Tuesday, June 30, 2020

Margin Valuation Prices As Price Targets

What a novel idea... the supposedly latest share margin valuation prices for glove stocks MAY actually present itself as a ready-easy targets for the glove makers to hit in the short-term. After a couple of weeks of solid consolidation, looks ripe for the next wave up.

Sunday, June 21, 2020

Frothy ...

The froth rising to the top. When ppl start speculating on rto counters it’s frothy. Know that an IPO n a rto both takes just as long. No real reason to go rto if your company is solid.

Tuesday, June 09, 2020

Top Glove's Quarterly Results - The Bellwether

Today's market after Monday holiday started with brave expectations of a gunging-ho day. However after just 10 minutes one can sense that there were more people waiting to sell than people dying to buy. You can see that via what we call price action. Of course some syndicates will park and do funny stuff and churn, but try to learn to note the price action to learn about the character of the stock for the day.

Much of the trepidation surrounding glove makers is the upcoming quarters results by Top Glove come Thursday. It is going to be a significant moment for glove makers. A superb performance will further add fuel and optimism for the rest. A meeting of expectations alone will attract only profit takers and a lack of fresh buyers.

In situations as such we have to ask: if the results are above expectations, who else will come in to buy?; if the results are sufficient to generate enough confidence that the current HOLDERS would largely choose not to sell and wait for higher levels; if its below expectations well, be in for a swift pullback.

Hartalega's recent quarterly, how was it? It was tepid. It has to be noted that it was for the 3 months ended March 2020, hence it did not get to reflect much of the upsurge in orders. 



A better gauge has to be Supermax quarterly results which was announced on 20th May 2020. Supermax appears to have included some of the uptick in ASP (average selling price) in the quarterly. This made Hartalega's financials look bad in comparison.  While revenue only jumped from RM385m to RM447m (+16%), PBT jumped from RM41.8m to RM95.2m (+170%). The resultant quarterly EPS was 5.42 sen. If you annualised that = 21.68 sen, at share price of RM8.88, PER will be just 41x. If we tag on a realistic 30% uptick for 21.68 = 28.1 sen = PER 31x. Totally reasonable being a favoured sector with a new normal of demand in store.

Now's the turn of the bellwether Top Glove, its quarterly to be announce on Thursday. Its for the quarter ended May 2020. Top Glove prides itself for being one of the swiftest to announce their quarterly. However 11th June was an even faster date compared to previous quarters: 17 Dec and 19 Mar. It has to be probable very good news that Top Glove wanted to shout it out to the world. Bearing in mind it has an additional two months of heady business compared to Supermax, analysts have been quite positive.

So what would be a decent expectation. The way Top Glove's price has been behaving around RM16-17 indicates that we are factoring at least 150%-200% jump in NP. Previous quarter's NP was RM116m, hence expectations will be around RM290m-348m or EPS of 11.3 sen - 13.5 sen. Annualise that = 45.2 sen - 54 sen. At RM18.00, PER would be 39.8x - 33x. Still within the realm of reasonableness. If we do not get RM280m in net profit, I suspect there will be a sharper sell down back to RM13.00-RM14.00. If its higher than RM360m, that should pave the way to march past RM20.00.


Saturday, June 06, 2020

The Markets' Disconnect To The Real Economy & The Glove Factor

First, the bull rebound from the US markets was a bit confounding. As more protests and negative issues rose to the fore, the stronger the markets rallied. In Malaysia, local stocks even went beyond linked to major markets by rallying on its own. Small caps were bought up in a frenzy. Breaking all time volume highs day after day. The rotational play to mid caps and then big caps further alienated most analysts.

Even chartists were guarded. There was this regional house that have been putting our bearish posts day after day(for the past few weeks) based on technicals, so much so it became a running joke. I told my market old friends that once this house goes bullish we should all exit. At first they were basing their bearish views based on technicals. But for the last few days, their bearish stance was more like a drunk holding onto a lamp post at night - the lamp post being technicals/fundamentals ... holding onto the lamp post more for support than for illumination.

Why the disconnect? Market experts immerse themselves in the paradigm of investing based on certain parameters of valuation. They may understand that markets are necessarily forward discounting machines, but they cannot project that far out as the "blow-out" (bankruptcies and tepid demand) has yet to show itself in the next 2-4 quarters.

Are investors discounting further out? Yes and no. 

"I generally think that most governments have thrown out way too much cash to rescue their economies over the pandemic. I think we will see a huge surge into equities for the remainder of the year. Why? We are nowhere near the factors necessary for The Great Depression nor The Asian Financial Crisis. Last check, some people may lose their jobs, some industries may be devastated, but the majority still have cash in the bank, the majority still have equity in their properties - that is not the recipe for any great depression. Now start counting the monies thrown at the problem."

I turned bullish on 18th May 2020 because tabulating the amount of funds being thrown at the problem has led to one main consideration: is the pandemic  as bad as the 2008 subprime crisis?; is it as bad as the Asian financial crisis 1998?.

In both cases there were massive debts to be unwound, plenty of bankruptcies to contend with, and naturally plenty of jobs will be lost and consumer spending will be shrunk for at least a couple of years. More than that, personal "assets" will be massively eroded for many.

How does that pan out compared to this pandemic: yes plenty of businesses and sectors will be devastated BUT ... most industries are still viable, those with cash flow issues will face huge obstacles but still we are talking about a tightening 3-6 months, while the above crisis has a longer lasting shrinkage lasting 1.5-2 years out.

Secondly, most people still have "assets and equity" (property, shares) unlike the previous two crises. As things go, China has been coming out well after a 3-4 month lockdown. Other Asian countries not that terribly affected (Malaysia, Vietnam, Cambodia, Thailand) have also shown promise as the earlier ones to try and resume economic activity. Hence we are seeing 1-3 months lockdowns, followed by 2-3 months of tepid reemergence of economic activity, another 2-3 months we should be back to 70-80% normalisation of economic vibrancy. All in it should be less than one year.

The amount of funds thrown by governments has been a lot higher than the subprime crisis, or the Greek/euro crisis. Go figure.


Go to the above link to check the amount of funds and stimulus from each country and you know we have an overkill situation.


The economic impact by the pandemic is more "immediate and direct" as we felt it close, all of us. Friends' businesses in trouble, most retail businesses were drained dry. All of us had friends and family members losing their jobs almost immediately. Owing to the "closeness" of the impact, many of us failed to look at the bigger picture. Previous crises were more drawn out, company failures were more drawn out, job losses were more drawn out. The example of having 100 hits over 2 years or 10 big hits over 6 months. Plus the fact that the "wiping of of wealth, equity and personal assets" have been more concentrated at direct retail sectors (plus leisure and tourism), and not so much at personal level.

The pandemic struck hard and fast. Because its not a normal economic collapse due to bubblelicious financial extravagance, because it involved deaths ... the immediacy of the situation caused a lot of people to react with extreme caution. Lockdowns, lockdown, curbs... The immediacy of it all also forced the hand of all governments to respond swiftly, and in many cases, an overkill. Its already well known that the stimulus and recovery funds injections by the USA is a few times that was undertaken during the 2008 subprime mess.

As lockdowns are being eased we can see plenty of pent up demand. It wasn't so much like a long drawn out recession mode. Chicken or egg thing, the markets' resilience has helped mitigate the wealth effect and in fact has spurred the velocity of money. In most cases the velocity of money in the markets will have a strong impact on their respective economies. Not all countries will be the same, you have to look at the percentage of GD that is listed for each country. Side note: Malaysia is one of the top countries that has the highest percentage of its GDP that is listed.


Dear all analysts, this was not a market correction due to financial extravagance like the Asian crisis, bubble dotcom collapse or the subprime messier the Greek/euro calamity. When its financial extravagance, there has to be a sustained wringing of excesses from the market place. Where's the excesses here? We do have companies failing especially if your fortune are directly linked to the pandemic: airlines, tourism, leisure, malls, REITs, etc.. but it was not due to excesses. Hence when you whack all and sundry 25%-35%... it was a recipe for a sharp recovery in share prices.

I do agree there will be more bankruptcies and tough times for selected industries over the next 3-12 months but it should not be prolonged because most of us we still have equity, assets, jobs, health ... Put yourself in the situation in 1998-2000 after the financial crisis, how was that for you?

In the US, money-market funds have lured $1.2 trillion this year, while fund managers with $591 billion overall are holding cash at levels rarely seen in history ... Investors are still underweight equities and signs of overextension are confined to momentum traders, JPMorgan strategists: There is still plenty of room for investors to raise their equity allocations. JPMorgan says the equity allocation of non-bank investors -- a group that includes households, pensions, endowments and sovereign wealth funds -- will probably rise to 49% in the coming years, given the backdrop of low interest rates and high liquidity. Currently, the proportion is 40%.

The dismal interest rate for the general public is another factor prompting many newbies to enter the market.


As the sector surge more and more, many are shaking their heads.

Maybank Kim Eng analyst Lee Yen Ling wrote that “massive earnings explosion in coming quarters will throw brokers’ forecasts out of the window”. Lee has raised its target price of Top Glove to RM20, implying a 49% share price increment from the current price of RM13.38 amid expectation of higher average selling prices (ASPs) and exponential growth on glove consumption worldwide. Maybank KimEng raised its earnings per share forecast by 37% for the financial year ending Aug 31, 2020 (FY20), 180% for FY21 and 18% for FY22 to impute for ASP hikes and spot orders until 1QFY21 (September to November 2020). “Our earnings forecasts could still be conservative as glove players might continue to raise ASPs until June 2021,” said Lee.
So you are looking at "highly robust" quarterlies from them for at least the next 4-6 quarters. One needs to ask is this the new normal - when things die down a year out, how will demand be then? There is a new normal. Even a year out and things have settled back to normalcy, I still see a lot more "new buyers" as stocking up will be a new norm. Government agencies, retail sector and related sectors will be more keen to be stocked up in "essential items" to prepare for future outbreaks or pandemics. 

The SARs did lift demand but it did not translate to a huge breakout in demand following that because SARs wasn't so widespread. This time its global so the impact cannot be dismissed lightly. But SARs was largely a southern China plus HK matter and some neighbouring Asian countries, but only 8,000 deaths. COVID19 - deaths the far 402,000. What that means: new buyers (government agencies, hospitals, NGOs, even personal inventory) even after the pandemic is over.

While the business isn't really like a moat around a castle, the barriers to entry is the time lag to enter the business. You need at least 5 years to be viable and being able to reduce cost via economies of scale to compete with the Big 5 or 6 players. You need to be in Malaysia and Thailand for access to latex (though not essential but it helps). You need trained workers and relatively competitive labour (again, Malaysia and Thailand).

Glove makers are now an essential component of any major index funds for Asian or regional exposure. Imagine new funds or ETFs to be launch for Health Services or Healthcare, .... who are the beneficiaries. This sector will be increasingly mopped up by those type of funds plus indexed funds. Glove makers used to be a maybe you need to have in your portfolio. Now it has graduated to becoming an essential exposure for any long fund with any credibility. Any correction will be mild. Unless they go way past the levels cited below.

This is unlike a pump and dump situation. This is a situation where there are plenty of speculators, traders and institutional funds looking at one sector. Their next 4-6 quarterlies should be magnificent. Expectations will be met or even surpassed. We are talking real profits and not imagining profits 3 years out. Hence I see the glove makers' rally continuing albeit with some corrections but any corrections should be short lived.

I would probably advise to cut your trading/portfolio positions by 50% once these prices have been passed:
Hartalega RM14.00
Top Glove RM24.00
Kossan RM11.00
Supermax RM10.50
Comfort RM4.50
(these levels are derived from the view in light of their fundamentals and institutional liking plus traders' favoured counters)

Another 10% from these levels I would strongly advise to ignore the glove makers. 

p/s: this is just an opinion and not a call to buy or sell, please consult your dealers and remixers and do your own research , you are responsible for your own actions

Wednesday, June 03, 2020

Glove - Volatility & Traders' Paradise

What a morning session. Limit down for a few glove and related counters, but the rebound was swift as well. A traders' paradise - you want volatility when you are a trader. 

The brokers already did very well, some did better by giving notice of reduction in margin prices for glove stocks, and would allow clients till end of June to regularise them. Kudos, gentle, firm and ample time. Brokers who just whack reduced limits immediately are assholes. Knowing full well the repercussions, it was a stupid and heartless thing to do.

SC/Bursa needed to tighten this margin capping process, one should not be able to do it willy-nilly with one day's notice. Maybe a two week warning will be better. One may suspect that some brokers may be doing that to "limit losses/max gains" on the related covered warrants issued by the same IBs.

I have avoided writing about glove makers as no point to spoil a party when it doesn't benefit me. Even though I wasn't invited to the party doesn't mean you should call the police on them. Let them be la.

What about over-valuation issues? Well I have been looking at results and much of the froth is justifiable. As the stars align for the glove makers, it is understandable that they will have super premium valuations in a field of destruction.

Look at the Supermax quarterly, their ability to improve margins just for the 1Q2020 showed that they had pricing power even with minor jumps in revenue.

Hence even at 70-80-90x earnings, a 100% jump would halve that. Then ask yourself if that 100% jump can further improve? Or can that 100% jump be the new normal? Thats up in the air. The balloon would certainly deflate ONCE a vaccine has been discovered. You will have to wait for the next "pandemic" for these lofty valuations to be matched.

Nonetheless, I think there is a new normal now for glove makers. Almost all countries will now start to stock up a lot more of these related products even after a vaccine is discovered.

I would also advise that the need to stick to the top 3 players and not the smaller ones because at the end of the day, pricing power and pricing leadership will rest with the big boys. I do not have to mention the lack of economies of scale for the smaller players.

If you wish to trade or buy, stick to Hartalega, Top Glove and Supermax. The rest will just be wannabes and will highly volatile.

The leaders' advantages, as elucidated by Supermax at its quarterly announcement:

The near limit downs today was healthy and I expect the parade to continue over the next few days. Maybank Kim Eng did a zooming presentation. If you were to look at the 2020 PER, most of the glove makers are not terribly overvalued with the exception of Hartalega, which might explain why Harta did not recover that well today. The rest seems to be reasonable still. Upside intact.

Monday, June 01, 2020

Could Have Done Better

BOUSTEAD/LTAT - As the main shareholder, LTAT should be careful about what it says in public. LTAT said it was considering a proposal to privatise the company, subject to finalisation of structure, funding and regulatory approvals. IF all major shareholders CAN do this at will, it will cause chaos in the said stocks. Just by saying "considering", one can "push" one's stock without retribution. 

This forced Boustead to come out with another statement that this does not indicate a firm proposal, nor does it indicate LTAT will definitely go through with proposal. Just got to wary here, non-censure or no-reprimand will mean it is OK for major shareholders to say certain things before fruition. It is so easy to NOT go ahead with the said proposal,... no funding la, cannot agree on proper structure.

SC and Bursa have to be careful NOT to set a precedent here. You cannot reprimand one and not the other. 

There has to be line drawn between revealing substantive information of relevance and "not time yet to reveal till most critical details have firmed up". Not tackling this may give rise to unnecessary speculation and a volatile price movement which can only benefit the ones "in the know". What was most unnecessary was to put out an actual price of 80 sen as a possible offer. Why was that even necessary?

Maybe no one benefitted from this, and LTAT acted in the best interest of shareholders. Still, it leaves a sour taste and certainly not the best example of releasing proper important information to the investing public.

The shares of Boustead never did even reach 80 sen after the news. But there was heavy volume traded. What was more significant was the huge jump in volume on 22 May and 27 May, from 48 sen to 61.5 sen prior to the news flow. 

Thursday, May 28, 2020

More About This Blog's Sponsor

The blog was started in 2007 and I have loathed having advertisers or sponsors for my blog. I now have a proper site sponsor because I believe in the product and have consumed it myself. I find that it mirrors the claims it expounds and is effective to treat andropause.

Blog sponsor: Andropause Succor



We recognize that andropause was a serious issue among men above the age of 40 but not much attention has been paid to address the issue when compared to say, menopause and its remedies.

Presently, a lot of people take testosterone booster and/or artificial testosterone injections (gels and creams included), which we believe has its limitations. They attempt to address the symptoms rather than the cause. It is like taking Viagra but not addressing why poor erections happen in the first place.

We wanted a holistic remedy to andropause and would stay herbal and organic as much as possible in the formulation. The platform which we build our formulation rest on being anti-inflammatory and better heart health.

Not a week goes by that I am not asked about testosterone levels. Especially one of the following questions:

—”How can I raise my testosterone?”

—”Can supplements actually boost testosterone?”

—”How do I know if I have low testosterone?”

The questions are endless. Testosterone is a hot marketing area for men, that strikes at the core of machismo and male health. Attach testosterone to any product with some hyperbole, and you can market it effectively.

But truth be told, testosterone levels are critical for male health. Low testosterone causes:

Low energy
Low sex drive
Low strength
Anxiety, depression, and general lethargy
There are no advantages to having low testosterone. Zero. Nada. In fact, hypogonadism (which is when your body is not producing enough testosterone) is linked to:

Alzheimer’s disease
Cardiovascular disease
Recent research even points to low testosterone being a precipitating factor for prostate cancer.

With all this in mind, it’s concerning that testosterone levels have been dropping in men worldwide for decades.

The reasons for this are legion:

Environmental endocrine disruptors, plastics, contaminants; lack of sunlight and solar radiation; lack of key micronutrients, skewed diets; lack of exercise, lack of sleep, increased stress; the list is long.

And this drop in testosterone is not only seen in humans, but animals as well. Across the world, environmental pollutants are affecting animal life and disrupting sex hormones.

The pragmatic reality is this:

Our environments and lifestyles do affect our bodies. And many men are slowly castrating themselves through their lifestyles.

Increasing your testosterone levels, and thus your general vitality, should be of paramount focus for all men.

High testosterone levels are a representation of overall good health.

You have everything to lose and nothing to gain by ignoring your hormone levels.

What Can You Expect

1-2 weeks:  Better quality erections (hardness and ability to stay up longer)
                  More energetic and positive
                  Higher libido (sex drive)
                  Heightened metabolism
                  Less irritability and mood swings
                  Better quality sleep
                  More motivated and focused

Longer Term:   Stops hair loss
                      Less visceral fats
                      Retention of muscle mass
                      Better joints strength
                      Reduction in bone loss and danger of having osteoporosis
                      Elevated testosterone
                      Higher sperm count
                      Less lethargy and better temperament

Tongkat Ali (extra potency)

We required Longjack (Eurycoma longifolia), a confirmed libido booster. Longjack, also known as Tongkat ali and pasak bumi, is a shrub hailing from Southeast Asia purporting to improve libido. It’s gaining traction in the scientific community for potentially increasing testosterone levels, and researchers at South Africa’s University of the Western Cape found that longjack improved testosterone levels and muscular strength in physically active seniors (a population with typically low testosterone).

The bulk of what is presently available is non-descript. Our manufacturing facility has patented a new way of extraction, using nano tech and sonification to extract up to 5x better - the process is already being patented.

What is TRT?

Testosterone Replacement Therapy (TRT) uses artificial androgens (think synthetic steroids) to try and raise testosterone levels. As the Mayo Clinic notes, they’re still being evaluated for safety and effectiveness, but it’s an option to discuss with your doctor.

Other researchers at the National University of Malaysia have gone so far as suggesting that, after further study, longjack could be used as an alternative approach to testosterone replacement therapy (TRT).

That said, a group of researchers at the National University of Malaysia did a systemic literature review of longjack, looking for clinical research that demonstrated a relationship between the shrub and testosterone levels. 

Cordyceps (tung-chung-chou in Cantonese)

Animal and lab studies suggest Cordyceps have the potential to improve heart health and fight inflammation, cancer, diabetes and aging. Again, we try to come up with a formulation that does not just deal with the symptoms. For example, Viagra is used to help people who have trouble maintaining a strong erection or have trouble lasting sufficiently long enough to complete the act. That does not address why/what caused the poor erections in the first place.

We believe in raising testosterone naturally. We wanted the other complementary body functions to be revitalised as well when generating more testosterone. Hence anti-inflammation and better heart health is a platform which we stand on.


Pomegranate is a potent antioxidant. This fruit is rich in flavonoids, anthocyanins, punicic acid, ellagitannins, alkaloids, fructose, sucrose, glucose, simple organic acids, and other components and has antiatherogenic, antihypertensive, and anti-inflammatory properties. Pomegranate can be used in the prevention and treatment of several types of cancer, cardiovascular disease, osteoarthritis, rheumatoid arthritis, and other diseases. In addition, it improves wound healing and is beneficial to the reproductive system. 


We wanted the best testosterone booster to contain Zinc — an important mineral for fertility. Zinc is little more of a nice-to-have ingredient than a must-have. It’s on our radar as an ingredient that possibly boosts testosterone levels, and while we couldn’t find enough supporting evidence that taking zinc would increase natural testosterone, low zinc levels have been connected to infertility. 

A low zinc level is also possibly a sign of hypogonadism. The closest support we found is in a study which found that people recovered from nutritional deficiency-related problems more quickly if they took a zinc supplement than those who did not. Zinc is available in many foods, such as oysters, fortified breakfast cereals, and red meat.

Zinc also has an upper limit. The NIH recommends that adults should not take more than 40mg of zinc per day, and notes that even moderately high zinc intake levels can be harmful. Hence our dosage has been kept safe within the limits set.

Every vitamin, mineral, and ingredient that affects the human body can be taken in enough quantities that they are harmful, or toxic, even the ones that — at lower levels — are beneficial or necessary. Unfortunately, testosterone boosters contain a lot of ingredients that are not well understood. This means in addition to not being able to confirm whether certain ingredients increase testosterone, the scientific and medical communities also don’t know at what levels many ingredients become toxic. 

Last Words

As with any supplements we are careful with the claims we make. We stopped short of saying it is an anti-aging remedy. However as you can read from the above treatise, it is very much a remedy to help us age better. Informal trials among tested subjects indicate that. We hope you will too benefit from it.

Margin Valuation Prices As Price Targets

What a novel idea... the supposedly latest share margin valuation prices for glove stocks MAY actually present itself as a ready-easy targ...