 3.4bil shares. The former is dual income with OBM while the latter is strictly OEM. When the dust settles post pandemic, Supermx is not the same company as pre-pandemic. May your investment brings you abundance. Peace out.

Dear all genuine investors,

I have not been coming to this forum for a long while coz it has become very toxic. But I know many new investors will inevitably land here in their effort to seek for information as they are worried about their investment in Supermax.

For these investors, here are some pointers to note while you read the comments here.

1. 90% of the comments here are from paid users by syndicate to manipulate the sentiment of retailers. They are paid 30 cents per post. Supermax has high percentage of retailers, so the counter is easily manipulated through sentiment play.

2. Only a few users such as pjseow or Toneefa will give you some valuable analysis or insight once a while. Many genuine investors have left this forum as it becomes a platform for syndicate to spread negativity.

3. As for the valuation of Supermax, all one needs to know is that by end 2021, the capacity of Supermax will be 36bil gloves, which is close to Hartalega capacity of 38bil. By end 2022, Supermax capacity is 48bil, compared to Hartalega capacity of 44bil by 2022.

4. The issued shares of Supermax is 2.7bil compared to Hartalega issued shares of 3.4bil. Also, Supermax has dual income streams from manufacturing and OBM. As a result, the EPS for Supermax will be around the same if not higher than Hartalega by 2022. The target price for Hartalega is a good guide for Supermax in 2022.

5. For those who are worried that the price of Supermax will fall to RM2 next year due to falling ASP, then you are basically assuming the price of Hartalega will also fall to RM2.

6. Even the biased report by JPMorgan gave a TP of RM8.50 to Hartalega when the pandemic is over and ASP fall to USD30 per 1000. With Supermax at 48bil capacity in 2022, more than Hartalega and also OBM, do you think Supermax will be less than RM8.50?

7. Lastly, the price of Supermax is very volatile coz it is easily manipulated by syndicate for trading due to its high retail holding, compared to Hartalega. Also, the PE ratio is lower due to its dividend payout which is not as generous as TG or Harta. But as Supermax grows, this will improve eventually and with cash holding of billions, a new chapter for Supermax has just started.

I hope the above can allay some fears for new investors. May your investment brings you abundance. Signing off.

Supermax PAT is same as Harta, but capacity is half only at the moment. By 2022, Supermax capacity is 48bil, same as Harta. This is without US and UK, and other PPE. Also, Supermax is OBM and Harta is OEM. Do you ever see Harta share price below RM5 before covid? For those who keep saying the price will go to RM4, please wake up lah.

I have the same thinking on JPM sinister motive behind the suspiciously biased report, and came to a conclusion similar to your hypothetical story. Whatever happens, one thing is as certain as death and taxes, that Supermax is grossly undervalued.

@wallstreetrookie what makes you think wall street fund managers are the one buying recovery stocks? FYI, they are the ones offloading their positions to retailers after issuing high TP taking advantage of vaccine news.

Hot money in recovery stocks? Airlines, leisure and tourism? We don't even know whether these companies will go bankrupt in the next few quarters, let alone any dividend.

Now the sentiment towards gloves are very bad, maybe due to resentment from those missing the bull run few months back. Despite the superb fundamental and earnings visibility for the next few years, the price is suppressed by constant negative news.

Everyday there is negative news on gloves... vaccine, windfall tax, clampdown on workers... now say raw material price hike... I am sure there will be more negative news.... but the fact remains Supermax will me making billions with EPS more than RM1.20 in 2021. The current price is way undervalue.

There are just too many glove haters out there whose intention is to keep churning negative news one after another.

If covid continue to increase, Supermax will make more due to testing requirements. If vaccine is successful, Supermax will make more due to inoculation requirements. If lockdowns are lifted, Supermax will make more due to requirement from airlines, hotels, education, F&B, etc. In short, Supermax will continue to have superb earnings.

I really hope all the negative news have been fully digested in Nov. The road ahead is much clearer now starting from Dec onwards. No more dropping below RM9 again.

The recovery stocks will at best only gives 1-2% dividend yield for the next 3 years. Gloves counters, esp Supermax, will be giving minimum 5% dividend yield for the next 3 years.

Either way one looks at it, Supermax will be making billions in the next few quarters until end 2022, if not later. If covid cases rise, Supermax will make more. If vaccine is successful, Supermax will make more. If lockdowns are lifted, Supermax will make more due to new demands from various industries, food, airlines, hotels, schools.

Supermax will be earning minimum PAT of 1bil each quarter, till end of 2022, at the very least, if not longer until 2023. If vaccine is effective and the inoculation of the population is carried out by Western countries, Supermax will be making double of the current earnings.

No other stocks in Bursa is close to Supermax performance.

I really find it absurd that the forward PE of Supermax is only 6X with such strong earnings visibility and earnings will only increase further due to increase in demand for gloves when vaccine is ready for inoculation of the mass public in 2021. The so-called recovery counters still have a long way to go before any positive earnings are in sight.

As I said before and I will say again, vaccine news is actually good news for Supermax, as this would only increase the demand for gloves in Supermax markets, mainly first world countries US, UK and Europe. The demand will easily increase for the next 5 years to vaccinate population in US, UK and Europe.

If Mercato is a benchmark, the price of Supermax should be RM47 now. This shows how undervalue is the current price.

EPS for glove counters, esp Supermax is still on an uptrend based on the current glove shortages. With vaccine coming in mid-2021 earliest, this uptrend will continue for another few years due to glove shortages for vaccination purposes.

The vaccination process, soonest by early next year, will only compound the demand for gloves. In addition to the current demand by hospitals to treat patients, and for testing, there are also demand from other sectors such as F&B, airlines, etc. With the additional demand for public vaccination, the ASP will keep rising for another 3 years at least.

Vaccines are most welcome news to glove counters, coz this will ensure demand for the next 5 years for vaccination purposes. This will only compound the current shortages as gloves are needed to treat patients as well as to administer vaccines to the public. All these demand will ensure ASP keep increasing for the next 3 years minimum.

Vaccine news is actually good for glove counters, as this will only reinforce the demand for gloves in the next 5 years. The captains of the industry know this very well, thus they spent billions to expand production in the next few years. However, the herd mentality of the simple minded will panic sell on vaccine news.

Airlines and leisure counters will still be making losses till end 2022 the earliest, and people are rushing to buy the shares on vaccine news... aiyo. Glove counters will still be making spectacular profits for the next 5 years on availability of vaccine.

The futures market in US is negative now... the regional markets are not buying the vaccine news and mostly are red. Only Bursa is so panicky hahaha.

The cycle repeat itself, retailers selling on news of vaccine. This will not change the earnings outlook of glove counters but only reinforce that the demand for glove will be higher due to vaccination activities for the next 5 years.

https://klse.i3investor.com/blogs/freetospeak/2020-11-08-story-h1535513315-SUPERMAX_EVOLVING_GLOBALLY.jsp

Supermax quarter earning is more than most banks in Malaysia and the earnings are sustainable post COVID-19 as per the article above, with government contracts locked in for 5 to 10 years. But yet, the price is trading at trailing PE of less than 20, compares to TG and Harta PE of more than 30. There is obvious bias in valuation from the market.

Top Glove, Hartalega, Supermax and Kossan have committed to contribute RM400mil to battle Covid-19, including bearing the cost of the Covid-19 vaccine and health equipment.

#Budget2021 #Belanjawan2021

With Trump's victory, confirmed Supermax ASP will keep increasing until 2022.

@super The increase in Supermax earnings are certain for the next 2 years. Therefore price will certainly increase. For cimb, genting to have 45% gain earliest in 2023, Supermax would have gain 150%. Which one is more safe to invest?

Just ignore all the negative noise. Whether there is windfall tax or not, Supermax will continue to earn more than 800mil each quarter for the next 2 years at least. The current valuation at PE 18 is super cheap.

Ya.... Bursa is like pasar malam nowadays

Bursa is mainly for gamblers, looking for excuses to cause volatility for day trading. Not for fundamental investors. All kind of silly reasons to manipulate the prices with no logic.

Harta price is so steady. Supermax is full of day traders trying to make peanuts money by spreading fear to new retailers. Sigh.

During this period, the best stock to pick up is gloves, especially Supermax with the highest NP margin for the next 2 years. All other counters in Bursa will report reduced earnings or loses in the next few quarters. Buy on facts.

@DontWorryBeHappy Supermax expected Q2Dec PAT is 1.2bil, meaning 400mil each month lo until Dec 2020. Current PE is 14, wayyyy below Harta PE of 60x.

If Biden won, the US will increase health budget and the benefit are gloves as important component of PPE.

If Trump won, the US will continue to register high cases of covid19 and the benefit are gloves as important component of PPE.

Supermax is the largest exporter of gloves to North America, given the current labor issues at TG. Supermax is making huge profits from both manufacturing and distribution of gloves, for the next 2 years at the minimum until 2022.

Why so worry?

https://focusmalaysia.my/mainstream/jalilah-baba-smart-to-invest-in-top-glove-now/

Supermax is the only stock in the world where its price dropped by 30% despite registering a 100% increase in quarter earnings.... sigh.

Thanks all

Why are analysts not considering the direct relationship with govt agencies as a sign of earnings sustainability but instead used a low PE for Supermax TP as compared to others such as Harta.

Unlike TG, Harta or Kossan, many IBs don't cover Supermax. Also, EPF doesn't invest in Supermax, only foreign funds and insurance companies. For IBs that cover Supermax such as Kenanga and CIMB, they assign a very low PE of 15x for Supermax as compared to 60x for Harta.

I am not expecting PE of 40x or 50x for Supermax, even a PE of 30x would be reasonable given the earnings potential of the company for the next 2 years.

@Gohhocks You are assuming the earnings are not sustainable beyond 2022, just like all the analysts. But @freetospeak and many others have demonstrated that the earnings are indeed sustainable.