How did you rate Supermax and its 100 million investment into the contact lens business then?

Well... I have 2 problems with it la.

1. Biggest one is ... all we ever hear is the contact lens business is expanding here and there... but till this very day, I've yet to see any P&L for that 100 million spent.

2. And the business was setup and managed by his daughter, who had just graduated. Yeah... father business what... but then... last I remember, this is a plc.

Sadly... shareholder activisms is so pathetic .... no one complained. No one bothers that there is no segmental p&l spent on the contact lens business....



P/S.... just my usual grumbly self....

... and just in case... I lupa.... have a good holiday and if you are celebrating.... yummm sing

Thank you thank you!! Thank you for the kind words.



This post has been edited by Boon3: Feb 10 2021, 05:28 PM

Why invest in a stock which is most likely to earn less and less money the next few years?

Pre covid price levels. The prices around March last year was 1.60 (adjusted due to the bonus shares last year). And before that it was trading in the 1.10-1.39 range.

Making less money in the next few quarters. For every less money making quarter, how would the market react? Will the market be forgiving or will the market punish it lower every time? So why rush to buy now?

After these make less money quarters, how will TG perform? Will its earnings stabilise or will there be growth? What if it takes a long time to stabilise? For comparison, you could use the previous Sars pandemic as an example. After Sars, the industry was hit with massive over capacity, which drove selling prices lower for many years. So you gotta ask, what if this happens again?

Ahh... I see. Cause in your initial post was 'why not'... nvm...

Yes, investments is all about the risks. Which is why I raised those questions. Those are the risks.

SARS.

Firstly, here's a sector report on the glove sector just on Sep 2019... not long b4 Covid.

and here is screenshot...



Despite the glove sector export recording 12% y-y growth, swelling capacity and intensified competitions caused pressured on the..... ASP.


See? 2019... and the glove sector had the issue of over capacity and pricing wars... since SARS day...

(that was posted on the stock market discussion thread not too long ago)

So, even from SARS, the gloves sector suffered from a long drawn over capacity and price wars. It was known as a sunset industry until Covid 19 hit.

Hence the risk. Over capacity is going to be worst as we are seeing more players now and then China. If you know China products or had dealt with Chinese players b4, you would know that in nature, they are extremely aggressive. Once they are in an industry, they WILL go all out and price wars follows without fail. It's early days now but the lowering prices can be seen already.

So you have supply issue. And then what about demand issue?

Yes, SARs, TG went up a lot...




but after that .... have a look at this multi year weekly chart (which has been price adjusted for bonus+dividends)




without another worldwide pandemic, glove stocks could be stuck for a long while....


Profits.... what is the risk? A long drawn profit decline is probably the worst scenario.... every year down about 10% type... cos the investor will never know when the rot will end....
or what if profit stagnates for a long time?

Dividends... yeah... dividends did look sexy but since the dividends is tied to a percentage of the profit, once the profit goes down, the dividends will go down in a hurry too.... as dividend drops, the stock price will follow....

lot's of concerns/risks....

and naturally, the logical question is what if the glove sector becomes back a sunset industry, just like how it was b4 Covid..... so does appeal to you as a good no brainer investment?



price declines... naturally will attract some value hunters... but just remember ... not value plays are safe... some do turn into value trap.


so do think about all these.... dun dive in just cos the stock appears to have fallen a lot.

This post has been edited by Boon3: Sep 24 2021, 09:26 AM

People will tend to read what they want to read, see what they want to see. This is normal.

It's always about the ASP. Without the insane increase in the selling price (and panic stocking of gloves), glove makers would not have enjoyed their once in a lifetime billion dollar profits.

Pre-Covid, ASP were below USD19.00. (this fact is searchable via the net)

At the height, I believe TG asp hit around USD120.00. (pls feel free to reconfirm)...

Recently.... from TopGlove...

https://www.malaymail.com/news/money/2021/0...ptember/2006341

Quote: As for the average selling prices (ASPs) for the US market, the group is looking at the US$40-level, said Lee. “With the current ASPs, they are still higher than the pre-Covid-19 level. We do foresee the price adjustments will be there possibly by 8.0 per cent to 10 per cent monthly. But in our case here with our sales back to the US, that can help to mitigate in terms of price adjustments,” he said.

In short: selling prices are falling fast. This is coming from TG itself and not some analysts.

from Hartalega..

https://www.theedgemarkets.com/article/glov...evels-%E2%80%94

Quote: Hartalega chief executive officer (CEO) Kuan Mun Leong noted that the ASP started to ease in the April to June quarter and is expected to decline by 30% every quarter going forward until 1Q22.

Quote: We are experiencing additional costs from social compliance and also the material cost seen today is actually higher.

The second statement.... higher cost of sales.....


These are the statements from the glove makers itself....

and when you have the ASP going from USD19 to USD120 and now crashing back down just as quickly as it rose.... we will get the boom and bust cycle.... these are the typical boom/bust charts and normally when it bust... it can go really low....






Moving forward...


Will we see increased demand of the glove? I shall leave that as ___________________

But on the supply side...

we know all about the countless new players jumping into the glove bandwagon.....

and then we have the aggressive Chinese glove makers and their aggressiveness in pricing

( see report on UG Healthcare and the point made on the Chinese glove makers https://research.sginvestors.io/2021/05/ug-...2021-05-14.html .... this statement:

)

the capex issue from our main glove makers... I copy and paste what I posted in May 2021..)

Accordingly, Top Glove expansion is even greater...



https://www.msn.com/en-my/money/topstories/...ile/ar-BB1e87Dp

Harta capex is ...

https://www.msn.com/en-my/money/topstories/...87m/ar-BB1eqF81

Yeah, Supermax is 48b... https://www.thesundaily.my/business/superma...3-sen-FM7824340

And then you have our Thai friend, Sri Triang.



Source: https://www.rubbernews.com/expansion/sri-tr...acity-expansion


Yeah... the capex issue is real .... every major player has huge mega expansion plans.... so one just gotta ask... with everyone expanding/new players/china x factor .... surely there is a huge possibility that this will lead to a long drawn out price war.... which most likely pushes the glove industry back to nothing but a sunset industry <-- this is the biggest risk concern one has to address!!!


*** yes, Top Glove said in its latest QR that it is scaling down a little bit of its expansion...

*** and yea... TG boss bought shares of TG again. This is after many months of absence... which was a positive 'sentiment' factor..... However.... given his terrible result of buying shares (TG share buybacks/his own buybacks/Tropicana investment of TG shares all which are losing millions and millions and millions of ringgit.... how safe is it to buy TG share just cause TG boss bought some recently?



These are the as it is concerns....... so really... one has to ask themselves... it glove stocks a good bet now? yup, is this the best available bet in the market now?

This post has been edited by Boon3: Oct 1 2021, 12:13 PM

I think that's a fair assessment.

The one thing, highlighted in the UG Healthcare report was the stocking issue. When covid was hitting hard March 2020, many customers ordered excessively for sticking. Now during a time when supply is easily available and prices lowering, glove customers are not gonna order excessively for stocking purposes. They are gonna be more stingy with their purchases too.

Another point, was the customer/supplier relationship strained last year due to the excessively and constant price increases. Would the customers be looking for alternative supplier?

Glove was deemed a sunset industry as recently as 2019... would we see a repeat soon?

Considered old news ya since that was Sep article.

He's not a good indicator as his own purchases of Top Glove shares is sitting on paper losses of close to 150 million.

Ya. That bad.


And he's another perfect example on why one should think twice about following a ceo own share purchases. Many a times, these ceo thinks they are smarter than the market... sadly many times they also lose big time.


And in regards to share buybacks.. I am not an accountant but I dont recall any company ever marking their share buybacks to market prices. Hence, they cannot claim such losses. ( pls feel free to correct me on this point)

This post has been edited by Boon3: Nov 4 2021, 06:42 PM

And ya...

https://www.theedgemarkets.com/article/top-...pairment-needed

So you do not think that the boss should be held responsible for the reckless share buybacks last year?

Did you follow how he bought back his shares? I did. The shares buyback was insane. Then, he used Tropicana to purchase his shares. Only then he used his own money. At current price, all these shares have lost more than one billion already.

Yes, I am a trader. Do not judge the messenger but the content of the message itself, ya.

Haha.. of course. You have your point.

So have you followed how the company bought back its shares last year?

This would be a relevant issue right?

This post has been edited by Boon3: Nov 4 2021, 07:50 PM

Btw... is it not possible to have a CEO to indulge on the stock market excessively?

Well, you be the judge based on the following facts yourself.

The company has splashed out 1.412 billion on share buybacks. Average price of those buybacks is 7.13.

The shares closed the other day at 2.49.

Which means those share buybacks is now worth only 492.843 million. These share buybacks is now worth 919.6 million less....

So how would you define this 919.6 million? Gone? Evaporated? Lost?

Let me paste some of my comments from last year.... you be the judge...


11 Sep.. this day was way too drastic!!

The trading detail of Top Glove on that day..
Open price 6.45
high 8.03
Close 7.76
That was a great day for Top Glove shares.
On that day, Top Glove bought back 13,420,000 shares valued at 99.972 million.
Price range of the buyback = 6.2 to 8.00

Source: https://www.bursamalaysia.com/market_inform...?ann_id=3087742



Is there a reason why Top Glove share buyback to be so aggressive that the price bought back ranged from 6.20 to 8.00?

How would you describe the buyback on Sep 11th?

LOL!!

Okay... here's another one...



That's the actual trading data for Top Glove on 26th Nov.

The share price had already rose significantly that day, yes?

But Top Glove splashed out 9.978 million on buyback that day.
Min price was 6.90.
Max price was 6.92.
Source: https://www.bursamalaysia.com/market_inform...?ann_id=3108687


This plus what happened on 11th Sep... how would describe such buybacks? Would it be wrong to say that the buybacks were aggressive? Or is it political again?

Tropicana purchase of Top Glove shares...

https://www.theedgemarkets.com/article/trop...op-glove-shares

Here's a record of Tropicana's 'investment' of TopGlove


[b]

At 2.49, thanks to TG boss, Tropicana would had been sitting on 62 million of losses....

But luckily, Tropicana on 16th April decided to cut loss and sold some 1,895,000 shares at average price pf 5.27.


now how would you describe this?

Well, that's the issue isn't it?