Posted by calvintaneng > 2022-07-09 07:17 | Report Abuse

Well balanced comment by Hong Leong Research Team on Gloves

Hong Leong IB is also the first Research to turn OVERWEIGHT on Palm oil and got "Clarity of Vision".

Gloves now still sitting on cash pile due to one short year of Huge ASP Premium profits

now harta should put off it's Rm7 billion expansion in up north for 16 new glove lines. Topglove has scaled down taking over reckless expansion of new entrants and Supermax should mothball it's expansion to USA. Kossan though we like for it's clean room glove and clean room face mask still drag drag down by fierce competition in it's medical gloves from China dumping. So downgrade all and neutral for Kossan

What happened to gloves was the overexpansion by incumbents and new players plus China joining the glove band wagon in frenzy

at the height of craze China has 38,000 new face mask producers and the new glove players are just too many as well.

But people have IGNORANTLY LUMPED PALM OIL BULL WITH GLOVE WHICH IS NOT THE SAME

NO NO NO

PALM OIL BULL WILL NOT END UP LIKE GLOVE

PALM OIL BULL RUN CANNOT END UP LIKE GLOVE

Posted by calvintaneng > 2022-07-09 07:23 | Report Abuse

Gloves expansion is very easy as a b c.

Any Time Dick or Harry can set up new glove factories in just 6 months Malaysia) in China just 3 months (as Glove Fully Auto Machines take 2 to 3 months to be shipped from China)

So there is no limit to expansion

You cannot do that with palm oil

Govt of Malaysia and Indonesia have BANNED conversion of forest to palm oil lands since year 2018 so there cannot be anymore expansion

Expansion can only be down by taking over existing brown field palm oil like Klk taking over ijmplant

Posted by calvintaneng > 2022-07-09 07:33 | Report Abuse

While new glove factories can be set up in 3 months there is high TIME BARRIER ENTRY FOR PALM OIL

It will take at least 5 years from planting palm oil to 1st drop of cooking oil

Posted by calvintaneng > 2022-07-09 07:37 | Report Abuse

Not only palm oil has no fear of competition like Gloves

even the existing competing vege oil are all in difficulties and troubles

Sunflower oil in Ukraine hampered by War

Canola crops decimated by drought in Canada

In USA high gasoline prices diverted Soybean from food to biofuel

Indonesia itself is having domestic demand for cooking oil and Biofuel due to high import cost of crude oil

So palm oil cannot be cheap and abundant like gloves

And prices will remain high in a new normal

Posted by i3gambler > 2022-07-09 09:15 | Report Abuse

For any business:
1) High profit margin would not be maintained for long period.
2) Narrow (and loss) profit margin, would also not last for long time, unless such business is no longer needed.

Calvin is correct, no doubt plantation high profit margin could last a bit longer compare to glove.

As the price is coming down, we need to look at 'biological assets' in the quarterly reports.
Especially to those companies which have high ratio of = FFB production / Market Cap.
In general, plantation companies with high debt, and those small companies have very high FFB / M.Cap ratio.

When the palm oil price went up, biological assets also went up, contributed significantly to the net profit.
Now the price is coming down, the biological assets come down too, will cause the quarterly result look very bad.

Considering this point, I have sold all my SWKPLNT, and buy more BKAWAN.

Posted by calvintaneng > 2022-07-09 11:53 | Report Abuse

Batu Kawan ok but I think Simedarby Plant much better as it has 3 positive factors

1. With 3.3 Million acres Simeplant is world biggest and is fully integrated with economy of scale now

2. With a 200 history many estates of Simeplant are freehold and located near townships. book value as low as Rm12k an acre

now current value is Rm200k to Rm250k per acre. Lots of value to be unlocked like Bplant

3. Kwap just bought 1 million Simeplant knowing it's potential

Posted by i3gambler > 2022-07-09 14:45 | Report Abuse

True, SIMEPLT value is in its estate land,
However, I think may be 200K / acre is only for those small piece of land very near to town.
I might buy SIMEPLT if it goes down below RM3.50.

For larger piece of estate land, eg. United Malacca sold 1021 ha Freehold (Melaka / N.Sembilan) at 171,000 / ha only.