Thursday, 10 August 2017

Superman downed in rubble, but Supermax will grow with rubber

You can call me thick faced hard sell on Supermax. So, I had to tell you - Yes I am indeed thick face hard selling on Supermax, but with a condition - When Supermax is currently trading at the price of RM 1.90.

I recall those hard time during last year (2016) when one of the stock that I had been recommending is not moving despite displaying convincingly good results with growth. That stock was Arank. I remember recommending Arank when it is just trading at a mere 70 cents region, and the stock continue to stay stubborn, not until the sentiment starts to recover, and Arank starts to get it's momentum and now Arank is trading at the range of RM 1.10.

As you can see, investing during tough times takes a lot of patience in order to see your fruits blossom. But firstly, the fruit that you choose must be healthy and not infested with worms.

Now come back to Supermax.

Talking on business fundamental, Supermax is definitely a fundamentally strong company. Given consistent dividend and showing growth from year to year basis.

Despite that, Supermax is now trading at an all time low position, with share price going far back into the 2013 price range. Yes, you can argue that this company could be shun by investor due to some governance issue such as insider trading and also being accidentally involved in some political talks. But those are past and I think potential investor should not punish themselves by losing out this opportunity by clinging on the past issue. After all, past is past, and what we are going to do in the present world will determine the future.

Now, I have to tell you that the glove industry actually do not depend largely on medicine industry alone. In fact, manufacturing sector such as semiconductor industry are consuming high amount of gloves due to the operation in the cleanroom environment.

With the thriving business in the semiconductor industry, the demand for gloves usage is continue to be on the rise. Healthcare also continue to see consistent demand, while seasonal flu in various countries will push demand higher for a certain period.

Hartalega, being one of the leading gloves manufacturer in the world had recently reported a 71% increase in net profit.

I believe this surge of revenue is industry wide effect, while one of the leading factor will be the stronger USD.

For the period of Jan to Mar 2017, Supermax had a total revenue of RM 308 million. For the same comparative quarter, Hartalega had RM 527 million. Hartalega latest financial result Apr - June 2017 shown RM 601 million in revenue.

Should this be an industry wide benefit, what we can assume is that Supermax revenue could be able to linger at the range of RM 350 million, and probably looking to see EPS around 3.5 cents.

Based on a projection of annual EPS at 12.72 cents and trading at an industry PE of x 20, Supermax valuation can be looking at RM 2.50

At the current price below RM 1.90, Supermax is deem undervalued from an industry perspective.

Will Supermax wake up soon ? I hope before he wakes up, you are on boat for the ride.

Tuesday, 8 August 2017

This Underdog Can Rise Up Again !!

The latest catch in the international sports arena might have you seeing Conor McGregor taking on undefeated Champion Floyd Mayweather in the coming 23rd August highly anticipated boxing match.

On the local side, you will be seeing Deputy Prime Minister Dato Zahid vs Former Premier Tun Mahathir. Who is the Conor Mcgregor and who is the Floyd Mayweather of Malaysia, I don't know, I will let you decide.. Haha

These are big news, but somehow these kind of news can hardly enable you to profit from an opportunity resulting from such event.

Let me show you another piece of big news, which I think might be able to benefit you.

As usual, big news is usually bad news, that is because bad news sell way better than good news does. It is a fact, psychological proven in fact. Bad news always send shivers down the reader mind, thus motivates them to make frantic decisions. For example, when the market drop and the media label them as blackest day of the world - You will get nervous, and the tendency to throw / cut loss of your holding is very high. Delusional. The good part of it ? Those who know what is happening will brave themselves and take position.

Of course, now I am not telling you that the market is going to crash and fall and so on. Honestly, I don't know. It might happen, but I don't know when. But for now, what I know is that there is a massive flu happening in Asia which had stricken Hong Kong badly.

So how bad can the flu be ?

According to official source, the number of recorded flu cases in 2017 is catching towards 20,000, and this is just up to July 22. In comparison to 2016, that is just 21.2k for the whole of that year. I can tell you that flu virus are getting bad to worst, and they are evolving stronger than ever to infest and killing people silently. News sources had it that the flu outbreak had taken a toll of more than 300 lives in Hong Kong, majority of them are elderly citizen and kids. As such, hospital are full to the brim for such moment.

Of course, this is bad news for mankind. There is nothing much we can do about, except to make sure that we have enough rest and beef up our own resistance. But as such event happen, the gloves industry will always blossom.

As you can see here,big player such as Topgloves, Hartalega and Kossan had seen share price trending upwards on this event.

Beside this, smaller player such as Careplus and Comfort are also seeing similar effects

So, I would like to conclude that such event does have huge influence on share price of gloves industry. Because of this, I would like to point out to 1 underdog for this case - Supermax.

I know Supermax might be tainted with some controversy earlier, but that doesn't mean a bad horse will always be a bad horse for life. What if this bad horse can become the black horse for this case ?

Here, I will not talk much on financial statements and equivalents topic, but to point out that Supermax indeed had fallen from a great height to rest at the rock bottom stage now, where a potential break out is very possible. With Kossan, Hartalega and Topglov trending upwards and trading at high PE, Supermax can be an explosive candidate to play catch up now.

The answer for the question now lies in the control of your hand. Can Supermax break the curse of the pearl and rise back above the waters ?

Monday, 31 July 2017

Good opportunity is nothing without action. This opportunity can make you a hero if you believe in it

Talk about DRB-Hicom selling off 49.9% stake to Geely of China, I would assume that this event might still appear fresh in our mind, and also resemble one of the hot market topic in the street. Back then, if you are still in the market, you would know that Proton Holdings Berhad is still listed in the KLSE 5 to 6 years ago. That was not until DRB privatized Proton at a price of RM 5.50 a share, which cost them a huge RM 1.29 billion bomb.

Today, I would like to teach you how to look at the event of the privatization of Proton by DRB back then from November 2011 onward.

Pointing on the privatization of Proton by DRB, I would say that many of us see this as just another corporate exercise of merger and acquisition between companies in order to create synergy, but fail to interpret the happening of the event in order to turn them into trading / investing advantages. Of course, everyone is not born smart into this world and knowing everything. The universe just doesn't work this way. As for the capital market, I have to tell you that the ability to predict and interpret based on given facts from media along with market participation plays an important role in good decision making to make money out of the market.

One of the main point that you need to know is that major corporate exercise that involves core asset disposal doesn't happen frequently in a company. Such an event, you can either do it out right and complete it 1 time, or play around the news for a few times before concluding the sales. Both are pointing towards 1 same objective - disposal of the asset, but different method yield a different manner. One good example will be Gpacket. If you are very found of Gpacket, you would know that Gpacket had been in the news for at least 3 years before the real deal is concluded at TM. That is at least is share price had been speculated for at least a few rounds, which is good if you know how to play the game.

For the case of Proton, the same will apply. But since this is an almost 6 years ago event, let me bring you back to see what happened. I will teach you how to look at event such as this.

As you can see, the media first toyed on the news that Proton is heading for a management buy out by firms such as Naza, Sime or Drb in the market at November 2011. Proton had surged from a lowly price range of RM 2.60 to a high of RM 3.50 before denial of such news came to subdue the price surge.

However, the news subsequently become more solid as time is running out and Khazanah looks set to divest all of the 42.7% stake. Market returned in speculating the front runner, and Proton share price continue surging to almost RM 5.00 in December 2011.

To cut the story short, DRB is the concluded winner at RM 5.50 a share for a General Offer for all Proton minorities shareholder after buying all of Khazanah stake.

As you can see, one of the major characteristic is that Proton share price did not falter much despite the news of denial. Subsequently, the news continue to brew with more interest and it's share price went higher.

So, if we implement the historical lesson of Proton into Nationwide, you might be interested to see that Nationwide may bear the same traits with Proton. 

According to the movement of share price, Nationwide consolidated at a higher price range, and volume consolidated, forming a mirroring triangle. This is despite the news that Century and Nationwide issue a denial.

What do I see here ?

From my perspective, Nationwide could be at it's stage 1, just like how Proton begins. What we know is that Century will be having their multi-storey warehouse ready by 1H of 2018. However, plans are intact for Century to start parcel delivery as soon as 4Q 2017. If you tell me how to get this fleet as fast as possible, the most possible answer will only lies at Nationwide.

At the current scenario, Century is lacking of a fleet of transport to penetrate into the parcel delivery industry. On the other hand, Nationwide is lacking of a strategic partnership that can provide them with consistent supply of delivery order and better management process in order to fine tune the operation.

The logistic sector had been firming up with M&A, and the possibilities of Century teaming up with Nationwide is just as good as synergy formula of 2+2 = 5.

End note, I had shown you how Proton had moved up with it's M&A with DRB in 2011. Now, it is your choice to either be part of the show, or just to see the show. This could be your last chance before Nationwide will shoot up higher as news firm up later. As mentioned previous, I had bet my name and reputation into Nationwide to have a M&A exercise very soon. Now, time will only tell how it will goes.