Management shall do something already in view of this.
In fact, supermax had already sub glove manufacturing to Blue sail china, Intco, to produce nitrile gloves for them under aurelia brand. Blue sail china. export data. 73996 AURELIA BOLD NITRILE PF 5MIL FULL TEXTU RE BLACK S 73997 AURELIA BOLD NITRILE PF 5MIL FULL TEXTURE BLACK M
Make Gloves Great Again: Look Forward Many are asking - why glove stocks are running after reporting huge losses. Simple, because stock market looks forward, not backwards, not even at the present. Usually, most take a 12-month view. Remember Mar-Apr 2020? Many stocks tumbled 50-70% as funds panicked and rushed to sell out holdings, especially tech stocks. On the other hand, retailers believed that although earnings outlook for stocks might be very bad for the next few quarters, but share price has fallen too much. They believed if they invest and hold their nose for 12 months, the outlook will eventually improve, and they could potentially make more than 100%. So they took the bold decision to start buying the stocks way before the stocks turn profitable. Sounds familiar? Let's examine if this is a déjà vu for gloves below:
ASP finally started rising - the one signal the whole market had been waiting for a long time, and now it's here. Harta raised ASP this Feb. Topg has followed suit, and will be raising again in April. Even Chinese players like Intco also said they will start raising in 2Q-3Q this year.
Customers' destocking will end in a few months' time (according to glovemakers), and inventory will go back to normalised level - so no more excess inventory. Once that happens, customers will have to start restocking again. One of the signs was, glove tenders from government and NGOs have stopped for 1.5 years, and recently, Topg saw the tenders coming back from UK, and rising enquiries from other countries. So, if we look forward, glovemakers' utilisation rate/volume could improve.
No more oversupply. All small glovemakers like Mah Sing, Salcon and many Chinese players have exited the market. Semperit also sold its glove business. Not to mention major players like Topg, Intco and Harta have all aborted expansion plans, and in fact, halted a big chunk of their existing capacities.
Costs will likely peak in 1H 2023, and could improve in 2H 2023, because natural gas prices (needed for production) will likely fall in coming months as oil prices have fallen almost 50% from last year's peak. Besides, the worst impact from electricity tariff hike will be effected in 1H 2023. Anwar said "we will only increase tariff for big companies that earn billions of profits". Are glovemakers making billions of profits now? Obviously not. So I believe electricity rates will not rise further for glovemakers in 2H 2023. So, if we look forward, costs could improve.
So how now brown cow? Yes, admittedly things are still not rosy yet right now, but if ASP climbs, volume picks up and cost improves later, doesn't that indicate the worst losses could be over by Mar or Jun 2023 quarter, and things could improve thereafter? So if we look forward and take a 12-month view, can we make more than 100% from gloves this time? I'm not sure, but pre-pandemic, Harta for instance was trading at RM5-7, now it's below RM2. Btw, TOPG, the leader of glove, has just seen MA200 breakout the first time after 2 years.
F China supply. Some may argue, China may spoil market, like steel last time. Consider this difference: more than 50% of steel supply comes from China, whereas only around 20% of glove supply comes from China while Malaysia has 60% market share. So who's the price determinant over the long term? Don't forget, some of their supplies need to go to their own domestic consumption. More importantly, consider ESG - Europe wants to phase out CPO due to ESG issues, and US banned Topg previously due to foreign worker treatment (but lifted it after Topg improved their treatment and resolved it). So what makes u think that these countries would wanna buy from China, which uses environment-killing coal? Not to mention the US-China trade tension now. Why would they prefer Chinese gloves, if glove purchases constitute such a tiny % of hospitals' expenditure? FYI, Europe and US buy 55-60% of gloves produced globally.
To both groups who have bought and have not bought - good luck.
Last time when glove companies was still making billion profit, the share price drop like shit. These investors foresee the profit and revenue dropped in next 2 years due to oversupply. Now that 2 years had passed, the same investors foresee that the revenue and profit will back in next 2 years so the share price goes up.
RM1? You will not see it anymore until the next QR. Even with the upcoming QR issued, the chance to hit RM1 is still low. Be wary of this typical trap.
Drop 3.5% only small matter lah , why not let it drop 30% one day , all the glove tards who still dreaming in 2020 glove frenzy are very rich n can tahan even drop 80 % more !
Wait n see how big losses in US factory then u will know the real value of glove stock , now even US local government purchase healthcare products from China e-com TEMU , amazon also surrender later !
One man's meat is another man's poison. Different people may have different view. Just support if you find it undervalued. In my honest opinion, more than RM1 is overvalued. If so good, why not short squeeze? Without any support, it is just a matter of time to bounce back to it's origin.
Be it fundamental or technical, none will be favorable to this counter. Even six months down the road too. Anything you could think of, bankers had long thought of it. For those who stuck high above, you got to find ways out.
U never learnt lesson in glove stocks still stubborn when the story end , the persons who still buy call in glove stocks are those ignored JPM 1st warning in 2021 n stuck above rm 4 , pls lah dont bring other people to holland with you since u already suffered huge losses cant unlock !
Supermax Corporation Bhd is urging its former migrant employees to apply for reimbursement of any fees paid to obtain employment at the company, to complete the transformation of its labour policies. It continues to conduct an outreach campaign in its effort to follow up on earlier efforts implemented in Nepal and Bangladesh, asking that former workers who paid recruitment fees to obtain employment be reimbursed. (The Edge)
Whether cbp lifted he wro or not , Supermax US factory is going opening in 3rd quarter and 100% US made. The Supermax facility in Texas will cater to at least 10-15% of annual medical nitrile glove in US in next 2 years.
Whether one believe it or not, Supermax's Texas factory in the near future (estimated 3years) will not be brightful. Perhaps you can see it from the upcoming QR.
Post a Comment
People who like this
New Topic
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
myinvestor
1,219 posts
Posted by myinvestor > 2023-03-03 09:04 | Report Abuse
Posted by Jason85 > 18 hours ago | Report Abuse
Management shall do something already in view of this.
In fact, supermax had already sub glove manufacturing to Blue sail china, Intco, to produce nitrile gloves for them under aurelia brand.
Blue sail china. export data.
73996 AURELIA BOLD NITRILE PF 5MIL FULL TEXTU RE BLACK S 73997 AURELIA BOLD NITRILE PF 5MIL FULL TEXTURE BLACK M