Why glove counter price refused to scale higher despite supernormal profits ?

Investors are worried that the supernormal profits will not last going beyond next 2 to 3 quarters when the pandemic is under control, the profits will no longer be super but normalised. Their concern is justified, not at all baseless because share price today is not about condition today, it is forward looking into the future. But that being said, i believe supermax will be different and it will eventually decouple from the group of glove stock and shine on its own. Reasons :-

probably the management of supermax also sense this may happen, thats why they have taken the following steps to mitigate this

Building more factories in US and UK, , increasing production capacity closer to your major customers, although the labour cost there is more expensive than the banglas in malaysia, but this will be offset by the transportation cost saved.

Let say going forward 18 months, when pandemic under control and ASP decrease, supermax will make up the loss in ASP by increasing their sales. They will offset the decrease in margin by increasing sales, to maintain profit. So no worries for supermax, as for the rest of the glove counters, i am not sure.

One may argue, why buy from Supermax alone, there are existing big players, and also many new players coming in ( example mah sing etc), here lies the competitive advantage supermax has over others in time to come :

1. Their factory is is the home country of the major customers, faster delivery time, saved on transportation cost, but maybe offset by higher labour cost, no way can beat the bangla cost in malaysia

2. no need to go through customs, hence no risk of goods being held up for violation of this la that la ( remember TG)

3. since it is produced in the buyer home country, savings of of import tax, this saving can make them sell at better price to the customers

4. no need to worry about trade wars, sanctions, human rights group complaining about labour practices..you must remember, these mat salleh buyers are very concious about human rights issue, if they think that you engage in bad labour exploitation, they will ban your goods ( one of the big 4 glove counters always being targeted for this)

Thats why supermax recently did not do aggressive SBB unlike some other counter ,they are reserving their cash to ramp up new factories in US and UK, so that in the event ASP drops in the future, they make it up with volume, and they will have the first mover advantage when competing for volume compared to others.

Good move by Supermax

Particularly of interest is Supermax, not all glove stock is the same, sooner or later this will be evident because in contrast with all the other glove counters, this counter has 2 added catalyst, which others may be lacking :-

1) Potential first time Inclusion into FBMKLCI component stocks, attracting more institutional funds ( Top glove already in for some time d, so not so sexy for institution funds)

2) Capitalise on TG factory closure due to covid infected workers, the saying goes, when your competitor suffer misfortune, you stand to gain..old adage that never fails

Thats why TG price has been dropping, but Supermax has been maintaining and hovering around 8 to 8.50,

But why despite the above 2 powerful catalyst, Supermax did not rally? This has got to do with investor psychology of negative sentiments always overshadow positive news, people react to bad news more strongly than good news.

When TG factory close, many will have in their mind, this will also happen to Supermax and their worry is not at all baseless, yes it could. So many are actually staying on the sideline despite the 2 powerful catalyst, as this worry overshadow everything else, hence the price of supermax kind of flatish.

Now lets say 14 days has passed since, supermax factory is not affected, and the TG incident slowly fades away, people also got short memory and that's human nature, and also approaching Dec 3 where FBMKLCI sotck will be reviewed, catalyst 1) will now be in most investor's focus, and inadvertently catalyst 2) will also resurfaced, then you will see supermax rally..until then most investors stay sideline and those invested in supermax keeping their fingers crossed that supermax factory is OK.

Just saw the so called seejovin report.

Probably an ex IB analyst, now working as gun writer for syndicate.

Now enjoying his profit share certain % from syndicate.

If 400m q to sell at 0.86 and few hundred thousand q buy at 0.855, then good sign

If 400m q to sell at 0.855 and no buyer at 0.85...you know what it means lo

The way this counter is pushed, memang not the work of 1 single operator.

Likely the team effort of a group of sharks. Somehow something went sour among them..may be cannot reach agreement. break up and all withdraw.

generally people go through 5 stages when suffering mega loss :-

denial - no this cannot be true
anger - lash out at the situation, and attack those around
bargaining - hope for some sort of compromise, maybe is is not as bad,
still got hope
depression - very down d, seems no hope
acceptance - accept the situation , and live on

Must admire some folks extra ordinary bravery..can still all in.

Not easy to find people with such bravery or courage. salute..lol

Why buy rate 100%?

Coz there is no buyer to sell to...only got seller to buy from

If unfortunately you got stuck, i.e bought at much higher price and cannot cut loss or meaningless to cut loss now. the world is not the end.

Probably your funds got stuck for 3 years, hopefully after the boss moratorium end after 3 years, they push the share up for their own selling, then you get out together with them, hopefully can reduce your loss or make some profit better then FD return..nothing much you can do already.

This does not look like a shake out to me..more like game over for goreng play.

Some very happy say day 3 no limit down.

Bursa tolong saja..otherwise

After circuit breaker lifted, wonder what will happen

With technology evolving at such pace, who knows may be in 5 years time they may come out with a spray coating combining nano technology and polymer science that cover your hands..thus making medical gloves obsolete..just stretching imagination.

Long term guarantees on profit visibility..how many company can give that kind of assurance ? lol

Even the best of the blue chips cannot give you that kind of guarantee.

One guy told me that all medical gloves manufactured, before ship out have to pass through a uranium or some other radioactive radiation for sterilisation, with that kind of radiation, no virus can survive.

The guy actually work in a outfit in Sepang who sterilise all medical gloves with uranium radiation. if i am not mistaken, he say his company name is grandNine or ten or something like that

Bursa has announced circuit breaker for vivocom..tomorrow price cannot go lower than 0.855..to allow cooling down.

probably will see some rebound, i think. But once this is lifted..what next will be interesting.

Either this is a pump and dump or

The other possibility is this is a Major shake Out.

If shake out , then retailers who hang on still can recover.

If its pump and Dump, then if you stuck and not want to cut lose, then be prepared to wait for 3 years, when boss can sell, probably they push it up.

The only people collecting is those retailers buying to average down.

No operators or sharks collect during sharp drop. limit down , like this.

The fact that there is a moratorium for vivocom bosses for 3 years can be good or bad depending whether you are a long term or short term investors.

If short term investors, less than 3 years ..then funds may be stuck for 3 years. Assuming the boss cannot sell for 3 years..meaning sharks can play..pump & dump..boss cannot do anything.

You have to wait together with the boss for 3 years, boss will only start to push the price when they can sell..i.e after 3 years. They are not going to do push the price NOW for you to make money while they seat on the sideline.

In the mean time, sharks do whatever they want to roast the bilis.

If you have the holding power and willing to commit your funds for at least 3 years, then go for it

Most players in this counter are short term, or day trade, or hit and run players.

Not many long term players here. Assuming there is a rebound, they will run and get out.

Where is the bottom ? Only shark knows. If you think you can rely on technical charts, shark is even better than you, they can even simulate the technical pattern to roast you.

The only chance is you take a guess, and hope to be lucky and catch the bottom of a rebound. its a luck game now for bilis. Don't beleive in any technical analysis or pattern, which the shark can make use to fool you.

Reply from Bursa :

If 2 days continous limit up - no complain
If 2 days continous limit down - many complains

We r not here to make sure n guarantee all of you make money, make money diam2 , lose money shout here shout there

Just checked..CCN is not a public listed company, but Khazanah and gang owned a large bloc of its shares..if CCN awarded the business of transporting vaccine, main beneficiary will be Khazanah..govenrment linked ....so sorry for the public investors.

Since Khazanah and its subsidiady Agri Food is a major shareholder of CCN, Cold Chain Network, a deep freezing logistic company with State of Art Japanese technology, may be the transport of vaccine will be awarded to CCN. Wonder if CCN is a listed in Bursa and can buy their shares?

lol..good analysis. A friend of mine who has been investing for the last 30 years offered his telescope. Just to share.

The share price of supermax in near term will be depressed. Why?

The IBs are trying to keep it ranged bound in anticipation of its inclusion in FBMKLCI component stock in Dec 2020 when a review is due. When it is included, many institution and foreign funds can then have a mandate to invest coz these funds have to follow certain rules like minimum market cap, earnings, liquidity, valuation, index linked..etc. If the price is allowed to sky rocket now, it may be less attractive for these funds in terms of valuation when they want to come in. So IBs will not earn brokerage from their corp dealing team to transact for these funds. At the same time, the IBs are slowly accumulating now at depressed price so they can sell to these funds later at higher price and make more money, in addition to their brokerage dealing fees.

What next after inclusion in FBMKLCI and becoming index linked?

Institution and foreign funds will come in, and they are not stupid either. They will make their presence known, pushing the price higher. After accumulating, they will then recommend the stock to their network of high networth private clients worldwide. They will then distribute their shares to these private clients and our local ikan bilis progressively, at the same time Supermax will announce higher Q results and IBs will assist the push by coming up with higher and higher target prices, pushing the price higher for these funds to distribute.

When will the frenzy end ?

These funds will time their distribution such that they finish their distribution close to vaccine being approved by FDA for mass use ( around March 2020, just a guess according to my friend, actual date may vary). When the announcement is made, the price will nose dive leaving the retailers who chased high and bought from them roasted.

My friend told me he has seen this pattern / cycle many times in his 30 years of investing career. Just sharing his telescope. please feel free to criticise and offer your views, no offence will be taken.

P/S : What happens if FBMKLCI inclusion is not successful ?
May be dual listing in HK, Spore as a back up plan is in the pipeline, who knows.

From May to Oct, all IBs call is either hold or buy, not one say sell..but price keep dropping.

Cannot trust the IB price call, scared while shouting hold n buy, they quietly sell off coz they scared be removed from FBMKLCI component stock.

One last round of push..for them to sell off b4 december come when review of FBMKLCI component stock is held.

To be admitted to elite club of FBMKLCI component stock, first must be eligible meaning mkt cap big enough..second, must pay membership fees.a.k.a one time contribution (400m pro rate) to govt.

After admission, can enjoy many priviledges..like attracting institution funds. if still cannot gain admission, maybe boss previously supported wrong political party, then go listing in HK, spore or wherever ( back up plan)

YES...got spare cash can slowly collect Genting, but again there are other better counters out there with better potential n return.

Why EPF is selling :-
1. Being the country's retirement fund, they are holding a huge block and they have to realise some of their gains to pay withdrawal from members..especially during pandemic where they are many request for withdrawal
2. They entry price is quite low since they acquired the shares long time ago, hence only make sense to take some profit from here to meet withdrawal request, and registered in their books " realised gains", rather they sell some of their loosing portfolio and registered " realised loss" which does not look good in their books if they cut loss
3. Are they selling off all? NO. Take a look at how much remaining shares they are still holding. By holding such a huge block, it is not possible for them to dispose all at the highest price, the market liquidity cannot absorb such selloff at the highest, it will cause a shock. So they have to sell ON THE WAY UP, progressively..the key word here is ON THE WAY UP.
4. Small timers like me can afford to wait, till may be RM5 or RM6 and sell off, no problem , will not cause a shock to the share price.

So now you understand why EPF is selling off bit by bit (by their standard), and the share price are still inching up bit by bit

Many seems to forget, stock price today is not about NOW..its forward looking.

That said, what do you think in 3 to 6 months time the scenario will be ?

every body has their prediction, predict correctly make money lo..predict wrongly lose money lo

Wonder why no mention of TSH..consistently make profit even in bad times when other register losses... i started buying in June 2020

Any negatives i missed..listen with open mind..dun worry can criticise..no hard feelings

If no windfall tax for glove counters -----} windfall gain for glove investors

If no windfall tax for glove counters -----} windfall gain for glove investors

The share price of today is not about the current historical profit..it is telling what the future will be..forward looking. So if you keep justifying today's price with today's historical profit ...and make decision based on this...then u r in for a rude awakening

Tomolo is Friday...last day of the week..usually do not want to hold huge long position..let's see how it pans out

The chart seems to suggest correction mode

History repeats...down on good QR..crazy

OOo what happended suddenly freezed with RED

Why everytime announce good q result drop ??

Just like previous round...already priced in or what?

pening

There are basically 2 scenarios here :-

if u got stuck or bought at high price, then need to consider cut loss or average down or no eye see let it be there

if u already sold off earlier at high price, then need to consider buying back now or wait later to buy back at even lower price.

For me, since i sold out earlier and made some profit from Spermax, but part of the profit lost /give back in other counters..I decided to come back here to cari makan again..so my nibbling for supermax shall begin in stages now. To me, it has become attractive again at this level.

After initial reaction of following the general wave market down trend, price drops, it will later stand out amongst the trash and rise again.

Go0d luck all

Just like those who bought glove at the start of covid at the beginning of the year..they got it cheap. Supermax was below RM2 at that time

Vaccine is just a matter of time..if you buy the stock when it becomes available..it won't be that cheap anymore

Just do some forward thinking. and invest b4 it explode.

some people misunderstood that vaccine is only for the infected..and conclude that since daily infection rate is decreasing, therefre vaccine is not needed. BIG MIStake.

Vaccine is for those NOT infected..it is a preventive measure, Just imagine the rest of the population that is not infected..HUGE market.

shake off or sell off ?

In the past when they do shake off, only once a day then rebound.

Today, dip twice d, so shake off or sell off ?

Things that i do not know :-
1) When the vaccine will be out ?
2) Whether vaccine out will affect glove demand, maybe yes, maybe no

Things that are certain :-
1) Lots of money is being poured into developing the vaccine, many big pharma is racing to be the first, and it is a matter of time, sooner than the normal..yes it will be out, when? maybe end of this year, or early next year..who knows but it will be out
2)Are investors start take profit from glove only when vaccine is official ? No i don't think so..its always forward looking, months b4 it is out smart money already start their profit taking

based on the above, i ve been cashing out on glove and hedge my bet on vaccine counters.

Of course, thats me, and i maybe missing out on further upside from this point, but I am ok and thanks to glove counters, For those still holding or going in, good luck and wish you made some more profit.

Heney 8833 is an idiot. I hv been taking profit from glove stock and reinvesting in pharma stock..it is a natural progression..the cycle and nature of progression for this pandemic.

Some think this pandemic will go on forever and keep increasing till it wiped out the hunan race..but never tot that given the enormous resources poured into developing the vaccine..it will be sooner than expected.

Actually I am looking for a stock to buy fitting the criteria :-

1. Worst impact by covid 19...almost go bankrupt but did not, too big to fail, hence share price hit rock bottom during pandemic, almost died but hang on
2. Once vaccine developed, just a matter of time given the huge resources poured in and the enormous market potential and profit given the extent of this pandemic, the stock will rebound like crazy

1 and 2 meaning a very sharp V-shaped recovery stock, for max bagger gain

The one famous classic example is Citigroup during the housing bubble crisis..almost went bankrupt and my uncle bought it at ridiculous USD 0.40 and when rebounded, he enjoyed an early retirement from his mundane 9 to 5 job.

May be I found one today, not as fierce as Citigroup, but maybe a good smaller scale proxy to its story.

To Grace cheong.

DuoPharma..or Pharmaniaga ..if you are looking at Bursa Mal.

But i prefer Duopharma

First of all, thank you supermax. i took some profit d and leave some for trailing gain

profit taken reinvested in vaccine counters lie Dpharma and pharmanaiaga as a hedge.

I think in Bursa, just play these 2 themes will be OK. Glove theme first, then followed by vaccine theme.

vaccine counters still cheap. Slowly accumulate till Dec or early next year for explosive profits

Better to switch off supermax..after cannot tahan go sell..

Aiyooo..go get cofee come back already touch 21...my goodness

Take a breather first...now go relax

So strong and fast..i got scared of heights la..

Congrats all..and thanks to those who throw to me at 18+