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Malaysia Best Performing Glove Stock : Supermax Corporation Stock Target Price At RM 9.80 – 2,552% Profit Growth Rate

With a longer order book visibility and factoring in higher ASPs (current assumption of a 10% monthly increase in 1HFY21 from only 1QFY21 previously), the research house has raised its FY21-22F EPS for the stock by 33.3-38.7%. It has also raised the target price for the stock to RM9.80 (28x CY21 P/E).

In a recent note last month dated 2 June 2020, research house CGS-CIMB Research has highlighted that Supermax (SUCB) had indicated that its order lead time has lengthened to Jun 2021 (end-FY6/21), which is 12 months (vs. Its previous assumption of 10 months).

This is on the back of favourable supply-demand dynamics in the glove sector, owing to Covid-19. The research house is also confident that SUCB is confident of raising its ASPs by 10% each month from Jun till Dec 2020, vs. its previous expectation of a 10% monthly increase from Jun to Sep 2020.

In fact, it was stated that in order to ensure no cancellation of orders, SUCB is requesting that its customers pay deposits (30-50%) in advance to lock in their orders. This is particularly for orders from non-recurring customers and/or spot buyers.

CGS-CIMB estimates that up to 15-20% of SUCB’s capacity mainly caters to spot (ad-hoc) orders (mainly from government and non-government organisations), which typically have higher selling prices (premium of 30-70%) vs. recurring orders, resulting in higher margins for SUCB.

Meanwhile, the research house also wrote that since the Covid-19 outbreak (Mar 20), SUCB has been selling more gloves under its original brand manufacturing (OBM) at 95% of its total sales volume vs. 70% pre-Covid-19.

This is via its own distribution centres (7 glove distribution centres globally – 55%) as well as via third-party distributors (40%). In our view, this manufacturing-cum-distribution model (focusing on selling OBM gloves) allows SUCB to garner higher margins and better pricing power as it is able to sell directly to end-customers.

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For the upcoming 4QFY6/20 results, the research house expects SUCB to record sequentially stronger earnings of RM130m-135m. It also believes that the company’s sequential results will remain strong up to 2QFY6/21.

With a longer order book visibility and factoring in higher ASPs (current assumption of a 10% monthly increase in 1HFY21 from only 1QFY21 previously), the research house has raised its FY21-22F EPS for the stock by 33.3-38.7%. It has also raised the target price for the stock to RM9.80 (28x CY21 P/E).

CGS-CIMB Research said it continued to like SUCB for its attractive valuations (35.1% discount to the Malaysian glove sector average CY21F P/E of 35.1x) and OBM business model, which allows it to garner better margins vs. its peers given the current strong surge in glove demand.

Source : Pe Group Holding

Which is the best performing Glove Stock?

Koon Yew Yin 19 Sept 2020

The one-year price charts show the following:

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1 Supermax went up from 80sen to close at Rm 7.60, an increase of 950%.

2 Top Glove went up from Rm 1.80 to close at Rm 7.98, an increase of 433%.

3 Kossan went up from Rm 4.50 to close at Rm 12.08, an increase of 268%.

4 Hartalega went up from Rm 5.30 to close Rm 14.16, an increase of 267%.

The reason for Supermax to perform very much better than Top Glove and other glove stocks is that it has the best profit growth rate as show on the table below.

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In Supermax’s last quarter ending June, its quarter on quarter increase was 462% and year on year was 2,552%.

Based on such good profit growth rate its next quarter ending September should be phenomenal.

The one-year price charts show the following:

1 Supermax went up from 80sen to close at Rm 7.60, an increase of 950%.

2 Top Glove went up from Rm 1.80 to close at Rm 7.98, an increase of 433%.

3 Kossan went up from Rm 4.50 to close at Rm 12.08, an increase of 268%.

4 Hartalega went up from Rm 5.30 to close Rm 14.16, an increase of 267%.

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The reason for Supermax to perform very much better than Top Glove and other glove stocks is that it has the best profit growth rate as show on the table below. In Supermax’s last quarter ending June, its quarter on quarter increase was 462% and year on year was 2,552%. Based on such good profit growth rate its next quarter ending September should be phenomenal.

Unfortunately, Supermax is being over shadowed by Top Glove. All the newspapers, news media and Investment Banks are promoting Top Glove frequently, especially the company spending more than Rm 100 million on share buyback.

Many scientists predicted that the Covid 19 pandemic will not be under control for at least another 1 or more years. As a result, the demand for medical gloves will continue to exceeds supply and all the glove makers can easily increase their selling prices.

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Source : Koon Yew Yin

Big Funds Are Buying Glove Stocks – SUPERMX, TOPGLOV

Big funds are buying SUPERMX and TOPGLOV at near market closing today in massive volumes. We can see these transaction in today Stock Tracker where the single order came in 6 digits.

Glove companies are expected to do well in the next few quarters. There are not many company in the market can offered better revenues and profits growth in the near future than glove industry.

Many big funds have missed the boat into buying glove stock as most of them has underestimated the performance of glove company for the past 2 quarters. The actual performance for the last 2 quarters have beaten their most optimistic forecast.

It is not surpirsing big funds will now restructure thier portfolio to increase the holding of glove company stock. They will accumulate the glove stocks when the retail investors sell it at below the intrinsic value.

Story : Malaysia Top Glove Company & Founder Lim Wee Chai – USD 4.6 Billion Net Worth & Share Price Could Reach RM77.60

Story : Malaysia Supermax Corp Company & Founder Stanley Thai Kim Sim – USD 1.1 Billion Net Worth & Share Price Could Reach RM24.19

Story : Malaysia Hartalega Company & Founder Kuan Kam Hon – USD 5.2 Billion Net Worth & Share Price Could Reach RM24.66

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