During the first year of pandemic in 2020, due to extraordinary demand for gloves, both the sales (>3X) and net profits (>5X) have set record high for glove manufacturers, supported by higher volume and higher selling prices, driving share prices to over 5-10 times compared to pre-pandemic. However, the quick return has invited many smaller players, supply more than demand when fear of COVID was fading over the past 2 years, glove stocks suffer big drops of both sales and income to about 10-20% of peak performances, even lower than pre-pandemic, driving the share prices like a roller-coaster, this time to less than 10% of peak prices.
In this article, you will learn 5 glove giant stocks in Singapore and Malaysia benefit from recovering in cyclic business in post-pandemic with over 2X upside potential of share prices, each requiring unique stock strategies for investing or trading.
1) Top Glove (SGX: BVA) / (Bursa: 7113) – Singapore / Malaysia Giant Glove Stock
2) Hartalega (Bursa: 5168) – Malaysia Giant Glove Stock
3) Kossan (Bursa: 7153) – Malaysia Giant Glove Stock
4) SuperMax (Bursa: 7106) – Malaysia Giant Glove Stock
5) Riverstone (SGX: AP4) – Singapore Giant Glove Stock
“Crisis is Opportunity‘, a golden investing rule but only true if the stock prices are falling to low Optimism while business is still intact or having high chance to recover. For glove stocks, due to cyclic business induced by pandemic (孤掌难鸣), despite some are still making losses now, demand for glove will be back sooner or later, especially when smaller players could not survive through the cold winter, demand will be more than supply again (currently many glove manufacturers only produce less than 50% capacity).
Buy Low may lower before an investor could Sell High in future, no one could predict the lowest/highest points for stock prices or businesses. Therefore, it is more practical to Buy Low enough, having patience to hold and then Sell High enough one day, integrating with several key indicators for business and stock price reversal. Crisis investing requires diversification over a portfolio of 10-20 giant stocks over several sectors and countries, alignment with own personality (eg. short / mid / long term) is key for success.
The largest glove stock, Top Glove, takes the lead to announce recently that ASP (Average Selling Price) of glove will be adjusted higher. Other competitors would follow the same trend of market leader, when glove selling prices are higher, when demand may be increasing in the next 1 year with more sales (glove also has expiry dates, inventory will be exhausted), likely they would report profits again, even if only aiming for target of pre-pandemic in 2019, both the sales and share prices could have 2X upside potential.
Top Glove (listed in both Singapore and Malaysia), Hartalega, Kossan and SuperMax are considered the Big Four of glove manufacturers in Malaysia, all are giant stocks (based on Dr Tee criteria), will be discussed in further. Riverstone is a smaller player (listed in Singapore) but having strong business fundamental, will be discussed as well.
In recent 15th Ein55 Charity Course (6 May 2023) on Global Discounted NAV Stocks, we have raised fund of $16,300 for Tzu Chi Singapore to help needy families in Singapore. Under the spirit of charity, Dr Tee decides to share 5 glove stocks discussed (SuperMax is an undervalue stock with stock price much less than discounted asset value) with readers as strikers in post-pandemic with light at the end of tunnel for glove industry (read each details in this article to fully understand on how to position in these giant stocks).
So, we will elaborate here mainly on 5 giant glove stocks (Top Glove, Hartalega, Kossan, SuperMax, Riverstone) which may be considered for both longer term investing (when correcting below a fair price with holding power) and short term trading (following S.E.T. trading rule – Stop Loss / Entry / Target Prices).
1) Top Glove (SGX: BVA) / (Bursa: 7113) – Singapore / Malaysia Giant Glove Stock
Top Glove is the world’s largest rubber glove manufacturer with many types of latex and nitrile gloves from manufacturing facilities in Malaysia, Thailand and China. Founder and major shareholder is Lim Wee Chai (27% ownership), was No 14 richest person in Malaysia (Forbes’ List), but ranking drops significantly with share prices from nearly RM10 to less than RM1 at one time.
Top Glove has dual listing in Malaysia Bursa (longer history) and Singapore SGX. The relative stock performance are aligned but due to different group of investors, short term share price in SGX (BVA) can be slightly different from Bursa (7113). Fundamentally, each share (SGX or Bursa) is the same but short term share price may not be due to difference of forex (SGD/MYR) alone, especially ringgit has been weaker over the past few years.
Due to low optimism in share price but weaker business (may turn around to positive in about 1 year), Top Glove may be considered as a striker stock (aiming for high potential capital gains with little or no dividend support) for short term / medium term trading with condition the share prices (Bursa: 7113) has to stay above RM1 as critical support (SGX BVA will be S$0.30 with 0.33 exchange rate for SGD/MYR).
Minimum target could be 2X for trading (RM2) but if there is any global uncertainty with stock price below RM1, a trader may need to exit with stop loss (eg. 5-10%), minimizing risk of Buy Low get lower. If the cyclic business is recovering well over the next years, then the stock may be position as “mid-fielder” stock for longer term holding for both growth in capital gains and dividend payments, then the fair price target would be >RM3 of its Ein55 intrinsic value. Before the hot summer with greed, an investor or trader has to endure through winter time of reversal from bear to bull.
2) Hartalega (Bursa: 5168) – Malaysia Giant Glove Stock
Hartalega is the world’s largest nitrile glove manufacturer. Founder and major shareholder is Kuan Kam Hon (about 50% ownership with family), was the No 9 richest person in Malaysia (Forbes’ List), also drop in ranking with falling of share price from about RM20 to RM2.
Hartalega main product of nitrile glove has higher profit margin compared to latex (rubber) glove. However, this profitable product segment also attracts many competitors, therefore the high growth of Hartalega is getting slower, now is more aligned (sustainable rate) with other major competitors, sharing the big pie of glove industries.
Similar to Top Glove, Hartalega is more suitable for crisis recovering trading but critical price support is RM2 (compared to RM1 of Top Glove). Even with weaker quarterly results recently, the share price did not fall further, supported above RM2 instead, a sign of market confidence. Top Glove and Hartalega has strong correlation in share prices of about 1:2, therefore when one stock starts to move in certain direction, another stock would follow, especially if it is glove industry or general market trend. For short term trading, Top Glove is stronger than Hartalega, therefore recently Hartalega has been catching up with lagging prices above RM2.
Stock market usually is 6-12 months ahead of economy or company business, therefore positioning in either glove leader (Top Glove or Hartalega) has additional protection of stronger companies while bottom fishing to Buy Low, ideally following S.E.T. (Stop Loss / Entry / Target) for short term trading plan, monitoring future business and Ein55 Optimism level for longer term investing.
3) Kossan (Bursa: 7153) – Malaysia Giant Glove Stock
Kossan is the world’s second largest glove manufacturer (technical rubber products, medical gloves, cleanroom products, etc). Kossan is a strong growth stock (supported by growing businesses with strong cash flow), performance is stronger than the main competitor, Top Glove. Kossan has low debt level, having potential to expand further with more leveraging if needed. The glove industry is big enough for major players to share the big global pie of growing demand for gloves in manufacturing and healthcare sectors.
Again, similar strategies as Top Glove to position Kossan at low Optimism level, except critical price support is higher at RM1.25 (trading above this level is relatively safer), compared to RM1 support of Top Glove.
4) SuperMax (Bursa: 7106) – Malaysia Giant Glove Stock
SuperMax is a leading medical / latex gloves manufacturer. SuperMax has additional protection of having undervalue asset more than its share price, useful consideration if a company may be in crisis, may not go bankrupt easily.
Again, similar strategies as Top Glove to position SuperMax at low Optimism level, except critical price support is slightly lower at RM0.90 (trading above this level is relatively safer), compared to RM1 support of Top Glove.
5) Riverstone (SGX: AP4) – Singapore Giant Glove Stock
Among 5 giant glove stocks, Riverstone is the smallest player but it has its niche market. Riverstone manufactures cleanroom glove (eg. hard disk drive and semiconductor) and healthcare gloves, therefore the business is relatively stronger than other major players during post-pandemic.
Riverstone is a Malaysia company but stock is listed in Singapore, therefore the share price potential is also partially affected by Singapore stock market. Choice of stock exchange for listing does not affect the company fundamental (same share ownership) but due to different characteristic of global investors in each stock exchange (eg. US, Hong Kong, Singapore, Malaysia), etc, would make a big difference in share prices which is the ultimate goal for a company to be listed.
Riverstone is also low Optimism level but positioning different from other 4 glove giant stocks. Since Riverstone did not fall as much as other glove giant stocks (mainly supported by stronger business), it is the only glove giant stock has not recovered yet to overcome S$0.65 resistance (to become future price support for trading). Riverstone may be considered for longer term investing (not for short term trading currently) with business trend affected by both glove industry (healthcare needs) and country economy (eg industrial needs).
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There are over 2000 giant stocks in the world based on Dr Tee criteria, choice of 10 Dream Team giant stocks have to align with one’s unique personality, eg. for shorter term trading (eg. momentum or swing trading) or longer term investing (cyclic investing, undervalue investing or growth investing). Readers should not just “copy and paste” any stock (What to Buy, When to Buy/Sell) as successful action taking requires deeper consideration (LOFTP strategies – Level / Optimism / Fundamental / Technical / Personal Analysis) which you could learn further from Dr Tee Free 4-hr Webinar.
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Ascendas Reit (SGX: A17U), CapitaLand (SGX: C31), CapitaLand Integrated Commercial Trust (SGX: C38U), City Development (SGX: C09), ComfortDelGro (SGX: C52), Dairy Farm International (SGX: D01), DBS Bank (SGX: D05), Frasers Logistics & Commercial Trust (SGX: BUOU), Genting Singapore (SGX: G13), Hongkong Land (SGX: H78), Jardine Cycle & Carriage (SGX: C07), Jardine Matheson Holdings JMH (SGX: J36), Keppel Corp (SGX: BN4), Keppel DC Reit (SGX: AJBU), Mapletree Commercial Trust (SGX: N2IU), Mapletree Industrial Trust (SGX: ME8U), Mapletree Logistics Trust (SGX: M44U), OCBC Bank (SGX: O39), SATS (SGX: S58), Sembcorp Industries (SGX: U96), Singapore Airlines (SGX: C6L), Singapore Exchange (SGX: S68), Singtel (SGX: Z74), ST Engineering (SGX: S63), Thai Beverage (SGX: Y92), UOB Bank (SGX: U11), UOL (SGX: U14), Venture Corporation (SGX: V03), Wilmar International (SGX: F34), YZJ Shipbldg SGD (SGX: BS6).
Dr Tee will cover over 20 case studies, Singapore giant stocks, eg. CapitaLand Integrated Commercial Trust (SGX: C38U), Singapore Exchange (SGX: S68), Keppel Corp (SGX: BN4), Top Glove (SGX: BVA), Jardine Matheson Holdings JMH (SGX: J36), Vicom (SGX: WJP) and many others, Malaysia giant stocks, Hong Kong giant stocks and US giant stocks, both long term investing and short term trading.
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