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Koon Yew Yin's Blog

Author: Koon Yew Yin   |   Latest post: Mon, 13 Jul 2020, 9:15 AM

 

Supermax: Update my target price - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Mon, 13 Jul 2020, 9:15 AM


Currently there are 12,400,000 confirmed Covid 19 cases and 559,000 deaths in the world. The chart below shows there are more than 200,000 new cases daily. 

The Chart below shows that there are 3,097,300 confirmed Covid 19 cases and 132,683 deaths in the USA. The chart below shows that in the US the daily cases started in March and currently there are about 60,000 new cases daily. The US has the largest number of Covid 19 cases in the world.

China and many other countries are testing vaccine on humans. It will take a long time for FDA to approve the use of the vaccine and to vaccinate millions of people.

Due to Covid 19 pandemic, the demand for medical gloves far exceeds supply. As a result, glove price continues to increase higher and higher. All glove manufacturers are taking advantage of the situation to increase their selling price.

After I read the analyst briefing from Supermax on 5 July I need to update my target price based on page 13 as shown below.    

I refer to the above report, total issued number of shares is 1,360 million.

The 3rd quarter ending 31 March 2020, revenue/sale Rm 447 million, PBT Rm 95 million and PAT Rm 71 million. The production cost is revenue Rm 447 million minus PBT Rm 95 million = Rm 352 million and average selling price (ASP) is US$ 60.

As shown on Supermax’ briefing page 13 above, ASP for the 4th quarter ending June 2020, the selling price was increased from US$60 to US$ 160, an increase of US$100 which is pure profit because the additional selling price does not involve production cost.

The 4th quarter ending June 2020, the production cost Rm 352 million divided by 60 X 160 = Rm 939 million which is the revenue/sale minus Rm 352 production cost = Rm 587 million which is pure PBT or PAT Rm 410 million.  

I refer to the table above. The total PAT for 1st quarter Rm 24,747 million, 2nd quarter Rm 30,165 million and 3th quarter Rm 71,065 million. As I calculated, the 4th quarter PAT is Rm 410 million.

The total profit before tax (PAT) for the year ending June 2020 is Rm 536 million.  

EPS Rm 536 million divided by total issued share 1,360 million = 40 sen.

Based on P/E 25 my current target price is Rm 15.00.

I want to be very safe and conservative in calculating my Target price. I assume the company does not have additional production and it does not increase its selling price for the next financial year ending June 2021, its annual profit will be 4 X 4th quarter PAT Rm 410 million = Rm 1,640 million.

EPS Rm 1,640 million divided by 1,360 total issued shares =Rm 1.21.

Based on P/E 25 my target price will be Rm 30.25.

Based on P/E 20 my target price will be Rm 24.20   which is easily achievable.        

 

 

  

  

 

 

Tulips to cheer you up - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Sun, 12 Jul 2020, 12:55 PM


I always like flowers. Readers might recall that I posted my mis-adventure in planting Dendrobium cut orchids flowers to export to Japan about 20years ago. Although I could produce enough of cut flowers but I could find enough of cargo space to transport to Japan. All the cargo space was reserved for computer chips at that time. Moreover, there were not so many planes to Japan at that time.

 In my previous house fronting the 8th hole Royal Perak Golf Club, I had a fairly large garden around my house. But, when I built my new house fronting the Meru Golf Course, I found the land was too small for a garden. So, I constructed a vertical garden alongside the dividing wall as shown above.  

Flowers are a great way to brighten up people, especially during this lockdown due to Covid 19 pandemic. Flowers can also brighten up a dull room or turn a garden into a veritable rainbow. A good bouquet can turn any frown upside down. Rosesfor example, are the ultimate expression of love and affection. They are fragrant and sweet-smelling wonders that can make dark and dank forests seem warm. Of all the different flowers in the world, tulips are, perhaps, the loveliest. They come in an unending range of colours, shapes, and sizes. After all, there are over 75 different types of tulips! They pour across massive fields streaking them with blues, pinks, and yellows. Some of the most popular gardens in the world are home to the greatest collections of tulips. Tulips can truly make the world a much more colourful place. Here are some of the most beautiful tulips you can find spread across the globe. 

I visited Keukenhof Gardens in Holland

About 40 years ago, when I first retired as IJM Corporation Bhd executive director, I visited Keukenhof Gardens in Holland.

The flower park has 32 hectares of flowers. There are also spectacular flower shows, surprising inspirational gardens, unique artworks and wonderful events. If you want to know everything about the Dutch tulips, you can visit the Tulipomania exhibition in the Juliana Pavilion in the park.

The flower park has 32 hectares of flowers. There are also spectacular flower shows, surprising inspirational gardens, unique artworks and wonderful events. If you want to know everything about the Dutch tulips, you can visit the Tulipomania exhibition in the Juliana Pavilion in the park.

 

 

 

Supermax: Investors must be more observant - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Fri, 10 Jul 2020, 3:39 PM


From my experience as a listed company director, I know our company used to employ hundreds of people. In the finance department alone, we had about 50 staff to produce the quarterly and annual accounts. When so many people were involved in the preparation of the accounts, it was impossible to keep any secret, especially quarterly and annual accounts.

Supermax share price started to shot up 9 trading days ago. It shot up from Rm 7.72 to close Rm 12.44, an increase of Rm 4.72 or 61% in 9 trading days as you can see from the price chart below.

The price shot up Rm 1.58 yesterday which indicated that the result of last quarter ending June is already known to a few rich investors.

Before 9 am yesterday, I WhatsApp to about 50 friends on my contact list to tell them not to be afraid to use margin finance to buy more Supermax shares.  

To make more money, investors must be more observant and have a lot of common sense. Investors must have entrepreneur spirit and willing to take calculated risk.

Most investors will not buy Supermax today because it has shot up too fast and they want to wait for the price correction or price weakness to buy. Based on the aggressive buying in the last 9 trading days, it looks like the price will continue to go up higher. Conservative investors will have to wait a long time to be able to buy. By which time, the price will have gone up a few more Ringgit. 

In any case, I advise investors not to sell their shares as the Covid 19 pandemic will not be under control for at least another year as many scientists predicted.

World sees record 212,326 Covid-19 cases in 24 hours

THE World Health Organisation reported a record 212,326 new Covid-19 coronavirus cases in the last 24 hours. The WHO has reported more than 163,000 new cases every day for the past week, led by a rise in the Americas.

As shown on the above chart, there are more than 12 million Covid 19 cases in the world and the number of new cases is still spiking. As a result, the demand for medical gloves far exceeds supply. All the glove makers are increasing their selling prices to make unprecedented profit which is being reflected on their share prices.

That is why all the glove makers’ shares are shooting up like rockets. Investors should not sell their holdings because I strongly believe my target price of Rm 18 is achievable when Supermax announces its next 2 quarter results. This is my honest opinion. I am not asking you to buy to push up the share price to enrich me. Readers must remember whether you buy or sell does not make any difference to the share price because the daily traded volume is tens of million shares.      

 

 

Labels: SUPERMX

Supermax has increased selling price - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Thu, 9 Jul 2020, 12:19 AM


My nephew Yap Sung Pang from Manchester, UK sent these 2 posters which show the glove price has shot up from 5.83 pounds to 14.99 pounds for 100 pieces, an increase of 260% due to Covid 19 pandemic. The demand for glove far exceeds supply.

Supermax has its own brand and sale out lets in US, UK and many other countries. Unlike other smaller glove manufacturers, Supermax can easily increase its selling price. Even if I assume that Supermax can double its original selling before the pandemic, its profit would be phenomenal. Bearing in mind that the additional selling price is pure profit because it does not involve production cost.

Based on this new information, I realised that I have under estimated my target price of Rm 18. I believe the share price for Supermax should be above Rm 20 after the announcement of the next 2 quarter results. The next quarter ending June should be announced soon.

RHB and CIMB just informed me that they have increased the capping from Rm 5.00 to Rm 7.00 for margin finance from tomorrow onwards. Investors will have additional margin loan facility for buying more Supermax shares which will push up the share price.

Mr Ooi Teik Bee said that he believes Supermax will be included into FBM KLCI component stock index effective on 18th Dec 2020. This higher rating will also push up Supermax share price.

Labels: SUPERMX

Nitrile Glove price increased by 260% in UK - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Wed, 8 Jul 2020, 11:55 AM


My nephew from Manchester UK just sent me these 2 photos which show that the old price before the Covid 19 pandemic was 5.83 pounds for a box of 100 nitrile gloves and the current price is 14.99 pounds for a box of 100 nitrile gloves, an increase of 260%.

 

 

 

 

Due to Covid 19 pandemic, the demand for glove far exceeds supply. As a result, the glove price has been shooting higher and higher and all the glove

manufacturers are making unprecedented profit which is being reflected on their share prices.

Investors should know that all the price increase will be accounted as pure profit because the company does not require additional production cost.

Glove makers which have their own sale outlets would be able to increase their selling prices more easily. I know Supermax has its own sale outlets in USA, UK and many other countries.      

 

Investors' ego is the most common mistake - Koon Yew Yin

Author: Koon Yew Yin   |  Publish date: Sun, 5 Jul 2020, 6:42 PM


I posted my previous article namely “Investors Guidelines” which can help investors to select good growth stocks to make more profit. Now I wish to point out the most common mistake of investors.

The current Covid 19 pandemic is affecting almost all the 1,100 listed companies with the exception of medical gloves and other medical products for the prevention of the virus. As a result, most investors are losing money and unfortunately many of them refused to admit their mistakes to sell to cut loss. They are too egoistic to admit their mistakes.  

When to sell

Investors must sell their holdings as soon they see the company reported reduced profit so that they can use the sale proceeds to buy better stocks. If they delay in selling the price will continue to drop which is being reflected on its price chart. To know when to sell is more important than when to buy. You can buy at high price to sell at higher prices.

Investors must remember price chart and the company’s report cannot lie.

Statistics shows that there are more losers than winners in the stock market.

All investors must check each of their holdings to see whether the company has reported increased profit in the latest quarter and whether the price chart is showing a down trend. Investors must sell as soon as they see the company has reported reduced profit so that they have funds to buy better stocks. If the company has already reported reduced profit, investors must not hope for the company to make more money in the next quarter. Remember there are 1,100 listed shares for investors to select.  

I believe most investors know how to select good shares based on good fundamentals and how to read price chart. But to be able to make money, all investors must be able to control their emotion of ego, greed and fear.

 

 


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