My nephew Yap Sung Pang from Manchester, UK sent these 2 posters which show the glove price has shot up from 5.83 pounds to 14.99 pounds for 100 pieces, an increase of 260% due to Covid 19 pandemic. The demand for glove far exceeds supply.
Supermax has its own brand and sale out lets in US, UK and many other countries. Unlike other smaller glove manufacturers, Supermax can easily increase its selling price. Even if I assume that Supermax can double its original selling before the pandemic, its profit would be phenomenal. Bearing in mind that the additional selling price is pure profit because it does not involve production cost.
Based on this new information, I realised that I have under estimated my target price of Rm 18. I believe the share price for Supermax should be above Rm 20 after the announcement of the next 2 quarter results. The next quarter ending June should be announced soon.
RHB and CIMB just informed me that they have increased the capping from Rm 5.00 to Rm 7.00 for margin finance from tomorrow onwards. Investors will have additional margin loan facility for buying more Supermax shares which will push up the share price.
Mr Ooi Teik Bee said that he believes Supermax will be included into FBM KLCI component stock index effective on 18th Dec 2020. This higher rating will also push up Supermax share price.