Thursday, January 14, 2010

Rubber glove stocks- time to take profit again

We have seen a strong rally for all stocks related to the rubber glove sector in the last 3 weeks. This was prompted by the terrific results of Topglove for QE30/11/2009 (go here). How much longer can the rally go? Nobody knows, but judging from signs such as the participation in the rally by smallish glove producers (such as, IRC & Rubberex) and also the appearance of the inverted hammer in the chart of Kossan & possibly Supermx, the top may be very near. I believe it is time to take some profit in this sector.


Chart 1: Kossan's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)


Chart 2: Supermx's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)


Chart 3: Topglove's daily chart as at Jan 14, 2010_4.20pm (Source: Quickcharts)
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4 comments:

  1. SureWinThursday, January 14, 2010 5:07:00 PM

    Alex,

    Y the market accorded a very low premium to AnnJoo-W even the mother is running now?? The warrant is really a bargain at the current price (ie only 2.1% premium).

    Thx

    ReplyDelete
  2. MarcoThursday, January 14, 2010 10:03:00 PM

    I don't think it is fair to judge TopGlove with others rubber glove players like Adventa and Rubberex.

    Topglove is gaining its revenue (double digits growth) and profit persistently without fail for at least 5 years consequently.

    Maybe I shall say SELL call for short-term investors, and HOLD call for long term players

    ReplyDelete
  3. Alex LuFriday, January 15, 2010 9:11:00 AM

    Hi surewin1woh,

    I agree that AnnJoo-WB is quite attractively priced with premium at 2.1%. The exercise price of the warrant is at RM2.50, while its expiry date is in Jan 2013.

    I have no idea why traders are not prepared to pay more for a warrant based on a stock with a bullish outlook. The only thing I can think of is that the number of warrants issued is sizable at 261 million units.

    ReplyDelete
  4. Alex LuFriday, January 15, 2010 9:35:00 AM

    Hi Marco,

    I agree with your take that long-term investors can hold onto their rubber glove stocks. However, it is not a bad idea to do a tactical sell & buyback for these stocks since they had risen so much in only 3 weeks.

    It is not easy to stomach a RM1.00 drop if you are holding the stock, but it is also not easy to stomach a RM1.00 gain if you have completely disposed of it. It is not an easy call, but don't fret it. A person holding rubber glove stocks are having an enviable problem compared to those who do not.

    ReplyDelete