Taking out the non-controlling interest, about 72 cents i guess?

pjseow, you mean EPS of 78 cents right?


Posted by pjseow > Aug 26, 2020 9:18 PM | Report Abuse

You are right, probability. If we use the estimate of 90% utilization for second half, the revenue from DS is about 267 million. Using a profit margin of 71%, second half profit is about 190 million. Assuming the resource and packaging divisions contribute 10 millions, total profits for the year will be about 338 millions. This will translate into 68 s EPS for the.whole year .

Thanks for the info pjseow, PE 15 does give a yield of about 7% your son had used on the DCF.

Referring to the below extract from qtr report, when availability factor increase by 90% from 78%, the impact on earnings can be more than proportional i suppose?

Planning to hold long unless it shoots up very high. This kinda margin and duration no business can provide.

.................



Power Division (Don Sahong Project)
....................................

Don Sahong achieved full commercial operation on 7 January 2020 following successful testing of and synchronization with EDL’s new 500 KV by-pass transmission line to Cambodia.

Reported power revenue of RM233.7 million for the 6-month period this year represented energy billing to EDL during the period on a take-or-pay basis, Despite the seasonal dry season in January-May, the period recorded an average energy availability factor of 78.7%, slightly ahead of management expectations.

With the onset of wetter weather in June, the average energy availability factor is forecast to exceed 90% in the second half of the year.

with such low interest rate, PE can even be 20 i suppose..

guess you are very confident on achieving 70 cents next year pjseow?
thinking of adding more

Posted by pjseow > Aug 20, 2020 12:39 PM | Report Abuse

Investor77, analysts are projecting very high earnings for both supermx and topglove for FY 2021. The PE range between 10 to 15 of 2021 earnings. Their earnings are few x of FY 2020 earnings. Thats is reasons why you see high tgt prices. I think.PE of 15 is a reasonable number for mfcb. I estimated mfcb earning to be about 65 to 70 sen this year and between 70 to 75 s next year

noted pjseow, i have seen you messages earlier on how delayed they are at realizing these ASPs...due to lead time

thanks for your usual deep analysis

Posted by pjseow > Aug 23, 2020 2:59 PM | Report Abuse

Probability, based on Supermx Q4 2020 result analyst briefing, we can actually estimate the earnings of Q1,Q2,Q3 and Q4 2021.The informations from.slide 4, 9 ,13 and 14 provides pricing ,leadtimes and orders .These info enable us to estimate the increasing earnings of the next 4 qtrs.I estimated the earnings of next 4 qtrs of.approximately 620 million,775 million, 978 million and 1114 million respectively. Total earning for 2021 is 3.5 billion. My assumption is no capacity increase and no cost increase. Strictly based on ASP increase and monthly volume of 2 billion pcs.This translates into rm 2.57 per share.With just a PE of 15, the tgt price is rm 38.6 if we base on FY 2021 earning.

At current risk free interest rate of 1.8% and further interest rate cut before end of the year, and the fact that all other businesses will remain depressed until the pandemic is over (2 -3 years time)....you really cant see the interest rate direction reversing again for many years to come....

As such, its possible for Gloves stock like Super to deserve a PE of 40...after all its going to beat Harta's margin edge consistently going forward

sorry sifu free, using your posting basis, with OEM having 1/3 of the OBM margin, TG will be deriving 1/3 of the above profit.

As such, extrapolated for its capacity expansion by 40%, its EPS will be 80 cents per annum (before bonus issue).

Its TP will be double the below value estimated earlier



Posted by probability > Aug 22, 2020 9:38 PM | Report Abuse X

To me what is interesting in this presentation of Post Covid scenario is..

at OEM margin of 12% used by free on above derivations, Top Glove with say an additional throughput of 40% (capacity expansion by 2022), will be having an EPS of around 40 cents per annum only (before Bonus issue)..

Even with PE 80, Top Glove TP = RM 32 (before bonus issue)

.......


It shows how conservatively the above TP for supermax had been derived..

ok let me try...may be tomorrow i post here if i could put in an easily understandable manner...

for now we can see below for TG:

https://klse.i3investor.com/servlets/stk/fin/7113.jsp

on second qtr of 2020, at 9% PAT margin, its EPS was 4.52

I try to see the effects of increasing margin to 12% and then raise sales by 40%....i got roughly 40 cents EPS only...

This is of course assuming TG maintains 100% at OEM sales price

A good place to check these on the Analyst Briefing of Supermax dated 9th Aug page 13 (the first 2 bar giving data for pre-covid ASP)

yes sifu free.....is my judgement above valid?

and for Top Glove to expand capacity by 40% , it needs to spend almost double the capital Super needs for expanding to 48b by 2022

To me what is interesting in this presentation of Post Covid scenario is..

at OEM margin of 12% used by free on above derivations, Top Glove with say an additional throughput of 40% (capacity expansion by 2022), will be having an EPS of around 40 cents per annum only (before Bonus issue)..

Even with PE 80, Top Glove TP = RM 32 (before bonus issue)

.......


It shows how conservatively the above TP for supermax had been derived..

and for your info, those who are immune can still transmit

understand why docs change gloves from one patient to another

its not only about protecting self..

Posted by Zuliana > Aug 22, 2020 3:24 PM | Report Abuse

freetospeak>>> May b u will end up with vaccine but no gloves to proceed.
22/08/2020 2:32 PM

No.... when we have vaccines, who need gloves to proceed the injection lah???
The doctor who gives vaccines injections, no need to fear Covid anymore .
The patient getting injections also doesn’t care whether the doctor wear gloves to administer vaccines injections lah.

So false conjecture that when vaccines are available, more gloves are needed to administer the injections lah...
I just poke and burst false presumption here.

No la..i always panic sell at low and buy high...:(

Posted by myongcc5 > Aug 20, 2020 12:55 PM | Report Abuse

Prob, still do hardworking here, must hv earn till no where to keep

so far super had never failed to break cimb TP...

it overtook Kossan, and then Harta...

i dont think its impossible to overtake TG before Bonus issue

Many dont realise TG has double the shares of Super and its converting bond to ordinary shares

https://klse.i3investor.com/servlets/ptres/56346.jsp

Experts Warn of a Possible 'Twindemic'—Here's What That Means
Plus, how you can prepare for the potential health disaster.

By Korin Miller August 18, 2020

Every year around this time, public health officials start warning about the approach of flu season. But this year is a little bit different thanks to the COVID-19 pandemic.

Now, experts are warning about the possibility of a “twindemic,” or the overlap of flu season and an expected surge in COVID-19 cases this fall and winter. Here’s what you need to know about the possibility of an upcoming twindemic, what it might look like, and what it can mean for public health.

What is a ‘twindemic,’ exactly?
...............................

The term “twindemic” was first introduced—to the general public, at least—by The New York Times in an article published on August 16. The Times credits L.J. Tan, PhD, as an "early promoter of the term." Tan is the chief strategy officer for the Immunization Action Coalition, a nonprofit group that works to increase vaccination rates.

A twindemic, per the Times, is the possibility of a severe flu season coinciding with a surge in COVID-19 cases. Even a mild flu season is concerning, given that the inevitable serious cases of the flu tax the medical system each year, Amesh A. Adalja, MD, senior scholar at the Johns Hopkins Center for Health Security, tells Health.

As of right now, experts aren’t totally sure if we’ll have a severe flu season and subsequent twindemic. The only predictor, Dr. Adalja says, is from looking at countries in the southern hemisphere like Australia, which are currently going through their winter flu season. Flu cases there have plummeted during the season, even seeing as much as a 98% drop in cases in April, according to the Australian Government’s Department of Health. A recent report from the country’s FluTracking surveillance system found that flu cases are “historically low,” with just 0.43% of people reporting influenza-like illness.

But, while that sounds like great news, Dr. Adalja doesn’t expect that we’ll see the same results. “We probably won’t get the same level of control of influenza as countries like Australia,” he says, noting that in the US, we don't currently have same social distancing regulations in place. “We have to prepare for a challenging flu season.”


What can happen if a twindemic occurs?
......................................

A lot. “We are anticipating a very vigorous winter respiratory virus season, with COVID-19 out there, perhaps increasing even more, and with influenza coming on the scene,” William Schaffner, MD, an infectious disease specialist and professor at the Vanderbilt University School of Medicine, tells Health. “There are other respiratory viruses, too.”

Even when you just look at the flu and COVID-19, “it will be challenging for doctors to distinguish one from the other,” Dr. Schaffner says.

A huge concern of doctors is the risk that the medical system will be overloaded trying to care for both COVID-19 and flu patients at once. “This is a real risk,” Richard Watkins, MD, an infectious disease physician in Akron, Ohio, and a professor of internal medicine at Northeast Ohio Medical University, tells Health.

“Even if we have to deal with a moderate-sized flu epidemic—which all by itself can stress hospital facilities—at the same time as the pandemic, we may be in for a quite rough winter,” Dr. Schaffner says.

Good sharing Dynasty...

it means spot order ASP is going to explode by Sept / Oct

to me these effects of explosive cases due to winter causing extreme shortage of gloves is almost certain

and Supermax Aurelia had established itself in Europe & U.S

a place where gloves sell at highest premium

Posted by Dynasty > Aug 20, 2020 2:09 AM | Report Abuse


Experts Warn of a Possible 'Twindemic'—Here's What That Means

https://www.health.com/condition/infectious-diseases/coronavirus/twindemic

very good estimation...thanks free

Posted by freetospeak > Aug 19, 2020 12:54 PM | Report Abuse

freetospeak The world population is in the billions 7 x 2 (1 pair) x 2 shots = 28 billion gloves per yr. This is only for injection part under no.4 (distribution).

1. More testing

2. Preparation

3. Production

4. Distribution
28 billion per year
(if possible which i think cannot be done coz every country speed of vaccination will be different and shortage of gloves will slow down the process. so it will be spread over 2-3 yrs to complete )

5. Disposal

report is very good you mean?

Posted by gemfinder > Aug 18, 2020 8:07 PM | Report Abuse

Normal la. When wharks want to push up, sure come out with very good reports

these new players probably have to sell cheap their assets to the big players later

thats why gloves company's margin % is so important - it determines how long they can survive 'holding their breath under water' under depressed margin without being killed by competitor (big players)

with OBM, Supermax has really equipped itself with the required defense mechanism

This is the exact reason why companies like Harta has such premium valuation


Posted by JohnFarmer458 > Aug 18, 2020 4:50 PM | Report Abuse

Many believe that in another few years after all the new entry into glove industry completed their factory and begun production they will be oversupply and ASP will decrease and in turn which affect the profit that the current glove makers currently enjoy during the pandemic.

But let me share my experience as someone with over 20 years in manufacturing industry

What happens when all the new entry into glove industry begin rolling out their gloves into the market? most current glove makers have good relationship with raw material provider as they have been buying for many years, so the trust is there and with their economic of scale due to sheer huge volume they will enjoy much more competitive price and priority.

So new comer will have to pay more to purchase raw material ( which would impact their profit margin ) and due to lower economic of scale their production cost per glove will be much higher.

And secondly being new in order to penetrate into the market they will have to offer lower price to distributors so it cuts their margin even more.

So most of them will run at a loss, for how long? the established big players can control price at anytime to press them further .Most of them will be making losses for long time before they can see profit. So whats the play? Remember the current players already have HUGE CASH reserve that they earned.

out of all the new players most of them will eventually bought over by established player to further increase their capacity so in the end all these new players coming into the industry will turn out benefiting current established players

well said

Posted by JohnFarmer458 > Aug 18, 2020 4:50 PM | Report Abuse

Many believe that in another few years after all the new entry into glove industry completed their factory and begun production they will be oversupply and ASP will decrease and in turn which affect the profit that the current glove makers currently enjoy during the pandemic.

But let me share my experience as someone with over 20 years in manufacturing industry

What happens when all the new entry into glove industry begin rolling out their gloves into the market? most current glove makers have good relationship with raw material provider as they have been buying for many years, so the trust is there and with their economic of scale due to sheer huge volume they will enjoy much more competitive price and priority.

So new comer will have to pay more to purchase raw material ( which would impact their profit margin ) and due to lower economic of scale their production cost per glove will be much higher.

And secondly being new in order to penetrate into the market they will have to offer lower price to distributors so it cuts their margin even more.

So most of them will run at a loss, for how long? the established big players can control price at anytime to press them further .Most of them will be making losses for long time before they can see profit. So whats the play? Remember the current players already have HUGE CASH reserve that they earned.

out of all the new players most of them will eventually bought over by established player to further increase their capacity so in the end all these new players coming into the industry will turn out benefiting current established players

so average 31.3....throw the dart with closed eyes also cannot miss then

by 17th sept this should be realized looks like

https://www.forbes.com/sites/robertpearl/2020/08/10/coronavirus-vaccine-gone-wrong/#7ae7db87ae4d


4. The vaccine gets approved but might be only 50% effective

That brings us to the novel coronavirus. In April, the WHO noted the ideal vaccine would establish immunity in at least 70 percent of the population, including the elderly. In July, an FDA official added, “We’re going to need a vaccine that’s probably in the order of 70% effective and 70%, at least, of the population is going to need to take it.” Meanwhile, Dr. Fauci is on the record as saying that he, too, would settle for a 70% to 75% effective vaccine.

But those are all “ideal” situations. =FDA guidance issued in June stated, “To ensure that a widely deployed COVID-19 vaccine is effective, the primary efficacy endpoint point estimate for a placebo-controlled efficacy trial should be at least 50%.”

This possibility leads to some disheartening mathematics. Assuming that only 50% of the population takes a vaccine that is only 50% effective, the nation’s immunization rate could be as low as 25%. That total would be insufficient to end the pandemic.

Achieving herd immunity, the point at which the virus would no longer spread, would require at least 70% of the country (200 million Americans) to either be vaccinated or acquire the virus and recover from it. Further, that estimate assumes long-lasting immunity from the virus.

...........

From above, if we U.S is to achieve herd immunity, 70% has to be immune.

If vaccine efficacy is 60% and 70% are vaccinated by end 2021 ( i doubt that fast), immunity level of U.S :

= 0.60 x 0.70
= 0.42 or 42%

At 42% immunity, looking at current cases of 60k per day with restrictions / safety measure, the cases per day at minimum will still be about 20k per day coupled with relaxation of rules.

Thats 5 x times higher than China at its peak

Further there is risk of immunity fading in 6 months...

https://www.forbes.com/sites/robertpearl/2020/08/10/coronavirus-vaccine-gone-wrong/#463db8857ae4

4. The vaccine gets approved but might be only 50% effective

That brings us to the novel coronavirus. In April, the WHO noted the ideal vaccine would establish immunity in at least 70 percent of the population, including the elderly. In July, an FDA official added, “We’re going to need a vaccine that’s probably in the order of 70% effective and 70%, at least, of the population is going to need to take it.” Meanwhile, Dr. Fauci is on the record as saying that he, too, would settle for a 70% to 75% effective vaccine.

But those are all “ideal” situations. =FDA guidance issued in June stated, “To ensure that a widely deployed COVID-19 vaccine is effective, the primary efficacy endpoint point estimate for a placebo-controlled efficacy trial should be at least 50%.”

This possibility leads to some disheartening mathematics. Assuming that only 50% of the population takes a vaccine that is only 50% effective, the nation’s immunization rate could be as low as 25%. That total would be insufficient to end the pandemic.

Achieving herd immunity, the point at which the virus would no longer spread, would require at least 70% of the country (200 million Americans) to either be vaccinated or acquire the virus and recover from it. Further, that estimate assumes long-lasting immunity from the virus.

...........

From above, if we U.S is to achieve herd immunity, 70% has to be immune.

If vaccine efficacy is 60% and 70% are vaccinated by end 2021 ( i doubt that fast), immunity level of U.S :

= 0.60 x 0.70
= 0.42 or 42%

At 42% immunity, looking at current cases of 60k per day with restrictions / safety measure, the cases per day at minimum will still be about 20k per day coupled with relaxation of rules.

Thats 5 x times higher than China at its peak

Further there is risk of immunity fading in 6 months...

its a very sad day in supermax forum....:(

naysayers...below is something for you all to ponder..

supermax never asked PE of HARTA , did it?


Posted by llwj1985 > Aug 15, 2020 1:29 PM | Report Abuse

add me pls! good constructive criticism is acceptable, but too many trolls and black hearted people that try to manipulate investors emotions and cloud their thinking = no no

aduh...secretinvestor....you might as well change name to openbookinvestor now...

Posted by yttihs > Aug 15, 2020 12:34 PM | Report Abuse

@probability

Yes, I've killed secretinvestor8888 3 times.
He may still have accounts in the private forum but he dare not bark anymore.

with the below criteria...naysayers are killed even before they can speak....LOL!

Posted by yttihs > Aug 15, 2020 12:25 PM | Report Abuse

I came over from TG to recruit Supermax believer/fans into our current PRIVATE CHAT CHANNEL.

If you are interest, you can post, I'll check, then add.
-------
If you are NOT added:
1. Your account is new
2. You are a troll

If you are being added:
"You spam, I ban"

aduh...now all forum become private group chats already...

though i am a staunch supporter of super....i feel bad for the naysayers now...LOL!

now i understand why supermax management is doing a fantastic job of investing additional capacity instead of paying out as dividends...

every penny invested becomes a pound

EXTRACT FROM ABOVE:
..................


With vaccines, which are given to healthy people, longer sets of data are crucial to find out how safe they are in the long term and how long protection lasts.

“We won’t know until we follow patients in clinical trials, in particular the vaccine trials, for six months to a year,” said Novartis’s Narasimhan.

Ongoing Risk
Pandemics like Covid-19 are rare, occurring perhaps as infrequently as once in 200 years, said Neil Ferguson, a professor at Imperial College London who advised the U.K. government on its early-stage response. Yet more new viruses and outbreaks are likely to appear as urbanization and deforestation bring humans and animals into closer contact.

Over the past decade there have been an “increasing number of viruses and bacterial infections spilling over into humans,” said Devi Sridhar, chair of global public health at the University of Edinburgh. “As long as we have close contact between animals and humans we will continue to have spillover events. And we’re seeing that through urbanization, deforestation, having wet markets.”

Covid-19 Shaping Up to Be Battle for Years Even With Vaccine


14 August 2020

https://www.bloomberg.com/news/articles/2020-08-13/get-used-to-living-with-covid-19-for-a-long-time-experts-say

The coronavirus pandemic is likely to be a challenge for years to come even with a vaccine, according to pharmaceutical and public-health experts.

While a vaccine will provide some measure of protection to societies around the globe, the virus is likely to flare up from time to time and be constantly battled, much like the flu and other pathogens.

“We know this virus is not going away any time soon. It’s established itself and is going to keep on transmitting wherever it’s able to do so,” Soumya Swaminathan, chief scientist for the World Health Organization, at the “How Covid-19 Is Reshaping the Global Healthcare Ecosystem” event hosted by Bloomberg Prognosis. “We know we have to live with this.”


“I think what’s realistic to expect is that with a combination of drugs and vaccines we can get to a stable place where the pandemic is manageable,” said Novartis Chief Executive Officer Vas Narasimhan. He called the actual elimination of the virus “unlikely.”


While the rush to rapidly test vaccines has potentially cut years off of the time before one will be ready, a first round of inoculations will likely go only to health workers and high-risk populations, with the general public having to wait until sometime next year to get a shot.


WAIT UNTIL END OF NEXT YEAR TO GET A SHOT!
...........................................

that time i dont know what super price would be....

by the time vaccination is completely implemented worldwide, super capacity already double.

This means even if margins erode to half the margin level of Q4 20', it will be able to deliver the current earnings of 400m per qtr or much higher (since management overhead costs will remain the same while capacity rise).

As such, at minimum. at most pessimistic scenario, EPS of 30 cents per qtr would be sustainable.

At a PE of 30 it should be priced 36 at the least.

Considering that such outbreak had repeatedly happened every 4 or 5 years (expected more frequent in future due to global warming), a PE of 40 is also justifiable.

......


Trust the above gives a solid justification that super is not at all over priced with the OBM business edge, under whatever circumstances of vaccination efficacy.

if you guys are clueless on vaccine effects on gloves, you can monitor Mercator price movement:

https://www.google.com/search?q=mercator+medical+sa+stock+price&oq=mer&aqs=chrome.0.69i59l2j69i57j69i59j69i61j69i65l2j69i61.1227j0j8&sourceid=chrome&ie=UTF-8

this virus is so easily transmitted...that even after vaccine the demand will remain permanently...

New zealand after 100 days of zero local trasnmission can now go into lockdown

vaccination is only practically done on healthcare workers, it will take years before globally people are vaccinated

and note that vaccinated person can still transmit

https://www.globenewswire.com/news-release/2015/02/04/703096/10118656/en/Corrections-Studies-Show-that-Vaccinated-Individuals-Spread-Disease.html

any 'relaxation' attempt on healthcare practise on gloves usage (due to vaccination) may have negative consequences of spreading the virus instead...

hospitals may become breeding ground instead of being the place to cure


.........

In my opinion, the gloves demand is not due to covid cases but the change in health care practise

This is the sole reason for the demand curve shift. Covid cases are peanuts compared to medical gloves output.

It is the SOP change that made all the change in demand.

Look at China...the major demand is from there and the cases there had fairly subsided long ago...

would vaccine change their habits now?



Posted by OTB > Aug 13, 2020 11:30 AM | Report Abuse

I hope history repeats itself, even vaccine is available in 2009 H1N1 pandemic, Topglov and Supermx still sustain profit growth for another 9 months after vaccine approved by WHO.

The present vaccine of Russia is not approved by WHO, need sometime for WHO to approve it. I believe WHO will not approve any vaccine until 2021.

Follow history, the share price of Supermx and Toplov will peak in April or July 2021 like what had happened in H1N1 pandemic in 2009.

Thank you.

Post removed.Why?

Mercator SA barely changed from its peak:

https://www.google.com/search?q=mercator+medical+sa+stock+price&oq=mer&aqs=chrome.1.69i57j69i59l2j46j0l4.6853j1j8&sourceid=chrome&ie=UTF-8

Bursa retailers seem less informed

the below is a very rational argument sifu

Posted by freetospeak > Aug 12, 2020 9:17 PM | Report Abuse

I do not know when the pandemic will end. But i know the profit for gloves company will not drop due to pandemic over.it will be sustained by growing capacity and a higher post covid price than precovid.those who imagine the asp will drop bak to precovid level doesnt know how the glove market pricing works. Jus giv a easy example.if super hav 50 billion caps by 2022, it only need 10 sen margin per gloves it can get 800 to 1 billion profit each qtr . 10 sen profit is only usd 50/k.

Do u think supermax cannot sell more than usd50 post covid? B4 covid distributor in us is selling above this price for your info. So thats the reason super is building 5 plant at once. If u hav eliminated all agent n middleman. Super is already the king of obmX.

EPS of Super is 5 x times higher than HARTA for the same quarter ending June 20'

Supermax has double the layer of margin with OBM

The margin edge that Harta had with AMG, Super has it twice the strength with OBM

Harta is dependent on U.S for 40% of its revenue.

Supermax has established its network worldwide, Canada, Japan, Brazil and growing....

Even if you use Harta's pre-covid price of 5.5, Supermax share price should be worth 27 plus now...

Cant Supermax earn 6 x Harta's pre-covid eps of 3 cents per qtr with its increasing capacity going forward when the pandemic is over?

Thats just 16 cents per qtr to justify RM 27 with Harta's pre-covid PE

Racing to reverse US ban, Top Glove improves workers' housing

August 11, 2020 22:54 pm

https://www.theedgemarkets.com/article/racing-reverse-us-ban-top-glove-improves-workers-housing

EPS of Super is 5 x times higher than HARTA for the same quarter

Supermax has double layer of margin with OBM

The margin edge that Harta had with AMG, Super has it twice the strength with OBM

Even if you use Harta's pre-covid price of 5.5, Supermax share price should be worth 27 plus now...

https://www.bloomberg.com/news/videos/2020-08-11/top-glove-says-demand-has-been-very-strong-amid-pandemic-video

https://www.bloomberg.com/news/videos/2020-08-11/top-glove-says-demand-has-been-very-strong-amid-pandemic-video

guys , people are creating false rumour here using freetospeak and OTB ids... please read carefully.

yeah..good article

https://www.theedgemarkets.com/article/how-much-profits-do-glove-makers-need-sustain-rally?type=malaysia

KUALA LUMPUR (Aug 6): Based on historical valuation, which investment analysts said has been thrown out of the window by now, the glove manufacturers are trading at price-earnings ratio of more than 100 times.

Top Glove is currently the second largest company by market value in Bursa Malaysia, followed by Hartalega as the third biggest. Only Malayan Banking Bhd (Maybank), the country’s biggest bank in asset size, is more valuable than the two glove manufacturers.

Interestingly, even Supermax Corp Bhd and Kossan Rubber Industries Bhd are already among the top 25 largest firms in terms of market value in the local bourse. Supermax is 16th and Kossan 21st.

Against the backdrop of anticipated exceptionally strong demand for disposable rubber gloves due to the Covid-19 pandemic coupled with a big jump of 30% in average selling price, investors are pouring money into glove manufacturers with high hope that they will churn not just profits in current harsh economic conditions but super profits.

Investment analysts have been raising earnings forecasts as the meteoric rally continues and the glove stocks surpass initial target prices.


As the glove companies are due to release their financial results soon. How much earnings do they need to deliver to sustain their currently high share price levels?

According to Bloomberg data, earnings consensus for Top Glove’s financial year ending Aug 31, 2020 (FY20) is a record high of RM1.44 billion and a whopping increase to RM3.81 billion the year after.

A back of envelope calculation, on a simple average, Top Glove would need to achieve RM866 million in net profit in the quarter ending Aug 31 - a 149% jump from the preceding quarter to meet market expectations.

This is more than four times the quarterly net profit of Nestle (M) Bhd for the financial quarter ended March 31, 2020.


Hartalega announced its record high net profit of RM219.72 million in the first financial quarter ended June 30. But the stellar set of financial results did not add fuel to its share price rally as it fell short of market expectations.

Still, analysts upgraded earnings forecasts noting that profit margin will be wider as a result of higher average selling price in upcoming quarters. In short, analysts are of the view that the exponential growth has yet to kick in.

Market consensus forecast Hartalega's annual profit went up to RM1.61 billion for the financial year ending March 31, 2021. This means that Hartalega's 1QFY21 net profit only accounted for 13% of the full-year earnings consensus.

To meet the market consensus, Hartalega will need to achieve an average of RM479 million in each of the three upcoming financial quarters. This translates into average earnings growth of 346% y-o-y.

Likewise, Supermax and Kossan are expected to see a 260% and 207% q-o-q growth respectively this coming quarter to meet their earnings consensus.

Supermax’s market capitalisation is currently at RM31.28 billion. Assuming a P/E ratio of 25 times, which is considerably high for the manufacturing sector, Supermax needs to make an annual net profit of RM1.25 billion, or an average quarterly profit of about RM312 million. Meanwhile, Kossan Rubber is expected to deliver annual net profit of RM974 million, averaging RM243.5 million in each quarter.

What about the smaller players?
Similarly, based on the P/E of 25 times, for Comfort Glove Bhd to justify the current market capitalisation of RM3.78 billion, it will have to make an annual net profit of RM151.56 million.

Rubberex Corp Bhd’s market value has swelled to RM1.881 billion. At the P/E valuation of 25 times, the glove maker is expected to achieve annual net profit of RM75.24 million, or RM18.8 million a quarter.

Over at Careplus, its market capitalisation is at RM2.918 billion. To justify a P/E ratio of 25 times, the company needs to churn an annual net profit of RM87.92 million - an amount that is almost equivalent to its market value a year ago of RM85 million.

https://www.theedgemarkets.com/article/how-much-profits-do-glove-makers-need-sustain-rally?type=malaysia

KUALA LUMPUR (Aug 6): Based on historical valuation, which investment analysts said has been thrown out of the window by now, the glove manufacturers are trading at price-earnings ratio of more than 100 times.

Top Glove is currently the second largest company by market value in Bursa Malaysia, followed by Hartalega as the third biggest. Only Malayan Banking Bhd (Maybank), the country’s biggest bank in asset size, is more valuable than the two glove manufacturers.

Interestingly, even Supermax Corp Bhd and Kossan Rubber Industries Bhd are already among the top 25 largest firms in terms of market value in the local bourse. Supermax is 16th and Kossan 21st.

Against the backdrop of anticipated exceptionally strong demand for disposable rubber gloves due to the Covid-19 pandemic coupled with a big jump of 30% in average selling price, investors are pouring money into glove manufacturers with high hope that they will churn not just profits in current harsh economic conditions but super profits.

Investment analysts have been raising earnings forecasts as the meteoric rally continues and the glove stocks surpass initial target prices.


As the glove companies are due to release their financial results soon. How much earnings do they need to deliver to sustain their currently high share price levels?

According to Bloomberg data, earnings consensus for Top Glove’s financial year ending Aug 31, 2020 (FY20) is a record high of RM1.44 billion and a whopping increase to RM3.81 billion the year after.

A back of envelope calculation, on a simple average, Top Glove would need to achieve RM866 million in net profit in the quarter ending Aug 31 - a 149% jump from the preceding quarter to meet market expectations.

This is more than four times the quarterly net profit of Nestle (M) Bhd for the financial quarter ended March 31, 2020.


Hartalega announced its record high net profit of RM219.72 million in the first financial quarter ended June 30. But the stellar set of financial results did not add fuel to its share price rally as it fell short of market expectations.

Still, analysts upgraded earnings forecasts noting that profit margin will be wider as a result of higher average selling price in upcoming quarters. In short, analysts are of the view that the exponential growth has yet to kick in.

Market consensus forecast Hartalega's annual profit went up to RM1.61 billion for the financial year ending March 31, 2021. This means that Hartalega's 1QFY21 net profit only accounted for 13% of the full-year earnings consensus.

To meet the market consensus, Hartalega will need to achieve an average of RM479 million in each of the three upcoming financial quarters. This translates into average earnings growth of 346% y-o-y.

Likewise, Supermax and Kossan are expected to see a 260% and 207% q-o-q growth respectively this coming quarter to meet their earnings consensus.

Supermax’s market capitalisation is currently at RM31.28 billion. Assuming a P/E ratio of 25 times, which is considerably high for the manufacturing sector, Supermax needs to make an annual net profit of RM1.25 billion, or an average quarterly profit of about RM312 million. Meanwhile, Kossan Rubber is expected to deliver annual net profit of RM974 million, averaging RM243.5 million in each quarter.

What about the smaller players?
Similarly, based on the P/E of 25 times, for Comfort Glove Bhd to justify the current market capitalisation of RM3.78 billion, it will have to make an annual net profit of RM151.56 million.

Rubberex Corp Bhd’s market value has swelled to RM1.881 billion. At the P/E valuation of 25 times, the glove maker is expected to achieve annual net profit of RM75.24 million, or RM18.8 million a quarter.

Over at Careplus, its market capitalisation is at RM2.918 billion. To justify a P/E ratio of 25 times, the company needs to churn an annual net profit of RM87.92 million - an amount that is almost equivalent to its market value a year ago of RM85 million.

trust you are not disputing the analyst PE which are as equally or more qualified than you on their judgements..

you are right..

my judgement is based on analyst consensus PE of 25

and the intense research i made to predict the earnings going forward (both from management guidance and the reality of the pandemic implications which had change demand structurally)

Posted by Ricky Yeo > Aug 6, 2020 10:47 AM | Report Abuse

I don't disagree that there's no precise measurement of value, although calling it an 'opinion' is a long stretch. But there's a big difference between not having a precise measurement vs any measurement would do.

Not having precise measurement just mean something is hard to measure, it doesn't suddenly mean that thing can take on any value, agree? Just like absence of evidence is not evidence of absence.

While we are at this, even if you truly believe because something cannot be precisely measured, therefore 'any value is possible', then how the hell you're going to know if you're not wrong? and if you don't have the ability to know whether you're right or wrong because any value is possible, how are you guarantee you can make money long-term?

Ricky, for any stock thats trading above PE 30, you need your whole career lifespan to prove that your valuation are materialized...

the whole concept of 'value' is just an 'opinion' that keeps changing...nobody waits to realize the cash dividends in their pocket as per DDM on any stocks....

our human lifespan is not sufficient enough to realize these 'valuation'

Posted by Ricky Yeo > Aug 6, 2020 10:34 AM | Report Abuse

Yes of course. Now we are closer to reality. Going towards $100-120 bil market cap. And btw, when discussing this stuff, don't confuse between value and price.