invest malaysia, the economic123 of supply and demand is not difficult to understand. For example, when the oil price is high , the US shale gas operators started their operations and flood the markets . When there is over supply , oil price come down to below US40. Shale gas operators closed shops because their cost is above 40 which is much higher than.Saudi and Russia. When the supply is reduced, oil prices go up again.

Invest malaysia , it is unlikely the trade war between China and US will end soon. Biden had clearly said that during his 4 year term he will not allow China to overtake US economically . He will continue to impose tax on gloves from.China. The cost of gloves is higher due to higher prices of natural gas which constitutes 15 % of total cost. When ASP Come down to US 37 per k, the China glove players cannot compete by selling lower than their cost due to the above factors mentioned.

Invest malaysia , pls read rhb report in details. The top 4 cost is below US 20 since they have economy of scales which supplied 66 % or two thirds of the world total requirements. The cost new players and glove makers in.developed countries are about 40 US . When.ASP tumbles to US 37 , these new players will close.shops. ASP will.stabilize and many supply demand will be in.equilibrium.

ASP dropping and capacity will expand is a known facts . The most important is to know what is the stabilised post pandemic effect of earnings with these two changes . Quoting from the two Analysts from Nomura and RHB .

From Nomura :

- In the long term , management sees intense competitive pressure from new players which could bring EBITDA and net profit margins down to
40-50 % and 30-40 % respectively which is still significantly above the profitability of pre COVID 19 level .

- Management reiterated its capacity growth target of reaching 48 bn pa by end of 2022 ( from 26 bn pcs currently )

From RHB :

-We expect US 40.00 to be the long term ASP for Nitrile gloves
-This is consistent with the reduction in earnings estimates and long term blended ASP to US 37.00 .For the company, we maintain our assumption on a long term volume mix of 75% and 25 % nitrile and non nitrile gloves .

Based on above information from the two analysts, we can estimate the long term earnings and eps of supermx at the stabilised state post pandemic .THe post pandemic period will most likely be 2024 and its capacity would be likely 60 billions or more per year .

Earning = 37 x 60 x 0.85 x 4.12 x 0.3 = 2332 millions or 2.332 b

EPS = 2332/ 2720 = 85.7 sen

Tgt price = 85.7 x 10 = RM 8.57 ( assuming PE of 10 although average PE for supermx during pre pandemic is between 15 to 18 )

Summary :
With the expected ASP drop (-60 %) and offset by capacity expansion (2.5x) , the net profit will drop to about half of the peak due to lower margin from the current 55 % to 30 % . However , the eps is still at 85 s . Supermx is no more the pre pandemic supermx but with 2.5 x capacity and huge nett cash and dividend yield expected at 7 % at current price . The PE of 10 gives ample margin of safety compared with pre pandemic periods .

Average PE for top 4 at Pre pandemic periods.

Hartalega 40 - 50
Topglove 25 - 30
Kossan 20 - 25
Supermx 15 - 18

All analysts still gives " buy " calls with average tgt price of about RM 7.30 after giving discount here and there .
My purpose of this sharing is to give genuine investors a quantitative feels of what are the effects on earnings after the ASP drop to stabilised state and capacity expansion offset after pandemic rather than listen to those fear mongers who do not provide facts and figu but keep drumming up fears day and night . The formula is there ,you can change the assumptions if you do not agree with the Analysts numbers .

agj , thks for your input . I like your position that if you dont own supermx , you dont come.to the supermx forum.and keep talking bad about the stock. It is natural for.supermx shareholders to share about whatever happen to supermx in supermx forum. What I dont understand is why there are a.bunch.of non.supermx.shareholders who kept coming to supermx forum and seems happy to talk bad and.degrade the company and use ABUSIVE words against supermx shareholders who participated in.supermx forum. Only pyscho peoples will do such things. I tried not to believe that these peoples are paid 25 or 30 sen per message because these money are peanuts and a wrong livelihoods. When so many peoples are doing this, I prefer to believe they are paid rather than they are pyscho.

invest malaysia , mistake in falling love with stocks ? I had stock investment experience for 23 years since 1998. I never fall in love with any stock and had never hold any stock for more than 5 years. I.am happy with my fundamental approach in value investing. My record is 18 % CAGR for the last 23 years. My best record return was supermx which gave me 5x return after keeping it 1.5 years from 2008 till mid 2010 .I have seen the big downturns in 2001, 2008 , 2011, and last year big dip in March. I believe in supermx values when it came.down from rm 12 to less than 4 . You are entitled to your opinion. There is no absolute right or wrong in.stock investment. Quoting Charlie Munger, it is not how many rights or wrongs you made , at the end of the days, it is how much you.make from your investments.

Brian3381, it was you who forwarded the nanyang article that said supermx ""may be "" ( 有可能) taken out from syariah compliant list because of too much cash in the bank .This triggered me to study in.more detail on how the company can.solve the problem by paying out more dividend . I thanked you for highliting this .Of course the easiest way to solve the problem is to pay out cash as dividend . Tan Sri will.also gain because he and his wife.own 38.6 % of the company. They can use this few hundred millions dividend to buy back the shares or buy more condos using their own money.

invest malaysia , I really like the syariah ruling which can provide guidance and enforcement on companies of not keeping too much earning as cash . The company should keep one third maximum only , the rest must invest on.capacity expansion or distribute it back to shareholders as dividend. It save the minority share holders a lot of efforts in.asking the management.why.so stingy , why.keep so much cash etc etc. Most investers will compare dividend yield with bank rates. Since supermx has 4b caah, I am very very excited to see announcement of this super fat cash piles be distributed to.shareholders .

This morning I read through the article from Nanyang on Syariah compliant with respect to Nett Cash/ Total Asset must be less than 33 %. There are 9 companies on the list which include supermx , MPI and Inari . I did a quick check and compare the 3 companies nett cash / total asset ratios. They are all.above 37 %. The other things in common are their increasing and record earnings in the last 3 to 4 qtrs. MPI has 968 millions cash , Inari has 879 millions while super max has the highest 3986 millions respectively. Will these 3 super.cash rich companies be taken out from the Syariah compliant list on May 28th due to too much cash ? Supermx was singled out in.the heading because it has the highest cash. I think some big funds especially tabung haji, KWAP and others may be targetting supermx after this was highlited. Both Inari and MPI PE ratios are 36 and 38 respectively while.supermx is only 3.97. Could this be a reminder to these companies to pay out more dividends to meet compliant so that these institutions can invest . Just wait until 28th and see what happen. As I.mention yesterday, supermx need to.pay minimum 17 sen dividend per qtr in.order to consistently meet the 33 % requirements.

brian3381, Today I read the full article on.klse screener about the syariah compliance. They are 9 companies which had cash more than the 33 % requirements. Inari and MPI are also in the list . The article you forwarded to us is only one third of the article. Are you saying Inari and mpi will also be taken out from the list?

Invest malaysia , good morning. Sunday still so hard working .
The trade war between US and China benefitted Malaysia. Gloves from China are subjected to 15 to 25 % tax . Furthermore , their natural gas is imported and much more expensive than Malaysia. Natural gas constitute 15 % of the total cost of gloves. When.ASP comes down to a saturation levels in 2 to 3 years period, the Chinese glove makers will not be able to compete with Malaysian top 4 glove makers which have the economy of scales.

farisfx54. thank you.

jeff3880, thank you for your kind words.

papasmurf，thks for your inspirational kind words. I will.continue to share the facts so that genuine investors can understand the value of supermx and compare with other stocks fundamentals and decide for themselves.

brian 3381 , the.article you forwarded said 有可能因现金比率不达标，而被。。。It.say ""may be ""only . Why you say finalised. already? The article did not say 已经被踢出。。。。You understand.Chinese?

I will attend the next Supermx AGM and bring out the Syariah compliance and dividend issues. Hopefully , Brian as.shareholder and active i3 forum participant can also attend to pressure the management.and ensure compliance by paying more dividend. After all , rm 467 million.is still.less than 50 % of earning when harta and topglove has 60 % and 50 % dividend policy respectively. Every year, supermx can also announce one fat special dividend in case the cash grow too much and too fast.
Hahaha, the world is really funny. We often hear investors complain.about.companies has cash flow problem . Now.,Supermx has too.much cash, peoples also complain. Dunia terbalik.

Supermx actually complied with syariah ruling.with 32.9 % nett cash over total asset after the 354 millions payout as dividend. Too much.cash is an easier problem to solve than no cash. Moving forward , Supermx can only keep maximum 33 % of earning as cash in bank. The balance must be spent in.capacity expansion plus dividend payout every qtr. The shareholder is the biggest beneficiary in terms of cash piles growth although a slower rate , good and fat dividend yield plus a bigger company.with greater capacity funded by internal earnings rather than borrowings. Such earning distributions into 3 parts are more balanced . Growing cash piles , bigger capacity and bigger dividends. Hard to find such company nowadays. Furthermore , the PE is so low at below 4 .

For the next 7 qtrs till end of 2022 , supermx has committed to spend 1.39 billions by adding 22 .5 billions pcs per year . On average , it will.spend 1.39 b / 7 or 200 millions per qtr . Take an average of 1 b earning per qtr for yhe next 7 qtrs, the company can only keep 33 % or 333 millions of cash earned per qtr ,the balance 667 millions has to be spent on either capacity expansions or pay out as dividend . With 200 millions committed per.qtr , the balance cash is 1000 - 200 - 333 = 467 millions . If there is no spending on the US or UK plants , then this 467 millions cash or 17 sen per share must be distributed out as dividend per qtr in order to comply with the shariah ruling.

It is interesting to hear that there is such a ruling in syariah compliance that nett cash ( 淨现金) over total asset ( 總资产) must be less than 33 %. I think.it is a good ruling. It prevent a company from keeping too much cash to earn interest in a company . By putting a cap of 33 % , it force the company to pay out dividend and spend it on other capacity expansion and investment activities. I did a rough calculation from numbers obtained from last qtr . The net cash is 2666 millions after deducting short and long term.borrowing plus tax deferment and provision. The total assets is 7052 millions. If you divide , you get 37.8 %. Since Supermax had.announced the dividend of 13 sen, it need to pay out 354 million. This will.make the nett cash reduced to 2312 million. The nett cash over total asset will be reduced to 32.9 %, just meeting the compliance of 33 %. The good things coming out from this ruling ( thanks brian3381 from extracting the article) is that every qtr Supermx must pay out s certain % of earning as dividend in order to comply with the syariah ruling.

Invest malaysia, quote by Benjamin Graham " In the short run , the market is a voting machine, in the long run , the market is a weighing machine.""

Fair Talk. You are right..SBB.is debatable . I think a certain.% of the cash pile is best distributed to shareholders as dividend or special dividend .The shareholders themselves can decide whether to buy back the shares. For example, Topglove CEO has stopped.using.the company.fund to do sbb but instead use his own money to buy up topglove shares.Every qtr., LWC recd a.few hundred millions dividend and is using it to buy back the shares. This will increase the % of his shareholding. SBB will not increase his shareholding %.

Another MM tried to bluf and gave fake information on ASP drop from last Oct till March this year .

Let me quote Nomura report dated 6th May

" Blended ASP per 1,000 pcs for Jan / Feb / Mar was USD 84.6 /87.65 /89.2. " It means the ASP was still rising from Jan US 84.6 to 89.2 to March rather than decreasing as mentioned by MM .

Another sentence .

" Supermx has orders booked until the end of this year with advance payment of ( 30 % to 50 % of order value in some cases ) collected .Its contractual orders in hand will help avoid any drastic fall in ASPs for the rest of the year .
April-June quarter blended ASP is likely to be in USD 80 to 110 range .

What it means is that the capacity has been booked until end of the year with ASP " locked in " in contractual agreement .

Another MM tried to bluf and gave fake information on ASP drop from last Oct till March this year .

Let me quote Nomura report dated 6th May

" Blended ASP per 1,000 pcs for Jan / Feb / Mar was USD 84.6 /87.65 /89.2. " It means the ASP was still rising from Jan US 84.6 to 89.2 to March rather than decreasing as mentioned by MM .

Another sentence .

" Supermx has orders booked until the end of this year with advance payment of ( 30 % to 50 % of order value in some cases ) collected .Its contractual orders in hand will help avoid any drastic fall in ASPs for the rest of the year .
April-June quarter blended ASP is likely to be in USD 80 to 110 range .

What it means is that the capacity has been booked until end of the year with ASP " locked in " in contractual agreement .

PE = Price /Earning

If Price go up by 6.5 x and Earning go up 22 x , PE will come down . This is primary maths .

When Earning go up 42 X by end of this year , PE will go down further .

What is 6.5 x price increase when earning in 2021 will increase by 42 x which is 6.5 times of 6.5 x . That means the price today is still effectively cheaper than the pre pandemic price by 6.5 x . Who is he trying to scare ??? He thinks we do not know primary maths ???

In Property investment , the most important criteria is Location , location , location .
In Stock Investment , the most important criteria is earning growth, earning growth , earning growth .

Hartalega , Kossan , Topglove and Supermx had seen their price growth from 150 x to 250 x since their IPO. What is 6.5 x man ???
Inari, Penta , Vitrox, Greatec had also seen their price increases from 10 x to 100 x over 1.5 to 15 years .

The price increases must be followed by corresponding EARNINGS increase , otherwise , its PE will reach a few hundreds or even thousand today.

Look at all the 4 glove makers . Are their PE high despite the 150 x to 250 x price increases ? The answer is a clear NO . That means their earnings had also rises correspondingly .

You can see many in i3 forum who quoted if you had bought two lots of Topglove in 2001 , today it is worth more than a million . Similar story for Vitrox , Inari ,Penta etc .

I am talking about medium and long term investment not hourly or daily tradings which does not depend on earning growths .

There is no doubt that supermx share price had gone up 6.5 X. This is due to excellent earnings from its dual income streams from both Supermx own OBM Distribution plus the manufacturing earnings. Supermx had modified its.business models by cutting off middlemen like agents and dealers. It had also decrease its OEM.from 30 % to 2 % and increased its OBM+Own Distribution business to 58 %.
The total earnings in.CY 2019 was 105 millions . In CY 2020 , its total earnings shot up 22x to 2.32 billions. This is a fact. No sugarcoating.

For CY 2021, supermx is expected to make 4.5 billion which is 42 x of 2019 total earnings.
When you have such high multiple earnings from 22x to 42x but with only 6 .5 x price increases compared with 2019 , the end.result is an extremely low PE of less than 4 today.

The PE of 3.98 based on today price of 4.76 and on last 4 qtr rolling EPS is also factual .
No sugarcoating 。
If there had been.no such earning increases, the PE would have reached 100 . Someone bad hearted tried to misled by intentionally hide the 22 x to 42 x earnings increases and only talk about the 6.5 x price increase. The ill intention is obvious.

Last qtr , the top 4 glove.makers paid about 2 billions taxes to the government. This is about 20 x of what the 4 contributed before pandemic.
When the top 4 had an.average 20 x earnings yoy, the government also has a corresponding 20 x in.tax collections. The government can expect to collect another 6 billions of corporate taxes for the balance of the years. Tax Contributions from the top 4 glove makers are enormous.

invest malaysia , Harta PE is still the highest at 11 among the 4 . I sold harta yesterday at 9.92 and will convert to supermx today to get the dividend and potentially Treasury shares as bonus.

invest malaysia , I just flew airasia a few days ago and give my support . I also give further support by paying extra for the front hot seats and bought 2 bottles of sanitizers. The flights were empty. I hope and wish AA will.survive this pandemic. On stock investment , I will buy a company at reasonable price that makes 13 million a day , with big cash piles ,growing and pay good dividend than buying a " cheap " price for a company which lose 10 m a day and with.negative NTA . AA big data BIG PAY may have some value with its 700 to 800 millions customers base.

2527005, the total liabilities is already more than assets. AA still worth RM .0.89 per share ? What is your valuation method? PE method or DCI or sum of parts ? AA is practically a bankrupt company . It needs new funds to go in.
Supermx earning yoy are more than 30 x compared with prepandemic.

Growimg Rich ,Read properly. I am talking about Australia not America.It was Australia who tried to act like big brother and provoke China . Why should China start a war with US ? China had always advocate peaceful development. It is US who do not want China to overtake them economically , technologically and militarily. You seem to support US aggressive stance to provoke China into having a war with US. Why ?

WealthSowonderful, did I stand up against Malaysian official stand on SCS ? Do you understand English? Look at the topics of this article. We are talking about Australia drumming up war against China. By the way , Did Malaysia stand up against China officially on SCS ? Our Foreign Minister Hishamuddin when.invited by China, he officially said China was his Ta Ke meaning big brother. Why dont you asked Hishamuddin to move to China for being so nice to China officially ? You had better learned to understand English better .

Fair talk already mentioned AA or Air Asia . Last qtr ( FY 2020 Q4 ) lost 2.445 billions.

invest malaysia , you are right . Statement 1 is.cash piles or cash in bank . Statement 2 is average profit per day . Generally , we dont do closing every day. the average 13 millions profit is conceptial and derived from estimated earning of 1.2 b for this qtr . Divide by 91 days, you can get a round up number of 13 million per day. The purpose is to make investors realise and have a better feel how profitable this glove business is. Many businesses in KLSE cant even.make 13 m in one year .Now we have a glove business which make 13 m.in just one day including saturday , sunday and public holidays.

As I said earlier, the spike in palm oil price is not sustainable. The price has grown from the low of rm 1800 from mid 2019 to 5000, an almost 2.8x increase .

Goldenharvest1, It is Australia which went to SCS to show its muscles and try to provoke China by drumming up war with China . China did not provoke Australia by sending its Aircraft carriers or destroyers in Australian waters. China never intend to have war with Australia in the first place. Why should China fire the first shot ? China just taught the lapdog a lesson by not buying lobsters, red wines, coal, beefs, barleys and other commodities which can be easily replaced. What can Australia do now after losing a big customer ? Start a war with China , its biggest customer? USA will slowly eat Australian lunch when China replace all the barleys, beefs , wines etc from US. Just watch.

Fair Talk, you are right. In the last 20 years , Supermx make a total of about 1.5 b only before 2020 . There is no way Supermx can set up a plant costing 2.2 b in.US. Neither can Supermx double its capacity which cost 1.39 billions in 2022 . Both expansions will increase the values of supermx in the long run.

If next QR make 1.2 b , total 4 qtr eps will be 1.50. With today low PE of 4.2 , price will be 6.3 . If PE is 5 , price will be 7.5

invest malaysia , I prefer you report everyday More excuting to see cash pile grow bit by bit . " Everyday " hei tic hei tic. See bit by bit more exciting.mah.

invest malaysia. good morning. you forgot to add another 13million to yesterday number leh. Today us 4.544 b + 13 m = 4.557 b already. Every day earn 13 million .

ProsperousRealm, Lets wait and see if Australia dare to fire the first shot with your American taiko behind them. I predicted Morrison will finally kowtow to China to resume talk. Many Australians high level officials offered the olive branch to talk but China just refused to see anyone of them .

Fair Talk, This info is from Nomura analyst. Read last two Ben Tan articles . The full Nomura article was forwarded to me by Ben. I read every line many times. There was also a Sin Chew article forwarded by myinvestor in i3 forum . This Sin Chew article quoted TA analyst report . You can check.and read but in Chinese. It state the same thing.

With the next 3 qtrs capacity fully booked with ASP of US 80 to 110 lock in , Supermx is signing new contractual agreements with ASP of US 70 to 80 . The shipments of these new ASP will be delivered in 2022.
With last qtr cash pile of 4 billion plus an average of more than 10 millions profit every day rain or shine., week day or weekend for the next 6 to 7 qtrs , many institution buyers are not dumb to see the value of supermx.

The sour grape wolves disperse already ?

Fair Talk , yes. With the cancellation of SGX listing, it is very likely supermx will.distribute the Treasury shares as bonus. The.Treasury.shares is worth 18 sen based on current price.

Fair Talk, you are right .

Supermx next qtr ( 4Q FY 21 ) QR is expected to make 1.25 billions . With this earning , Supermx total eps will hit RM 1.50 . With 40 % dividend payout , it is 60 sen . With current share price of 4.70 , its dividend yield is 12.8 % . I will also receive my Harta dividend of 17.7 sen on the 9th of June. Topglove will announce its next QR around 11th June . Can expect another 25 sen dividend . The dividend yield of these 3 stocks are between 8 to 12 % which is better than bank interest rates .

The grapes are growing bigger and juicier . On the 8th of June , we will taste the juicy grapes while a bunch of wolves are staring and salivating. They keep saying "" sour grapes, sour grapes.....""because they can only stare and console themselves by saying the grapes are not worth eating . Funny , sour but they keep coming everyday and mumbling sour grapes, sour grapes ....

patrico8, agree with you. Both topglove and harta has very clear dividend policy of 50 and 60 % respectively. If supermx also announce its dividend policy , its price will appreciate to higher PE even though it is 40 %.

investmalaysia, today cash pile is already 4.653 b .Everyday .13.33 millions will be added to the cash pile. Tomorrow morning just add another 13.33 millions into this number. By the end of the year, a total of another 3.5 b will be added to the 4 b. This 3.5 b is enough to buy comfort , rubberex and careplus .

investmalaysia, today cash pile is already 4.544 b .Everyday 11.11 millions will be added to the cash pile. Tomorrow morning just add another 11.11 millions into this number. By the end of the year, a total of another 3.5 b will be added to the 4 b. This 3.5 b is enough to buy comfort , rubberex and careplus .