Also next will be mergers and acquisitions. The big 4 will soon merge or acquire the small manufacturers.

US already ban TG. Also US avoiding China products. So Supermax will gain from all these and provide the glove demand for US. 15 Billion annual demand. That is why Supermax is setting up factory in US. So Supermax quarter PAT of 1B will continue to remain.

Also all ASP for this year is contracted. The next 2 to 3 quarters sales already confirmed and paid. so the next 2 to 3 quarters PAT in tact.

Since TG cannot supply to US, their inventory is showing surplus but this is where Supermax will gain and tap the US market. In return TG will supply all other parts of the world. So this balances up.

Singapore - Nurse in Tan Tock Seng Hospital was fully vaccinated in Feb. In May got infected with the Indian Variant and has spread to many. Now lockdown in a few places.
Indian and South African Variant has already spread to 17 or more countries.

Singapore - Nurse in Tan Tock Seng Hospital was fully vaccinated in Feb. In May got infected with the Indian Variant and has spread to many. Now lockdown in a few places.
Indian and South African Variant has already spread to 17 or more countries.

The main reason for CDC and Biden to make such declaration is political pressure. Spring break is coming and many want to be at the beaches and vacation. They had initially informed the masses that vaccination will be the cure. Then back track to say it will prevent serious illness but can still be infected. So if they dont allow social gathering, the administration will lose popularity.

See China, Japan, etc, - mask is still a must even though the numbers are very very low.

Mask off and assuming that they have won the battle against Covid 19 is a big mistake. See India.

Singapore - Nurse in Tan Tock Seng Hospital was fully vaccinated in Feb. In May got infected with the Indian Variant and has spread to many. Now lockdown in a few places.
Indian and South African Variant has already spread to 17 or more countries.

The main reason for CDC and Biden to make such declaration is political pressure. Spring break is coming and many want to be at the beaches and vacation. They had initially informed the masses that vaccination will be the cure. Then back track to say it will prevent serious illness but can still be infected. So if they dont allow social gathering, the administration will lose popularity.

See China, Japan, etc, - mask is still a must even though the numbers are very very low.

Mask off and assuming that they have won the battle against Covid 19 is a big mistake. See India.

All naysayers, if glove has no hope then why are you still in this forum.? Why waste your time with us. ? Obviously you are working with manipulators to instill fear.

The variance between my forecasts and actuals for the three quarters is just Rm46 million. As Supermax in its 3rd quarterly commentary asserted that had it not been for the Meru plant closure (and possibly, the shortage of containers as per the report by Hartalega on May 3) and the contribution to the government, I believe, my forecasts would have been on target. If Supermax can operate without further hiccups from Apr-Jun, will it not achieve Rm1.24 billion profits in 4Q21? I think it is more than doable.

If Supermax FY21 earnings come in at Rm4.1 billion as per forecast, the expected EPS (net of treasury shares) will be Rm1.56. At the close of the market today, Supermax price ditched to Rm5.57. The valuation of a 3.5 PE does indeed make a mockery of a supposedly efficient market.

What exactly is causing such mispricing of, probably, the most profitable listed company (in terms of EPS) in Malaysia? I think all the capable Sifu’s out there will have their explanations. I shall not venture there. Let’s leave it at that.

But why were my forecasts so much closer to the actuals compared to those made by the professional analysts? Luck, perhaps. Or could there be more?

When the price started to retreat in Aug 2020 despite the continuous strengthening of the earnings, I would say it was due to profit-taking. The stock attempted two rallies on Sep 1 and Oct 15. Each time, they failed to break through the previous high. After that, the price continued to decline to Rm3.76. The decline from Oct 21 to Apr 6 was in large part due to the fear of the arrival of vaccines. The investors (Supermax stocks are largely dominated by retail players) were afraid that the vaccines would crater the demands for gloves. This fear was consequentially egged on by the lies and misinformation propagated by the incompetent analysts as well as the big con like JP Morgan.

In my Dec 3 report, SUPERMAX BONANZA: HOW TO TREAD THE MINEFIELD TOWARDS IT, I laid out the facts and rumors at that time. I coined them “A bird in the hand” versus “Two birds in the bush.” The facts laid out then are playing out very accurately now. The covid-19 infection, as we all know now, continues to plague the world. The demand for gloves has shifted. Segments of the industries that never used gloves before are now using them. Glove demand has not cratered by the vaccines as feared.

So, what is holding back the Supermax stock price from rallying? The stock price has rallied from the low of Rm3.76 to the high of Rm6.48 – a whopping 72%. But what is holding it back from rallying even higher? The misinformation that is disseminating by the bears has now switched from vaccines to overcapacity. It is instilling fear and confusion among many investing players. I do not pretend that overcapacity is a non-issue. Every informed player should see incremental capacity coming. (Note: I use “incremental capacity” here instead of “overcapacity.”) Economics 101 teaches that when an industry experiences abnormal profits, competitions will eventually normalize them. Such a cycle afflicts all industries. At this time, the glove and semiconductor industries are experiencing outsized profitability. At other times, it was oil, palm oil, travel, etc. But stock prices will ride the waves of these ups and downs. So, the difference between “incremental capacity” and “overcapacity” is, it takes time for the glove industry to ratchet up to overcapacity. We are far from that.

It is precisely the issue of capacity, I believe, that sets my forecast apart from the pact of professional analysts. I expected the prices of gloves to taper gradually over time. But I also took into consideration that as prices of gloves taper, the production capacity of Supermax would also rise. The capacity increase offsets the effects of price tapering. This balancing act has played out in the Supermax 3Q21 earnings report. Despite the softening of ASP as reported by Supermax, the increased capacity sustains the 3Q21 profit vis-a-vis 2Q21. Had it not been for the Rm75-million contribution to the government’s pandemic fighting efforts and the Meru production shutdown, Supermax 3Q21 would have held out by the increasing capacity despite a lower ASP.

By the end of 2022, Supermax will have expanded its capacity to 48.425 billion, a 122% increase from pre-pandemic. I have not yet worked out any earnings forecast beyond FY2021. But based on the ballpark, I can safely expect that Supermax earnings will hover between Rm3 to 4.5 billion annually despite ASP tapering, at least for the next two to three years.

Stock prices do not often reflect fundamentals. Stock prices can detach from reality longer than investors can remain solvent. The stock market can be very fluid. With a still strong earnings visibility ahead driven by increasing capacity despite tapering ASP, my bet is still on Supermax to have another massive rally when all the stars align.

This is Supermax's detailed report. Read carefully and understand the report.


One of the key points in the QR announcement of Supermax which was broadly publicized and stressed on was the following:

"As more new capacity is available in the market, the global glove prices have begun to decrease. The glove prices have since dropped by between 15% to 25%. Currently, the Spot market prices are lower than the contracted prices."

Unfortunately, as Malaysian companies are not required to disclose such information with their quarterly reports, it is hard to gauge the average selling price (ASP) for the quarter without knowing the utilisation rate. Additionally, the wording is confusing (intentionally or not) and that is why I haven't written yet any more detailed analysis on Supermax's quarterly results.

However, from the report itself we get a few extra pieces of information on the current and future profitability of the company, which are important:

- The company donated RM75 million worth of gloves to the Malaysian government, which was recognized during this quarter;

- The inventories increased from RM363 million to RM623 million, or by RM260 million quarter-on-quarter;

- Cash on hand increased from RM3.7 billion to RM3.99 billion, or by RM290 million quarter-on-quarter;

- In total, the current assets increased by approximately RM830 million, while current liabilities remained largely unchanged.

From public announcements we know that the Meru plants were closed for 3 days. At the time of the announcement, the company guided that the loss in annual production will be less than 1% (see here). However, it appears that subsequent quarantining of workers might have resulted in much lower than expected utilisation rate. The company mentioned in its report that during the quarter it has commissioned the remaining production lines in Block B of Plant #12, and it fully contributed an added capacity of 2.2 billion pieces for the quarter, or a little over 8% extra capacity.

If that is the case, and having in mind the aforementioned extracts from the quarterly report, the ASP should have actually increased slightly. In fact, if you read the report carefully, you will notice the following on page 8:

"Increase in average selling prices (ASPs) each month which started in March, 2020 for both its Manufacturing and Distribution divisions."

And on page 9:

"Continued rise in average selling prices (ASPs) and thus contributing higher earnings from Manufacturing and Distribution."

Don't be fooled. Covid 19 is here to stay and mutations will continue to emerge as advised by Mordena CEO. ASP will definitely rise. Especially when borders open.

Wrong. Its not ASP drop but spot price drop 15% - 25%. Read the report carefully.

ASP for Apr until next year already locked in and contracted.

US CDC has confirmed that the virus can spread through airborne transmission. People more than 6 feet away from others indoors can be infected.


https://www.washingtonpost.com/nation/2021/05/07/coronavirus-covid-live-updates-us/

ASP prices for this year and next (a few quarters) have all been locked in and firm. The drop in ASP is only for new orders mid next year. So PAT will continue to rise if no plant shutdown and lack of shipping containers.

All new comers into glove manufacturing will drop out due unable to compete with the Big 4 + 3 due economics of scale. Supply will drop and ASP will recover.

That is why the Big 4 + 3 have well positioned themselves with additional plant expansion as the foresee ASP stabilizing gradually. So to counter this will be the volume.

ASP prices for this year and next (a few quarters) have all been locked in and firm. The drop in ASP is only for new orders mid next year. So PAT will continue to rise if no plant shutdown and lack of shipping containers.

All new comers into glove manufacturing will drop out due unable to compete with the Big 4 + 3 due economics of scale. Supply will drop and ASP will recover.

That is why the Big 4 + 3 have well positioned themselves with additional plant expansion as the foresee ASP stabilizing gradually. So to counter this will be the volume.

ASP prices for this year and next (a few quarters) have all been locked in and firm. The drop in ASP is only for new orders mid next year. So PAT will continue to rise if no plant shutdown and lack of shipping containers.

All new comers into glove manufacturing will drop out due unable to compete with the Big 4 + 3 due economics of scale. Supply will drop and ASP will recover.

That is why the Big 4 + 3 have well positioned themselves with additional plant expansion as the foresee ASP stabilizing gradually. So to counter this will be the volume.

With very strict movement control, recovery stocks tomorrow will drop. The only counters profitable and will remain so for many many years is healthcare.

Government all around the world are stocking up gloves as demand continues to rise. Variants are emerging. See Singapore. After 2 dose vaccinations in Feb, nurse infected with Indian Variant. Now Singapore new cases increasing.

Now new cases are affecting the younger age. Many admitted in ICU. See Malaysian DG report. Same all over the world. So now the world realises that PPE including glove is required as new norm as Covid 19 is here to stay.

New variants, new booster jabs, more gloves demand.

With very strict movement control, recovery stocks tomorrow will drop. The only counters profitable and will remain so for many many years is healthcare.

Government all around the world are stocking up gloves as demand continues to rise. Variants are emerging. See Singapore. After 2 dose vaccinations in Feb, nurse infected with Indian Variant. Now Singapore new cases increasing.

Now new cases are affecting the younger age. Many admitted in ICU. See Malaysian DG report. Same all over the world. So now the world realises that PPE including glove is required as new norm as Covid 19 is here to stay.

New variants, new booster jabs, more gloves demand.

With very strict movement control, recovery stocks tomorrow will drop. The only counters profitable and will remain so for many many years is healthcare.

Supermax now is tapping the US and Europe market actively and has a huge advantage. TG now banned in the US. So all TG market share will be taken up by Supermax.

No orders cancelled. Government all around the world are stocking up gloves as demand continues to rise. Variants are emerging. See Singapore. After 2 dose vaccinations in Feb, nurse infected with Indian Variant. Now Singapore new cases increasing.

Now new cases are affecting the younger age. Many admitted in ICU. See Malaysian DG report. Same all over the world. So now the world realises that PPE including glove is required as new norm as Covid 19 is here to stay.

New variants, new booster jabs, more gloves demand.

But testing and vaccination are continuing. Also numbers of new cases are increasing. And new variants are emerging that the current vaccine cannot protect. So back to huge demand for gloves.

Don't be fooled. Covid 19 is here to stay and mutations will continue to emerge as advised by Mordena CEO. ASP will definitely rise. Especially when borders open.

Are we going to allow China who has no natural rubber and our climate to take this advantage away from us just because we are not united in this cause?

Look at all the Western, Japanese and Chinese companies. They get great support from their own Government, Institutional and Retail Investors. We should do the same. After all, it will only benefit our own economy, our own Malaysia.

Don't punish and destroy the goose that lays the golden egg.

Malaysians should be proud of the Big 4s. They have donated 400M for securing vaccines which are saving Malaysian lives. Karma will be in their favour. Support them as you would your own family.

Not windfall tax but probably another donation of RM 100M from the big 4. Same like last year.
But now that ASP is lower, maybe lower donation.

Moderna CEO expects more Covid variants to emerge in coming months: ‘This virus is not going away’

For those of you who has the holding power, remember anything can happen. Fundamentals are strong. Demand is there and will continue to increase. The only setback is too many players and supply has also increased. Now comes competitive advantage and edge to secure the business.

The top 4 has economies of scale, track records, solid distribution network and firm customers and contracts. They have the expansion as well to counter lower ASP.

Their NP will remain around 1B for a few quarters.

Also the only way to control Covid 19 cases in India is PPE. Soon gloves will be in huge demand and the world will start supplying gloves to India.

Soon there will be mergers to control the capacity. ASP will rise once again.

All new glove manufacturers should take note that you will not be able to be profitable due low ASP. You will need economics of scale like the Big 4 + 3 to be profitable. So better to merge with them to survive.

For those of you who has the holding power, remember anything can happen. Fundamentals are strong. Demand is there and will continue to increase. The only setback is too many players and supply has also increased. Now comes competitive advantage and edge to secure the business.

The top 4 has economies of scale, track records, solid distribution network and firm customers and contracts. They have the expansion as well to counter lower ASP.

Their NP will remain around 1B for a few quarters.

Also the only way to control Covid 19 cases in India is PPE. Soon gloves will be in huge demand and the world will start supplying gloves to India.

Soon there will be mergers to control the capacity. ASP will rise once again.

All new glove manufacturers should take note that you will not be able to be profitable due low ASP. You will need economics of scale like the Big 4 + 3 to be profitable. So better to merge with them to survive.

Panic sell. IBs will collect.

Now that the Government is also getting involved in Glove manufacturing, more and more incentives and reliefs will be given. Increase in PAT in the near future.

Although spot prices have dropped, the volume of sales have increased to counter the drop due increase in demand. That's why PAT is still maintaining at 1B. Infact if not for the shut down of the Meru plant and 400M in inventory due shipping container shortage, PAT would be much higher above market expectation.

So all in all, good performance and excellent PAT compared to any other company in Malaysia or anywhere in the world.

AS for future performance, look at its potential. Top Glove already banned from US. China is not in good books with the US. So Supermax is the only major glove manufacturer to tap that 25 Billion annual glove supply in the US. Especially when they have manufacturing plant in the US itself.

Covid 19 is here to stay. World numbers in new vases are increasing. Glove demand will continue to surge. New players will find it difficult to compete with the big 4 or 5.

So future PAT will continue to remain. Also Supermax has ventured heavily into masks as well.

Although spot prices have dropped, the volume of sales have increased to counter the drop due increase in demand. That's why PAT is still maintaining at 1B. Infact if not for the shut down of the Meru plant and 400M in inventory due shipping container shortage, PAT would be much higher above market expectation.

So all in all, good performance and excellent PAT compared to any other company in Malaysia or anywhere in the world.

AS for future performance, look at its potential. Top Glove already banned from US. China is not in good books with the US. So Supermax is the only major glove manufacturer to tap that 25 Billion annual glove supply in the US. Especially when they have manufacturing plant in the US itself.

Covid 19 is here to stay. World numbers in new vases are increasing. Glove demand will continue to surge. New players will find it difficult to compete with the big 4 or 5.

So future PAT will continue to remain. Also Supermax has ventured heavily into masks as well.

Although spot prices have dropped, the volume of sales have increased to counter the drop due increase in demand. That's why PAT is still maintaining at 1B. Infact if not for the shut down of the Meru plant and 400M in inventory due shipping container shortage, PAT would be much higher above market expectation.

So all in all, good performance and excellent PAT compared to any other company in Malaysia or anywhere in the world.

AS for future performance, look at its potential. Top Glove already banned from US. China is not in good books with the US. So Supermax is the only major glove manufacturer to tap that 25 Billion annual glove supply in the US. Especially when they have manufacturing plant in the US itself.

Covid 19 is here to stay. World numbers in new vases are increasing. Glove demand will continue to surge. New players will find it difficult to compete with the big 4 or 5.

So future PAT will continue to remain. Also Supermax has ventured heavily into masks as well.

https://www.wsj.com/articles/germany-becomes-latest-european-country-to-suspend-use-of-astrazenecas-covid-19-vaccine-11615820414

This is proof that vaccination will be a yearly affair. Every year Billions will be vaccinated. Glove demand will continue to rise exponentially every year.

It could also be a trap.

None of all these is going to matter. Without any good news from Supermax and the support from its owner and management, the share price will continue to drop. Shameful.

Nothing to do with demand and supply. Just lost confidence in Supermax.

Naysayers are correct. Better for the share to plunge. Next below RM 3. Then RM 2. Remove from KLSE Index. Shameful.

One thing I will agree with all the naysayers, pointless having 1B PAT but crapy dividend. Instead owner buys Luxury Condo in USA. First clean up the sxxt in our own house before commenting on naysayers. For now we deserve what they have to say. Unlike in TG.

Well since this is a Billion Ringgit question, the best to answer these will be the companies producing Billion Ringgit PAT which are the Top 4 Glove companies.

All of them continue to state very clearly that the demand for gloves will continue even post Covid 19. This is demonstrated through their order books and the fact that the variants are continuing to spread. WHO has already warned the World that Covid 19 is here to stay.

Glove demand is further propelled by Vaccinations using gloves for fear of infections, contact with persons that may be carrying variants, etc. Most countries are using gloves for vaccination especially USA, Brazil, Indonesia, India, Australia, etc, etc.

Vaccination is going to be a yearly affair.