News1
LUXCHEM - the "direct proxy" to GLOVES
probability
Publish date: Thu, 14 May 2020, 08:21 PM
Just two important information to share:
(1) Gloves contribute 35% of its revenue.
(2) It has just expanded its Latex manufacturing arm by 30%.
This effectively means, at current demand Gloves contributes 45% of its revenue before rise in average selling price.
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Discussions
Be the first to like this. Showing 16 of 16 comments
Aminvest published the above report on 18Feb 2020 before really knowing at what PE Gloves stocks will be trading in March, April and now May...
2020-05-14 20:27
Aminvest also published the above report in Feb 20 considering the risk in disruption in supply from China. But now China is up and running like no other country.
2020-05-14 20:31
Nice write up by "Sky is the limit":
http://skyisthelimitskyisthelimit.blogspot.com/2017/04/next-growth-engines-of-luxchem-part-1.html
2020-05-14 21:18
Transform Master (TMSB) - fully Owned by Luxchem, supplies chemical to gloves industry
http://transformmaster.com.my/v1/
http://transformmaster.com.my/v1/index.php/product-service/latex-compounding-chemicals
We are focusing on rubber latex industry include latex glove, latex toys, latex foam, latex thread, catheter, condoms, finger cots, balloons, latex exercise bands & etc. We also provide OEM service, design formulation for our customer based on customer requirements.
..........
The chemical consumption will be directly proportional to the gloves demand
2020-05-14 21:23
https://www.ytygroup.com.my/
YTY's mission for over 30 years has been to keep frontline employees safe through the manufacture of high-quality, single-use Examination gloves. Our original corporate ethos around quality, service and value continues to drive us today, making us one of the largest and most reliable manufacturers of single-use Examination gloves in the world.
Today, YTY is one of the largest manufacturers of Nitrile Examination gloves, but also a leading supplier of Polychloroprene Examination gloves, which offer unique advantages relative to Nitrile gloves. Beyond single-use Examination gloves, YTY offers single-use Surgical solutions as well, available in both the Polychloroprene and Polyisoprene synthetic polymers.
.....................
YTY Increases Its Medical Glove Donations During the COVID-19 Crisis
Wednesday, April 1, 2020
https://www.ytygroup.com.my/yty-increases-medical-glove-donations-during-the-covid-19-crisis/
2020-05-14 21:28
RHB report 18 Feb 2020:
https://research.rhbtradesmart.com/attachments/81/rhb-report-my_luxchem-4qfy19_results-review_20200218_rhb-b-350989118756393355e4b34d840429.pdf
as we expect Luxchem Corp’s trading segment to benefit from higher demand from the glove-making sector – particularly in 1Q20 due to COVID-19. We also raise P/E to 14x from 13x, as we believe its significant overseas exposure is a plus, given the soft domestic economy.
..........
RHB need to revise the PE looking at gloves stock
Luxchem = 35% (revenue from glove companies) + 65 % others
as such 35% of Luxchem current market cap should trade at PE 50 at least
Required PE = 35% x PE50 + 65% x PE20
= PE 30
as such Luxchem at PE 30, should be trading at PE 30 x 4.2 cents
= 1.26
.......
2020-05-14 21:35
Good write up from Sky is the Limit:
http://skyisthelimitskyisthelimit.blogspot.com/2017/04/next-growth-engines-of-luxchem-part-1.html
Follow by Luxchem's acquisition of Transform Master Sdn Bhd (TMSB) since April of 2016, TMSB has contributed to Luxchem's revenue and profit positively.
Who is Transform Master Sdn Bhd?
.................................
http://transformmaster.com.my/v1/
TMSB is a chemical manufacturing plant who mainly produce rubber latex chemical dispersion, latex processing chemicals, latex surfactant, dispersasant & specialty chemicals for latex industry.
Their plant is strategically located at Lumut Port, which is nearby to well known Malaysia oil and gas giant, SapuraEnergy Fabrication yard.
What is the reason behind for Luxchem to acquire Transform Master?
..................................................................
Which I believe Transform Master's main customer, YTY Group is the main driver behind. YTY is the medical glove manufacturer located in Perak and they are in aggressive expansion mode.
"Back to year of 2010, they have some of the most modern and automated lines in the industry. Our current production capacity exceeds 8.2 billion pieces of gloves a year"
YTY First GLove Factory Located at Lekir Perak
"By year 2012, our production capacity would have increased to 10.5 billion pieces a year" (Quoted from YTY Group Website)
The capacity towards 10.5 billion pieces of medical gloves was underpinned by their second factory which is located at Lumut Port, under the name of Green Prospect Sdn Bhd.
Now, YTY Group has further expand their capacity aggressively through their third plant located at Lumut Port too, just next to SapuraEnergy Fabrication yard. There is a huge parcel of land which allows YTY group DOUBLE UP their capacity easily.
I believe their third plant has started production but yet to fully operated. As you can see from photo, the plant is equipped with workers dormitories too. With the uninterrupted water supply in Perak and strategic location beside the Lumut Port, YTY Group is in the right direction to further expand their business globally.
As such, I believe Transform Master Sdn Bhd, as the sole supplier of Latex Processing Related Chemicals will continue benefited from the aggressive and stable development of YTY group, locally and regionally.
keyword - "sole supplier"
2020-05-14 23:06
https://www.theedgemarkets.com/article/luxchem-seen-grow-exports-margins
i) Transform Master Sdn Bhd (TMSB) in the latex industry: The production is operating at nearly full utilisation rate with capacity remaining at 13,800 tonnes per annum. The group’s plan to increase TMSB’s capacity to 18,000 tonnes per annum by 3QFY19 has been delayed due to warehouse and labour constraints, with expansions slated to be completed by the end of 2019.
.............
The above clearly shows that the expansion has NOT taken place on its qtr ending Dec 19.
And the expansion in 2020 will be:
= 18,000/13,800
= 30%
This will be shown on Q1 20'
2020-05-14 23:34
30% rise in revenue (before rise in avg selling price), will have explosive impact on profit
2020-05-15 14:01
not really a proxy......gloves benefit from exchange rates, lower raw material costs , higher volume , higher selling prices.............Lux same meh?
2020-05-15 18:24
China car sales mark first rise in nearly two years, mainly due to heavy trucks
12-May-2020
https://news.cgtn.com/news/2020-05-11/China-car-sales-mark-first-rise-in-nearly-two-years-QptUBit5W8/index.html
polyester resin mainly used for the surface finishing of trucks & cars should be back to normal, while raw material cost declines
2020-05-16 13:03
The demand for gloves will rise by 50%
Nanyang Sat, May 16, 2020
https://www.klsescreener.com/v2/news/view/677697
2020-05-16 15:01
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https://www.amequities.com.my/documents/20126/0/Luxchem+Corporation+200218.pdf/5b2b4b28-e743-3e69-5b70-2c14b008e21e?t=1581992694717
2020-05-14 20:24