Koon Yew Yin's Blog
Supermax target prices by Investment banks - Koon Yew Yin
Koon Yew Yin
Publish date: Sat, 12 Dec 2020, 09:00 PM
Koon Yew Yin
0 1,453
An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
The table below shows the target prices by Investment Banks. All these Investment Banks cannot be wrong.
JP Morgan has sent out the following message to down grate Top Glove by about 50% of its last traded price to Rm 3.50. Down grate Hartalega by 38% and Kossan by 30%.
JP Morgan did not mentioned Supermax.
You can read the details below.
KUALA LUMPUR (Dec 11): JP Morgan has reinstated coverage of Top Glove Corp Bhd, but with an underweight recommendation and a fair value of RM3.50 — that's about half its current market price of RM6.90 — as it sees the passing of a supernormal growth cycle for glove makers, in anticipation of a huge oversupply in the market, as glove demand decelerates in tandem with the pace of testing for Covid-19.
Besides the world's largest rubber glove maker, it also initiated coverage of its closest peers Hartalega Holdings Bhd and Kossan Rubber Industries Bhd, also with UW ratings.
It gave a fair value of RM8.50 for Hartalega, down 38% from its last traded price of RM13.72, and a fair value of RM3.80 to Kossan, which is 30% less than its closing price of RM5.39 today.
Its analysts Jeffrey Ng and YY Cheah, in a note to clients today, said they expect glove prices to weaken in the second half of next year.
"Global testing trends have also plateaued, which ought to ease current supply tightness. JP Morgan’s proprietary fund flow analysis indicates the glove sector is a crowded trade, implying significant downside momentum. Near-term concerns on rising costs, plus long-term overcapacity risk, spell downside risks. Once Malaysia lifts the short selling ban, downward pressure could be amplified," they wrote.
My comment
It is so ridiculous to down grate Top Glove by 50% of its last traded price to Rm 3.50 after it reported EPS of 29.64 sen for its quarter ending November. Its previous quarter ending August was only 5.32 sen, an increase of 5.7 times.
Perhaps JP Morgan has issued too many call warrants at much higher prices. If Top Glove share price remains so high, JP Morgan will lose a lot of money.
A call warrant is a financial instrument that gives the holder the right to buy the underlying stock shares at a specific price on or before a specified date.
Why didn’t JP Morgan mention Supermax ?
The obvious reason is because so many Investment Banks have much higher Target prices as shown on the table above.
Supermax’s 1st quarter ending September EPS 30.58 sen. Its EPS was 15.29 sen for its previous quarter, an increase of 100%. Based on Top Glove’s performance, Supermax’s profit for the next quarter ending December should be another new record profit. Most likely Supermax will announce its result in mid-January, that is about 5 weeks from now. Shareholders should wait patiently.
I believe all the Investment Banks’ target prices are easily achievable.
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Discussions
Be the first to like this. Showing 50 of 51 comments
Aiyo...no need talk about Supermax also affected going down lahh....
Multiple effect mahh....
If all glove makers share price going down, you think Supermax can be exceptional !!!......
2020-12-12 21:08
KYY panic looks like
confirm he will exit gloves by next week
final death struggle article
2020-12-12 21:11
Perhaps JP Morgan has issued too many call warrants at much higher prices. If Top Glove share price remains so high, JP Morgan will lose a lot of money.
Remarks #1: I have checked all the CW. None of them issued by JP Morgan.
Remarks #2: Perhaps old man loses all of his gain. Zero sum game.
2020-12-12 21:25
abang, why do you doubt ? All Investment Banks have plenty of Call Warrants. The ones on Glove companies are at very low exercise prices.
2020-12-12 21:30
I hope you can make up with him again. sslee & kyy huat together
Sslee Haha why so many people want to see KYY loss money?
2020-12-12 21:47
I am waiting for the opportunity to invest in TG & Supermax
.If TG drops, usually Supermax also follows. Both are brothers in arm.
2020-12-12 22:17
KYY made a wrong statement. Call warrant is cash settled on the date of expiry. It does not give the holders the rights to buy the underlying stocks at specific prices. He is confusing with company warrant.
2020-12-12 22:40
STAY ON TRACK WITH INSAS, U DEFINITELY WILL MAKE MONIES MAH...!!
FUNDAMENTALLY VERY SOUND MAH....!!
JUST BUY LOH...!
Get ready for the coming big upside potential of insas in view of its growth potential, value rerating and big improvement in financial stock business mah....!!
Jump in & buy big b4 too late loh....!!
INSAS IS A MISUNDERSTOOD STOCK LOH....!!
IF U LOOK BACK AT INSAS FOR PAST 10 YEARS, IT HAS BEEN CREATING VALUE NON STOCK ALMOST EVERY YEAR WITH INCREASING SHAREHOLDER FUND MAH...!!
THATS THE REASONS WHY ITS NTA GROW FROM RM 1.00 SAY 10 YEARS AGO TO ALMOST RM 4.00- 5.00 AS AT NOW MAH...!!
INSAS BIGGEST WINNER LIKE INARI, CONTRIBUTE MORE THAN RM 1.4B MARKET CAP & SMALLER WINNER LIKE SENGENIC CAN CONTRIBUTE MORE THAN RM 60M LOH...!!
SMALL INVESTMENT LIKE OMESTI & DGSB ARE DOING EXTREMELY WELL LOH...!!
INSAS IS LIKE BERKSHIRE HATHAWAY BUSINESS MODEL LOH...!!
BUT UNLIKE BERSHIRE, ACTUALLY INSAS IS BETTER IT PAYS DIVIDEND BUT BERSHIRE DON'T PAY LOH...!!
THOSE INVESTING IN INSAS IS GETTING COMPOUND GROWTH RETURN AVERAGING 10 TO 12% PA EVERY YEAR LOH....!!
IF U BUY INSAS NOW U R PAYING RM 0.865 FOR A FAIR VALUE OF RM 4.00 IN INSAS LOH....!!
A GREAT INVESTMENT LOH...!!
BUT MOST EXCITING PART THIS INSAS IS GROWING WITH GOOD PROFITABILITY MAH!
Just look at the amazing growth track record of value creation of insas for the past 10 yrs
Sept 2020- Nta Rm 2.75
June 2019- Nta Rm 2.62
Dec 2018- Nta Rm 2.54
Dec 2017..Nta rm 2.49
Dec 2016 ...Nta Rm 2.18
Dec 2015..Nta Rm 1.96
Dec 2014..Nta rm 1.82
Dec 2013 nta..rm 1.71
Dec 2012 nta ..rm 1.51
Dec 2011 nta..rm 1.38
Dec 2010 nta...rm 1.22
Dec 2009 nta ..rm 1.14
INSAS IS GROWING STRONGLY MAH....ONLY THOSE PEOPLE DO NOT UNDERSTAND BERKSHIRE HATHWAY BUSINESS MODEL ARE SAYING INSAS HATHWAY BUSINESS MODEL ARE LOUSY LOH...!!
BUT INSAS BUSINESS MODEL ARE SAME SAME MAH, IN FACT INSAS GENERATE COMPOUND EARNINGS OF 12% PA SAME SAME AS BERKSHIRE WOH..!!...HOW COULD BE BERKSHIRE VERY GOOD & INSAS VERY BAD LEH ??
2020-12-12 22:51
The same fate goes to thosw predicting Insas share price movement in the past 3 years
2020-12-12 22:53
Come Monday, if you don't sell is as good as letting other to sell ahead of you. Good luck
2020-12-12 23:10
https://klse.i3investor.com/servlets/stk/fin/7106.jsp?type=last10fy
Check above link for Supermax 10 years financial data.
What are the profit before covid?
Profit for year end 30/6/2020 covid?
And do your own calculation what will be the profit post covid?
2020-12-12 23:11
IF YOUR SOHAI TEAM SO CAPABLE, THE GLOVES STOCK WOULD NOT BE FALLING ALMOST ALMOST EVERYDAY FOR THE PAST 1 MTH LOH...!!
UNTIL SOHAI WEE NEED TO SPEND MORE THAN RM 1 BILLION TO SUPPORT THE SHARE PRICE LOH...!!
Posted by Morpheus61 > Dec 12, 2020 11:07 PM | Report Abuse
stockraider, our team includes data Analysts who are very capable of scraping you and your ilk out of your misery of trying too hard to convince people that JP Morgan and Macquarie are right. DO NOT MAKE US DO THAT.
2020-12-12 23:11
now 16 x times higher price LOL!
Posted by gohkimhock > Dec 12, 2020 11:13 PM | Report Abuse
pre-covid Supermax is just a penny stock.
2020-12-12 23:14
Post covid supermax will be net cash of few billions and it will depend on the boss how to use this cash to invest/acquire new business to growth the profit.
2020-12-12 23:28
When Analysts dont agree with him, he says they are stupid, when Analysts agree with him, wah he promote their target prices like polishing their Apples and indirectly saying they are now so smart.....Bloody hippocrate. Not ethical. He's like a fish flip flopping day and night. Disgraceful.
2020-12-13 00:46
Dartmastee n sslee, agreed I lost my pants following old man ky on Tguan.
Just ignore him.. I strongly believe he got lots holding on supermax as he promoted in recent weeks... Now Jpm suddenly caught him by surprise and we fully support Jpm... Old man need to cough back up profits he made from the last.... Very Lega nya. That's why..
2020-12-13 10:02
Debunking JP Morgan’s alarmist report on Top Glove and the Glove Sector
--------------------------------------------------------------------------
Author: sutp | Publish date: Sat, 12 Dec 2020, 8:46 PM
In yesterday’s Edge (11/12/2020), we get another article from an investment bank, peddling the same mantra of over-supply of gloves. JP Morgan is a highly respected financial institution. I am surprised and disappointed that it would lend its name to a report that is largely a seat-of-the-pants analysis, with spurious claims and arguments without any concrete supporting data.
Let me list down its fake claims and speculative hypotheses and debunk them one by one:
JPM: Global testing trends have plateaued
Rebuttal: With cases soaring to meltdown levels, how is it possible for testing to have plateaued?
JPM: Testing trends have started to trend downwards from their peaks since the end of September. Therefore glove prices have peaked.
Rebuttal: Top Glove has just reported that ASP will be 30% higher in 2nd quarter
JPM: The expectation that the use of gloves per capita would double post Covid-19 is "overly optimistic", given global population growth is substantially slower
Rebuttal: JPM is equating growth in per capita use of gloves post pandemic to world population growth, which is about 1.1%. Isn’t this is ridiculous? Top Glove sales have been growing at a rate of more that 13% p.a. even before the covid pandemic. After the pandemic, the world will become more health and hygiene conscious and it is entirely plausible that per capita consumption will be high.
JPM: Glove production capacity is expected to grow 87% in the next three- to five years
Rebuttal: JPM claims that an 87% growth in production capacity (if true) over 5 years will lead to over-supply. But 87% growth over 5 years is only 13.3% per year compounded. Top Glove’s CAGR for the last 5 years was 23.6% and the 4 years before the Covid pandemic was 13.5%.
JPM: We can take a leaf from the crude palm oil industry which saw a decade of oversupply post a supernormal cycle in the early 2000s
Rebuttal: Comparing glove with palm oil is again nonsense. Palm oil oversupply is unavoidable as the FFB (which is perishable) from the increased planted acreages have to be converted to oil. But glove manufacturers can shut down production lines when demand drops. So increased capacity does not have to mean oversupply.
And glove is not a commodity like palm oil. The health and medical segment accounts for 69.4% of global glove sales and gloves for this segment command a premium price as quality is crucial. Hence, buyers are less likely to change suppliers and concomitantly price is also less likely to drop. Therefore, the established large glove supplies will have a great competitive advantage over new entrants.
JMP: Additionally, glove makers' profitability is expected to be negatively affected by higher raw material prices and rising labour costs.
Rebuttal: Raw material and labour cost increases is a fact of life and applies to almost all manufacturing industries. And as cost increases applies to all competing companies, the increased costs are usually passed on to the consumer. This will not affect profitability. By bringing up the cost issue, which is a non-issue, JPM is clearly trying to stretch its argument to justify the paring the fair value of Top Glove’s share price to RM3.50.
JPM: Retail and foreign participation are at all-time highs. It is thus difficult to find incremental dollars to drive this sector higher
Rebuttal: There is no sense to this statement. Investors come and go; buy and sell. Money will always chase profitable growth stocks when negative sentiments are proven wrong
JPM: Top Glove is using cash to support capacity growth instead of debt
Rebuttal: Yes ROE will be higher with use of debt but ROE is already very high anyway. And prudence in using surplus cash is not necessarily bad.
This JPM article is a very poorly reasoned one. It is obvious that it is another shameful attempt to spook glove investors into selling and thereby creating buying opportunity for the fund managers in JPM
2020-12-13 10:37
Now Rm 6.90....u lari kuat kuat mah...!!
Whether Rm 6, 5, 4 or below no problem loh, can always buy back with big profit mah...!!
Just Run when u still can bcos tomorrow Tsunami come loh!
Posted by AlvinTSK > Dec 13, 2020 1:39 PM | Report Abuse
Rm 6 or Rm 5 or are that cheap aiming for Rm 4 and below ??
2020-12-13 13:45
According KYY's post, a possible reason for TG's downgrade by JPM could be:
"Perhaps JP Morgan has issued too many call warrants at much higher prices. If Top Glove share price remains so high, JP Morgan will lose a lot of money.
A call warrant is a financial instrument that gives the holder the right to buy the underlying stock shares at a specific price on or before a specified date."
2020-12-13 16:17
SSLEE,
U UNDERSTAND MARGIN OF SAFETY OR NOT LEH ??
NEXT RAIDER ASK U TO BUY AROUND 10 SEN TO 13.5 SEN WHEN IT HAS NET CASH 15.5 SEN MAH...!!
TOPGLOVES IS HIGHLY PROFITABLE BUT GOING FORWARD THE DURIAN RUNTUH IS OVER....THERE WILL BE INTENSE COMPETITION DUE TO OVER CAPACITY & TOO MANY NEW ENTRANTS MAH....!!
THE ASP & PROFIT WILL PLUNGE MAH....THUS EVENTUALLY CANNOT JUSTIFY THE VALUATION MAH....REMRMBER YOUR " HENGYUAN" SAME CONDITION WILL BE COMING MAH....!!
BTW TOPGLOVES CASH IS ONLY 50 SEN CANNOT SUPPORT THE CURRENT SHARE PRICE OF RM 6.90 MAH....!!
Posted by Sales > Dec 13, 2020 4:08 PM | Report Abuse
Stockraider, you very funny. NETX loss stock, keep asking to buy. Top glove make so much profit, keep asking to sell. Since Top Glove no good, you don't have to waste time here. Funny people.
2020-12-13 16:18
THEY DO NOT DARE MAH....!!
BCOS THE FUTURE FACTS THEY SUPPLY WILL BE VERY NEGATIVE LOH...!!
Posted by Taipan > Dec 13, 2020 4:13 PM | Report Abuse
All glove companies should suspend their trading tomorrow morning and issue a collective statement to all media, press conference and Bursa about the manipulators. They should provide facts and data about the rising ASP, Spot price, Demand, order books, etc, etc. Put the records straight with facts and figures to shut the manipulators and IBs once an for all. Also take action against them.
2020-12-13 16:42
abang_misai Perhaps JP Morgan has issued too many call warrants at much higher prices. If Top Glove share price remains so high, JP Morgan will lose a lot of money.
Remarks #1: I have checked all the CW. None of them issued by JP Morgan.
--------------------
Old man wrote in so hurry and desperate and didn't check the facts?
2020-12-13 20:24
Don't loose your queen's english. It is downgrade not down grate unless you are using it as a pun.
2020-12-14 07:11
people want to feel joyful after pandermic era...they don't want to go buy gloves everyday think of the pandermic. look for stocks that provide services to make people feel joyful...that is the trend. I am stock like tan chong is ago better than this glove stocks...because riding a car is more fun to do than wearing a pair of gloves thinking about pandermic going to consume you. Please don't be sickly depressed that you must wear a pair of gloves or buy a pair of gloves everyday. investing also must understand human nature..go find a stock that provide joy because this is what is needed in the future. not profit figures alone, it is human nature.. you have to use to invest in stocks. Value is what you can not buy and price is what you can bought...you want value or you want price...it is up to you to decide...
2020-12-14 11:01
at one point you'll say IBs are wrong... at another point you'll say IBs are no wrong... conman & snake attitude just to make money from uninformed newbie investors! your statements are just flip flops !
2020-12-14 13:13
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No need to talk supermx. Same downgrade 50%. Margin wil call u soon kyy
2020-12-12 21:07