i did a calculation on the TopGlove fair value at https://moneynology.blogspot.com/2020/06/2020-topglove-fair-value.html
now i am gonna using the same method to find the fair value for Supermax.
According toSupermax, the current glove Capacity is 26.1billion.(6.525 per quarter
), 2Q20 report showed revenue is 385m
So, 0.385/6.525 =0.059 per piece.
Boss said will increase price. Analyst said will be 30% . For conservative calculation, I assume they increase 20% on May, June and July.
So, 0.059 x 20% = 0.0118 extra per piece.
My Profit Forecast for 2020/2021 = 0.0118 x 26.1billion pieces = 308million Ringgit. (this is extra profit from the 20% increased of price)
we need to add with the profit before price increased. on 2Q20 profit is 30million. 4 quarter will be 120million.
As a result, My estimation total profit for 2020/21 will be 308m + 120m = 428million Ringgit
428 million / 1360million of shares = 0.3147 eps.
Assume PE = 30, 0.3147 x 30 = RM9.44
Let's do some proper homework to find out the fair value atleast at the short term instead of just following the crowds chasing glove counter without knowing what price you are paying for.
According to analyst research report, the pre-CoVID19 ASP is USD0.029 per 1000.
Thus, the ASP is RM0.116 per piece.
Supermax said will increase ASP by 30%+
Topglove said will increase around 5% to 15% (according to analyst).
Thus, i assume for April, May and June the average increase on ASP price is 10%.
0.116 x 10% = RM 0.0116.
On 2019, the total glove capacity produced is 73.4Billion pieces. Since topglove said after March ,the utilization is max at 100%, so, i would take 73.4 billion for calculation.
Thus, the extra profit gain from the 10% increased of price will be 0.0116 x 73.4 billion = 851million ringgit per annum.
according to 2Q2020 result, the net profit is 115million.
So, my profit estimation for the next 1 year = 115*4 + 851 = 1311 million ringgit.
the total shares is 2608m.
thus , my forecast EPS is 1311/2608 = 0.50 cent.
i would say the normal PE for topglove is 40 if we look at pre-covid19, it is trading at PE 40+.
So, my fair value for Topglove on 2020-2021 is 0.50 x 40 = RM20.
