Supermax’s easily achievable target price

Koon Yew Yin 24 Nov 2020 

Supermax recently reported its 1st quarter, ending September, earning per share (EPS) of 30.58 sen. Its EPS for the previous quarter, ending June was 15.29 sen. The reason for the company to be able to increase its profit by 100% is due to surge in demand for medical glove for the coronavirus prevention. 

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Due to Covid 19 pandemic, the demand for medical gloves far exceeds supply and all the glove makers can easily increase their selling prices to make more and more profit. 

Supermax is making more earning per share (EPS) in every quarter since the pandemic began in March, than any of its peers, namely Top Glove, Kossan, Hartalega, Comfort Glove, Care Plus and Rubberex, etc. as you can see from their price charts. 

The reason why Supermax can make more EPS in every quarter than any of its peers is because it has its own brand and sale outlets in many cities in US and in many other countries around the world. Smaller glove makers cannot sell their glove at higher price than Supermax because they have to sell their gloves through agents or middle men.  

To be very safe and sure of making money, as an investor, I assume the company does not increase its selling price for the whole financial year. 

Its total EPS will be 4 X 30.58 sen = Rm 1.22 

My target price, based on PE 10, will be Rm 12.20 which is easily achievable. 

Statistics record shows that 80% of the investors in the stock market lose money, 10% can break even and only 10% are real winners. In fact, since the current pandemic is affecting almost all the listed companies except medical glove and medical products for the coronavirus prevention, there should be more losers.  Consequently, all the big institutional investors and investment banks which have to invest in many counters in their portfolio would be losing badly. They would have to sell all their non performing counters to buy medical glove and medical product stocks. 

I have taken extra effort to explain clearly why investors should buy Supermax so that even all the losers can make back some money.

I am sure its profit for the 2nd quarter will be better than its 1stquarter which should be announced in about 2 months. 

Currently Supermax is selling at Rm 8.16. Investors should just buy and wait patiently     

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