3 people like this.

18 comment(s). Last comment by CuriousGuy 2021-02-25 11:36

sikusiku

57 posts

Posted by sikusiku > 2020-11-21 17:36 | Report Abuse

Something else to consider in your article here.

Top Glove has been aggressively buying back their shares, although aggressive is a somewhat arguable term - depending on which side of the fence you sit on. Their buyback is capped at RM70 million per day, although of course as outside investors, we do not know what the upper limit for the buyback price is set at before buybacks discontinue.

Now whilst our beloved Uncle Koon has of course condemned the buybacks as being counterproductive (since he views it as management trying to support the share price), whilst at the same time throwing in a plug praising his flavour of this time, Supermax - heh, I think there's one other view one should look at.

TG will be issuing a dividend of 50% of their net profit for the quarter. That's their stated policy.

What some investors may not realise is that the their cash flow is far more robust than net profit simply because of the advance payment (deposits/prepayments) paid by buyers, way in advance of delivery. As I understand it, spot order deposits are at around the 50% range, whilst longer term orders (extending up to the 650-660 day backlog) have a deposit of around the 20% range.

Deposits are not counted as profit. Profit is only recognised upon delivery of the goods. Thereafter deposits will then be categorised as revenue, along with any balance of payment.

It is possible for TG to declare the bulk of the prepayments as dividends. They can do so and recognise it as a special dividend issue.

Alternatively though, there is share buybacks. Consider this, there is still another 12 days of trading before the expected release of 1QFY21 results by Top Glove (tentatively set at 9 December).

If you do the math and assuming that TG continues to buyback RM70m worth of shares, up to the end of day of 8 December, and assuming the share price is bought back even at an assumed higher average price of RM8 per share, the amount of treasury shares would then exceed 2.5% of the company's total number of shares.

They could very easily issue a share dividend of 1 for 40 with that amount. Or a higher amount assuming the average buyback price is lower of course.

From the major shareholders perspective (inclusive of the founder), they get to boost their own shareholding by a minimum of 2.5%, without any outlay or activity needed on their own personal trading accounts.

The buybacks then aren't a way of supporting the share price alone, but for the benefit of shareholders (especially the major ones).

How big a dividend are we expecting for the upcoming quarter? Let's put a conservative 10 sen nett per share (high unlikely, since EPS should be MORE than 20 sen for the quarter). At 10 sen against the current RM7.29 price, that's a 1.37% yield for the QUARTER.

What about if a 1 for 40 share dividend is also issued? Using the current share price as a baseline, that's equivalent to another 18.225 sen dividend. Making the QUARTER'S payout equivalent to 3.87%. Pretty good, no?

stockraider

31,553 posts

Posted by stockraider > 2020-11-21 18:07 | Report Abuse

Of all the newcomers to Gloves...mahsing hold the greatest Prospect loh!

emsvsi

3,511 posts

Posted by emsvsi > 2020-11-21 18:19 | Report Abuse

The writer has a low IQ

There are recovery stocks that have strong balance sheets that are ALSO value stocks because they are very cheap AND that pay dividends

That stock is Genting Malaysia / Genting

In 1 years time we shall see the performance of gaming companies vs the hype of gloves

The stock market is a voting machine in the short term, a weighing machine in the long term

Gaming is forever and eternal and will once again show its enduring quality

Sincerely,
EMSVSI

Erudite

248 posts

Posted by Erudite > 2020-11-21 18:21 | Report Abuse

Excellent write up. Good article. Tqvm 4 d assurance

stockraider

31,553 posts

Posted by stockraider > 2020-11-21 18:22 | Report Abuse

The problem is the covid19 affected stock can survive b4 covid19 over leh ?

Erudite

248 posts

Posted by Erudite > 2020-11-21 18:27 | Report Abuse

Emsvi, who r u 2 call people low IQ. Who gv u d rights? U can’t even write a proper article. Look in d mirror b4 insulting. Can’t even read accounts talk crap. Low IQ? U can’t even do stock valuation. Super embarrassing.

stockraider

31,553 posts

Posted by stockraider > 2020-11-21 18:28 | Report Abuse

Simple mah...!!

Look at the logic loh...u r investing in Gloves stock bcos of 1 or 2 years good earnings or R u investing for the long term leh ??

Surely sustainable good share price is not depending on just 1 or 2 yrs good short term earnings mah...!!

If that is true...the conclusion below missed the point loh..!!

My simple conclusion remains :

1. Severe shortage of gloves in the market,
2. Earnings visibility for at least 1 year minimum for the sector,
3. The companies will be delivering continuous record earnings in coming quarters
4. Transition from Growth to Yield or Growth + Yield stock,
5. With the recent selloff, Glove stocks have become very attractive valuation wise.

If you are wondering whether you should still hold glove stocks in your portfolio, that is a decision you must make on your own. However, the history of the financial markets has taught me that yield is very important to investors and funds, hence it will ultimately form the bottom to protect glove stocks from falling further. When the downside is protected, the upside takes care of itself.

williamh

828 posts

Posted by williamh > 2020-11-22 07:08 | Report Abuse

My view is it starting to go south,dont hesittated to sell

Posted by Pgraduate123 > 2020-11-22 12:04 | Report Abuse

Genting n genm already Uturn last week, and gloves uptrend... Tomorrow will continue up till 2023

Erudite

248 posts

Posted by Erudite > 2020-11-22 12:09 | Report Abuse

agree with pgraduate123

2021money

31 posts

Posted by 2021money > 2020-11-22 12:24 | Report Abuse

simple buy profit then sell, buy profit then sell, profit money is king. why keep ? buy and sell, easy money......

witan

770 posts

Posted by witan > 2020-11-22 12:58 | Report Abuse

Unfortunately market sentiment has changed dramatically since vaccine news have come out. Everyone knows that glove is going to produce stellar result next year but how about in 1-2 years time.

Eventually glove price will go back to its normal. How soon?? We dont know the answer.

I definitely dont want to hold the high price ticket by then.

Noned

229 posts

Posted by Noned > 2020-11-22 14:27 | Report Abuse

Big boys always at the buy side..rain or shine..bullet proof..
Retail players pls set n monitor your cut loss b4 buy any stock..

Posted by CynicalCyan > 2020-12-19 13:08 | Report Abuse

If yield protects falling stock prices, why didn't it protect BAT? Stock market sentiments still play a vital role.

zhangliang

728 posts

Posted by zhangliang > 2020-12-19 14:14 | Report Abuse

BAT wrong ex buddy. BAT went thru structural change. Sold factory, move manufacturing facility. Dividend one off & big drop from b4. Not apple 2 apple comparison. Apple 2 orange.

Erudite

248 posts

Posted by Erudite > 2020-12-19 14:20 | Report Abuse

Market retail investor dunno how important DY is until d time comes den too late

Posted by CynicalCyan > 2021-02-25 11:35 | Report Abuse

So, did yield protect gloves?

CuriousGuy

999 posts

Posted by CuriousGuy > 2021-02-25 11:36 | Report Abuse

These few days i feel that these short sellers really maximum short kao kao all the glove companies o.

Its like they are going all out to do it. I feel that its weird and u can see that all if not most other cw expiring later in months may or june all fall drastically n the vol are big. Collected back back the ib?

Is it possible rss will be suspended soon or something big is happening in the future for glove stocks? Supermax buidling a factory in the usa. Is this the catalyst?

I dun know. All the best dudes

Just my curious 3 cents of analysing

Post a Comment
Market Buzz