Table 1: Supermx's 8 quarterly results (plus chart)
Table 2: Kossan's 8 quarterly results (plus chart)
Table 3: Harta's 8 quarterly results (plus chart)
As such, it may be advisable to avoid these stocks for a while.
Friday, August 27, 2010
Rubber glove sector- when the going gets tough...
I have appended below the tables of the last 8 quarterly results for Supermx, Kossan & Harta (plus the charts of their past quarterly results). We can see that all three companies suffered a drop in their net profit in QE30/6/2010 when compared to the immediate preceding quarter (QE31/3/2010). Is this a sign that the balance has swung from a seller's market to a buyer's market? This may explain the drop in their profit margin as cost increases cannot be fully passed onto the customers. In my opinion, the rubber glove sector has crossed the tipping point & their profit would likely to continue to decline, albeit at a gradual rate. If this scenario panned out, I believe we have seen a peak in the share prices for all the stocks in this sector.
Table 1: Supermx's 8 quarterly results (plus chart)
Table 2: Kossan's 8 quarterly results (plus chart)
Table 3: Harta's 8 quarterly results (plus chart)
As such, it may be advisable to avoid these stocks for a while.
Table 1: Supermx's 8 quarterly results (plus chart)
Table 2: Kossan's 8 quarterly results (plus chart)
Table 3: Harta's 8 quarterly results (plus chart)
As such, it may be advisable to avoid these stocks for a while.
Most the the glove player is unable to pass the cost of the clients immediately. Historically, most the the cost could be passed to the clients with a time lag of 2-3months. And of course the cost could be only be 80-90 % passed. As long as the demand remain strong, the profit would be keep on increasing as long as the expansion plans by the glove players are executed as planed. It is still too early to make a bear call on this industry.
ReplyDeletesgbuaya.blogspot.com
alex,
ReplyDeletei still holding bjcorp. bought at 1.06 and now, it drops to penny stock. can you pls share some analysis of you regarding this counter?
was thinking to dump all and cut loss next week.
thanks
Hi Akagi Shigeru
ReplyDeleteYou could be right. We can only be sure in the next 2 quarters whether this is a temporary setback or the sector has peaked. My take is that it has peaked because the dynamic of supply & demand is such that ever increasing supply has brought an equilibrium to this market and now surpassing it. Unless demand suddenly picks up, the new era is one of too much supply (as more production lines are being set up) while the demand situation remained unchanged. Let's wait & see.
Hi tan
ReplyDeleteBjcorp broke below the psychological RM1.00 yesterday. Unless a quick recovery happens, the stock would continue to slide lower. Its next supports are at RM0.90 & then RM0.80.
Hi Alex,
ReplyDeleteAxiata which announced its commendable Q2 results have not seen much rise in its stock price.
Do U think it has risen too much prior to its announceent?
Pls give your views on Axiata. Thanks
Hi Alex,
ReplyDeleteMBSB has announced very good Financial results but $$$ doesn't rise much. It is still worth to hold this stock. BTW can you share your inputs on Johan and Timecom. TQ.
Good day Alex,
ReplyDeleteIf there is a short term rally, would it be lead by the O&G because of NNHE listing?
How do view cement sector and this stock called Gopeng?
Appreciate your insights. Many thanks.
Hi Alex,
ReplyDeleteGood morning
Advise me please.
1) After QL bought Lay Hong ~25%, only Lay Hong up significantly. QL remained no change.
2) F&N bought Cocoland ~25%, both counters flat and no excitement.
Please explain your view that i could understand. This confuse is clouding my evaluation.
Very best regards,
Ai Ling
Hi Ahmad Rozian
ReplyDeleteAxiata's Q2 results were commendable when compared to the previous corresponding quarter (QE30/6/2009). However, when compared to the immediate preceding quarter (QE31/3/2010), net profit was lower by 37% while turnover was up very slightly. the lower net profit was attributable to a one-off gain recorded in QE31/3/2010 from the sale of shares in XL.
As noted by you, the good news may have been factored into the share price. Thus, the stock did not rally on the good results announcement.
hi alex, good monday morning. i have genting shares that I want to dispose of. based on the technical chart, what target price can i sell at to maximise my profit ? thanks
ReplyDeleteHi Stephanie
ReplyDeleteI agree with your comment on MBSB's good results and I've also noted that its share price did not react to the announcement of the results. For QE30/6/2010, MBSB's net profit increased by 15% q-o-q or 590% y-o-y to RM49.5 million while turnover increased by 5% q-o-q or 262% y-o-y to RM294 million. Could the non-reaction be a sign that the market is worried about MBSB's aggressive growth?
Another finance company with exposure to personal financial sector, RCECap had also reported a good results for the same quarter. For QE30/6/2010, RCECap's turnover dropped 10% q-o-q or 12% y-o-y to RM58.9 million, while net profit increased by 4.0% q-o-q or 27.6% y-o-y to RM23.6 million. RCECap's share price also did not rally on the good results.
Johan & Timecom are quite bearish. Johan broke its uptrend line at RM0.38 as well as its horizontal line at RM0.36. Its next support is at RM0.33. Timecom broke its uptrend line at RM0.53 and it may soon test its support at RM0.48.
Hi solomon
ReplyDeleteI don't think a listing of MISC's subsidiary, MMHE would lead to a sustainable rally in the O&G sector. That sector is weighed down by uncertainty in the outlook for crude oil. Is it going up or is it going down? Nobody knows...
Gopeng has certainly benefited from its associate (Perak-Hanjoong Simen)'s performance in QE30/6/2010. If it can maintain its 1H2010 performance in 2H2010, it may recorded a FY2010 EPS of 30.6 sen. This means the stock is now trading at a PER of 4.1 times. That's very attractive.
Technically speaking, Gopeng broke above its strong horizontal resistance at RM1.00. Its next horizontal resistance is at RM1.60.
Hi Ai Ling
ReplyDeleteYou asked about the different share price performance after the announcement:
1) After QL bought Lay Hong ~25%, only Lay Hong up significantly. QL remained no change; and
2) F&N bought Cocoland ~25%, both counters flat and no excitement.
The answer is simply that the share prices of the acquirers normally react timidly in an acquisition of a much small company. The acquiree company's share price normally react positively, as the case of Lay Hong. This did not happen to Cocoland because the stock has double in price from RM1.50 in mid-June to a recent high of RM3.00. You may say that some insiders bought into Cocoland way ahead of the announcement & they are now taking profit on the stock.
Hi CK
ReplyDeleteBased on technical analysis, the good price to take profit on Genting is RM10.00. However, its results for QE30/6/2010 was very impressive and the target prices set by many research houses are higher than RM10.00.
Hi Alex,
ReplyDeleteThank you for the explanation for QL, FN...
I had cleared my cloud now, next time, i will do more study prior to seek for your advice.
AL
Alex, Thank you for you comment on glove industry. I am still in the camp of thinking that the demand will surpass the up coming supply. Furthermore, not all glove players are in the same condition. Yes, currently the market is concern about the margin squeeze. But if you look at Hartalega and Top Glove, their net profit margin is actually loud-able if not improving. I think the market is too pessimistic about this industry now. It is the best time to accumulate if you ask me. Thanks
ReplyDelete