Fair Value: RM4.52

Current Price: RM 4.50
 
Recommendation: SELL/HOLD

The next quarterly report will be out some time this month. There is a possibility that the result will be less encouraging like Topglove. As the US government continue to print money, the US dollar will continue to be weakened, and this will hurt the earnings of rubber glove companies.

There is a possibility that the market price of Supermax will continue to drop. Or it might not. So the best strategy is to sell half and hold half. :-P If the market price continue to drop, you would have some extra cash to buy at a lower price. If the market price goes up instead, you would have the other half to ride the uptrend and use the other half in cash for other stocks when the boat of opportunity arrives.

Fair Value: RM4.52

Current Price: RM 4.03
 
Recommendation: BUY

As the current market price is below my Fair Value, I'm upgrading my recommendation from Hold to Buy. However, I'm not sure if the market price will drop further from this price. I believe a strong bull sentiment on this stock will only come back when there is an increase in the next quarter earnings. Otherwise, the market price may drop further. But I don't expect the downtrend in quarterly earnings to last more than 1 year. Therefore, the best strategy will be to buy in stages.

Refer to previous write-up here for more info about this company.

Fair Value: RM4.52

Current Price: RM 5.21
 
Recommendation: HOLD

Based on the recent Q2 report, the company's profit had dropped 10.9% compared to the previous quarter. However, its revenue had increased 6.4%. This is most probably due to the strengthening of Ringgit against the US Dollar. Thus, I believe the demand for the company's rubber gloves is still increasing, but most probably at a slower rate compared to during H1N1 outbreak. At worst, I'm expecting the company's profit to remain flat at the next quarter. Thus, I'm revising the Fair Value for this company from RM5.76 to RM4.52  As the current market price is above the current Fair Value, I'm maintaining my recommendation to Hold.

For those of you who have bought this stock earlier based on my recommendation, I'm sorry for causing you to have paper loss. This company's business is quite resillient and its business was not affected during the 2008 US recession and I believe it will not be affected by the current slower global economic recovery as well. Thus, it is safe to average down your cost per share for this company.

Some of you might want to sell off at the current price to cut-lost and hope to buy it back at a much lower price. But personally, I would not recommend you to use this strategy UNLESS you need the money in the short term (within 3 months). Never try to time the market. This is because the market price might or might not drop to my current Fair Value, which is based on my worst expectation that the next quarter profit may remain flat. The market price might not drop much after you've sold it. So if you have the patience to hold on to this stock for a longer term (more than 1 year), the best strategy is to average down.  

Investing for the long term has a lower risk of losing money, compared to trading for the short term.

Refer to previous write-up here for more info about this company.

Fair Value: RM 5.76 

 

Current Price: RM 6.44
 
Recommendation: HOLD

As the current market price had overshot the Fair Value, I'm revising my recommendation from Buy to Hold.

Refer to previous write-up here for more info about this company.

 

Fair Value: RM 5.76 

 

Current Price: RM 5.60
 
Recommendation: BUY

The Fair Value is adjusted to reflect the Bonus Issue of 1:4 (1 Bonus share for every 4 existing Supermax shares held) that was exercised on the 16th of June 2010.

Refer to previous write-up here for more info about this company.

(10 years Historical Chart)


Company Background

The Supermax Group was founded by Dato' Seri Stanley Thai and his wife Datin Seri Cheryl Tan in 1987 as a trading business distributing latex gloves which were sourced from contract manufacturers. In 1989, they started their first manufacturing facility. Today, the Supermax Group is the world's second-largest rubber glove manufacturer. It produces more than 14 billions pieces of gloves per year, meeting approximately 11% of the world demand for latex examination gloves.

The Supermax Group has eight (8) manufacturing plants based in Malaysia. Supermax currently exports to over 145 countries worldwide in the regions of America, Europe, Middle East, Asia and the South Pacific.
As an own-brand manufacturer, Supermax has developed a range of brands, namely Supermax, Aurelia, Maxter, Medic-dent and Supergloves.

In the 1st quarter of 2010 ended March 31st, the Supermax Group recently reported a 161.2% rise in earnings, on the back of 14.2% rise in revenue from the corresponding quarter last year.

Fundamentals

ROE: 23.3%

Average EPS Growth Rate: 29.7%

D/E: 0.30

Average P/E: 10.9

Dividend Yield: 2%

Fair Value: RM 7.20

Current Price: RM 6.99

Recommendation: BUY