Koon Yew Yin 4 May 2020
Covid 19 pandemic has been depressing all the major stock markets around the world. Our local stock market is not spared. To prevent Covid 19 infection, the demand for rubber and nitrile gloves exceeds supply. As a result, the glove prices have been going up higher and higher. All glove manufacturers’ profits are increasing and their share prices are also shooting up higher and higher.
Under such a situation, investors have the difficulty of selecting the company with the fastest profit growth rate to invest. Among all the share selection criteria such as NTA, cash flow, healthy accounts, EPS etc, I consider profit growth prospect is the most powerful catalyst to move share price.
Rubberex has the best profit growth prospect
Currently Comfort is producing 450 million gloves per month or 5.4 billion gloves annually. From February it has added 6 new production lines to its existing 49 lines. The production increase is timely to take advantage of the higher sale prices.
Comfort has issued 580 million shares. Based on its current share price of Rm 1.55, its market capitalization is Rm 900 million.
Currently Rubberex is producing 1 billion gloves annually. Its new production plants which is scheduled to start operation in June has a production capacity of 2 billion gloves annually. The total production will be 3 billion gloves annually.
Rubberex has issued 252 million shares. Based on the its current share price of Rm 1.75, its market capitalisation is Rm 441 million.
Note: My intention for writing this piece is to help investors select wisely. I am obliged to inform you that I was a co-founder of Rubberex and I am not selling my holdings. I am not asking you to buy or sell. If you do, you are taking your own risk.
Note: I am sorry that I wrongly stated Comfort’s annual production was 450 million gloves. It should be 450 million per month and its annual production should be 5.4 billion gloves.