Economy crisis might hit sooner than thought, top US economists predict October could spell the history worse crash disaster. So please trade with care.
Company performance is not relevent. ASPs not relevent. Until the de-leveraging has happened, the shares will continue to fall.
Someone - not sure who - maybe a "super-investor" has used glove shares as collateral to buy other shares (maybe even in other glove companies). Since all the gloves shares are falling, this causes a domino/waterfall effect.
Comfort Gloves (CG MK) Anticipating Weaker Quarters Ahead Sell (from Neutral) Target Price (Return): MYR1.21 (-12%) Price (Market Cap): MYR1.37 (USD190m) ESG score: 2.56 (out of 4) Avg Daily Turnover (MYR/USD) 7.90m/1.85m Analyst Sean Chew +603 92808801 sean.chew@rhbgroup.com Share Performance (%) YTD 1m 3m 6m 12m Absolute (54.2) (23.9) (36.3) (37.2) (60.1) Relative (48.2) (24.7) (33.6) (31.3) (62.2) 52-wk Price low/high (MYR) 1.37 – 5.08 Source: Bloomberg Downgrade to SELL, new DCF-derived TP of MYR1.21 from MYR1.95, 12% downside. Comfort Gloves’ 1H21 (Aug) results came above expectations, due to its better-than-expected sales volume. Looking ahead, earnings should continue to normalise, as ASPs find an equilibrium. However, given its lower economies of scale and higher cost base, we believe the company’s margins are at risk of further compression should price erosion become steeper. 1HFY22 core net profit exceeded our expectations, at 98% of our fullyear estimate. We believe the earnings beat was attributed to the higher sales volume achieved. However, net profit declined 31% QoQ as the ASP began to descend from its highs. Additionally, a single interim DPS of 2 sen was declared for the quarter, bringing total DPS to 6 sen for 1HFY22 (implying a 9.5% payout ratio). Challenging outlook. Its glove ASP should continue to decline as the market adjusts to the new equilibrium. We believe prices could reach an equilibrium by mid-2022, potentially bottoming at USD27.00 (nitrile) and USD21.00 (latex) per 1,000 pieces, with the market pricing reverting to being based on the cost-plus model. However, smaller manufacturers such as Comfort are at risk of margin compression, should prices overshoot to the downside, as it has lower economics of scale and a higher cost of production. Additionally, sales volumes may be hampered in 3Q21 by the imposition of EMCO during August. We revise our ASP assumptions to USD27.00 and USD26.00 for FY23-24F (from USD44.00 and USD38.00). Production capacity to increase by 1.8bn pcs. Comfort is expected to commission an additional seven lines towards the end of FY22. Once it is completed, it will have a production capacity of 8.6bn pcs pa. Following this, the company aims to grow capacity to 25.2bn pcs pa through the construction of a new production facility in Bemban – although targeted dates were not disclosed. That said, we would like to highlight possible delays in expansion, given the quicker-than-expected price erosion. Following the reallocation of sector coverage, we have revised our ESG score to 2.56 (from 2 previously) and lift FY22F earnings by 46%, after increasing our sales volume assumption. However, we slash FY23-24F earnings by 70% and 63%, after accounting for the revision in ASPs. Downgrade to SELL, with a new TP of MYR1.21. Given the quicker-thanexpected price erosion and the possible risk of a steeper price war, smaller manufacturers like Comfort are in a much less favourable position to ride out the uncertainty. Consequently, we see few near-term re-rating catalysts. Our TP implies 11x FY24F P/E (normalised earnings base), at -1SD of its pre-pandemic 5-year mean – which we believe is justified, given the greater margin compression risk. Upside risks: Higher-than-expected ASPs, rapid capacity expansion, higher utilisation rates, and favourable USD/MYR and raw material price movements.
It was still a good quarter for the company. If the decline of profit over the next few quarters is kept at 30pct or less. We're already looking for a RM 2.00 company @ P/E 5 ... Guess it's just whether the IB analysts are right about quarter-on-quarter outlook... it would be great if the next quarter it didn't decline, but instead stays flat or increases slightly for Comfort. That would be phenomenal.
Do you call this a laughing stock? PE multiple of 1 ( only one).
Those who switched from mother share to WB fast enough they got away with minor scratches only and that is only if they switched out very early.
For the rest, it is a waiting game.
580 million issued Comfort shares is not a large number compared to Supermax or Top Glove. I still feel that this is a cornered stock and when the major shareholders decide to play it up then everyone in this room can get better prices.
There is still a glimmer of hope. Nothing is dead yet.
DATO' LAU ENG GUANG 17-Sep-2021 Disposed 270,000 0.378 View Detail DATO' LAU ENG GUANG 10-Sep-2021 Disposed 2,500,000 0.396 View Detail DATO' LAU ENG GUANG 08-Sep-2021 Disposed 1,300,000 0.378
Many analysts are calling BUY for MrDIY with target prices near to RM5 and SELL for all glove stocks. Just for fun, let's do a DIY comparison on whether we should invest in MrDIY. At current price of RM 3.90, MrDIY EPS for the current quarter is 1.31 sen with a trailing P/E of 57. Comfort at RM 1.35 current quarter EPS is 25.64 sen with a trailing P/E of 1.3. The market capitalisation of MrDIY is RM24.4b and Comfort RM 786m. Will MrDIY achieve a P/E of single digit within the next 4 quarters?
Assuming current price of RM 1.35 of Comfort is maintained and EPS drops 30% every quarter for the next 4 quarters, it's trailing P/E will still be about 3.0. If EPS stabilise around 6 sen per quarter by then, the forward P/e will be about 5.6. If there's no windfall tax, this stock with good management should remain rewarding in the years ahead but holding a stock long term may not be a good strategy if the trend is against us. Take profit whenever possible and buy back when opportunity comes. As the saying goes, "A breast in hand is worth two in the bra".
KUALA LUMPUR (Sept 22): The government is contemplating and studying the implementation of a one-off higher tax rate to be imposed on companies that have generated extraordinary profits during the Covid-19 pandemic.
The government is looking at a few ways in which it can increase its revenue, including implementing the taxing of capital gains on shares and also imposing a one-off higher tax rate on companies that have obtained extraordinary profits during the pandemic.
Improve my desire on huge purchase on this from peer to lower stock , with HUGE CAPITAL in hand , its known well done glove stock , i not doubt it further diver down , headache for me , if i not have it at this period , people scare or frighten , actually is golden opportunities ..... the flow energy is even positive .
Still a very long road to declare the pandemic is end in the world , vaccines not so efficiency now only PPE like mask,glove,sanitizer will give human more protections ! Spore is the best vaccination rate with over 82% fully vaccinated people but it still break highest record of cases !
The losers in stock market are the people who doesnt understand the real meaning of fundamental n just simply panic sell in short term down trend while the stock FA is still solid !
I Learn the lesson , avoid playing stock any more ....1997 my first lesson , 2021 another PEER LEVEL lesson , i HOLDING MY PHD DEGREE now , COMPLETE LESSON , NOT MORE LEARNING STOCK ANY MORE AWARDED ....
I laugh also... Will just buy and buy... This ridiculous price is an opportunity of a lifetime. In 3 years, can easily triple from now. Look at tech Genetech... RM40 and P/E of 400. This makes 30X more money and P/E of 1.2. WTF...
I strongly believe the buyers of the mother and WB are the people who know the game plan of the company and these people have the holding power. There are only abt 580 million shares and it is a cornered stock.
The NTA is now higher than the market price and it shld not stay that low for long time, especially when it is a very healthy company.
If you know what you are in for and believe in the fundamentals of the company, these should not disturb your sleep.
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Benny1123
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Posted by Benny1123 > 2021-09-21 20:14 | Report Abuse
Company wants keep the money for share buy back.. Now so cheap.. Clever comfort..