Thanks for the insight Mr Tan. In the Harta Quarterly Report, they did mention that their ASPs are still on the rise, and the underwhelming revenue is due to shipping container shortage- and yet, their revenue still increased. My question is, is there a way we can derive the ASP increase percentage for this quarter juxtaposing the data from Department of Statistics
Harta released their investor presentation. According to the slides, their sales volume for the quarter was 6.7 billion pieces. That makes ASP of RM343 ($83) for the quarter. Last quarter their ASP was RM224 ($55). That's an increase of 50% q-o-q.
I will top up TG on retracement. Hopefully there is a chance for that. Glove counters price movement is so irrational now. Even crazier that Bursa de casino
speakup, as the healthcare system in certain states is currently flooded and running at close to 100% capacity, I don't think anything other than a tightening of restrictions is possible to be honest. The real question is how much tightening will be imposed, and if that amount of tightening will have the needed effect. Based on today's announcement, I am not too optimistic.
Ben Tan Thanks for compiling the glove export data . I think the most likely scenario is scenario 2 . I estimate the PAT margin to be 58 % . With this margin ,the supermx earning may hit 3.12 x 0.58 = 1.81 billion.
@Ben Tan, another excellent piece of write up. For long term investors (Buy and Hold) I do not think there is a better sector to put money in especially for the amount of dividends that glove makers are giving out (except the 2nd liners).
pjseow, yes, it does seem like scenario 2 is the "average" case. My assumption for net profit margin would be a bit lower though. This is probably a good time to mention that before yesterday my estimate for Supermax's quarterly results was significantly lower based on previous guidance by the company. However, with Harta's "lukewarm" results and the exports figures showing a significant increase m-o-m and q-o-q, it is hard to explain the difference in any other way. The second liners don't have the capacity to cover a big part of the gap.
Brutus, I don't like to talk bad about companies, so I have not been writing much about the second liners. They are 3 very different businesses, and while some will likely do better than others in the future, my personal expectation is that (most of) the big boys will do best overall.
Posted by pjseow > May 5, 2021 6:16 AM | Report Abuse
Ben Tan Thanks for compiling the glove export data . I think the most likely scenario is scenario 2 . I estimate the PAT margin to be 58 % . With this margin ,the supermx earning may hit 3.12 x 0.58 = 1.81 billion.
Rm1.81B????????? 80% higher than last Q?????????????
Ben Tan , Harta "lukewarm" result was hit by the unexpected 6.7 billion shipment which was way below its previous qtr 9.5 billions. This unexpected drop was due to shutdown arising from preventivr measures on covid infections plus shortage of containers. Despite such drastic lower shipment, Harta can still produce a qoq improvements which was attributed to the 50% increase in ASP.
CharlesT, trueinvestor, pjseow, thank you for your comments.
pjseow, we are running a bit off-topic (I may indeed write that article on Harta), but just to confirm - elsewhere I wrote about this, and about the fact that their inventories have increased by almost RM300 million q-o-q. That was not my point when I pointed to the lukewarm quarter. My point was that based on my simple model explained in this article, as Harta reported lower than expected revenue from sales, and as exports of gloves have increased by more than expected, the gap (i.e. the difference in these expectations) must have come from somewhere, and the most likely "culprit" would be Supermax.
Charles T, the estimation is purely mathematical by using Ben 's scenario 2 3.12 b revenue and my estimate of 58 % margin . The previous qtr margin already hit 53 % margin. Hence, with 50 % ASP increase , 58 % assumption is considered conservative.
Kyou, batman666, Jack Khan, CharlesT, abang_misai, Foker, thank you for your comments.
Please note that this was just a simplistic model, which evidently proved ineffective in this case. Note that there are two adjustments that might need to be made:
- Supermax donated RM75 million worth of gloves to the Malaysian government, which cannot be captured by the model and is unpredictable.
- Even in the "worst" case described in my post, and when factoring in the donation, there is still approximately RM10 billion in exports that is unexplained. There might have been enormous items coming from newly commissioned lines of newcomers, for instance, or there could have been a blowout month of March for Top Glove.
Either case, the difference is very significant and we will have to wait for more announcements in the coming months to see where it might have come from.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
treack
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Posted by treack > 2021-05-04 20:05 | Report Abuse
Thanks for the insight Mr Tan.
In the Harta Quarterly Report, they did mention that their ASPs are still on the rise, and the underwhelming revenue is due to shipping container shortage- and yet, their revenue still increased. My question is, is there a way we can derive the ASP increase percentage for this quarter juxtaposing the data from Department of Statistics