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To All Investors,

2020 is coming to an end. Though there's literally nothing to celebrate, but I hope everyone is in good spirit. If you are healthy, be thankful of that. If you are making money in the market, do provide some cash aid to the needy people or NGOs. If your portfolio is currently in red, fret not, this is something all investors will go through.

Let's get straight to the point - I am planning to double down my investment in LKL (0182) and here's why.

  • Surging number of COVID cases.


As at time of writing, there are 21 million of active cases worldwide, as per data here. Take it or leave it, but this pandemic ain't gonna end soon. We all know how infectious is this disease. Despite all preventive measurements, we still see the emergence of COVID cluster and cases. You may confort yourself with the news of vaccines development. Numerous biotech companies are racing to produce vaccines and as at time of writing, 2 actually received the green light for full use. Well, ask yourself, are you confident of taking Pfizer's vaccine? Most of them (Moderna, Pfizer, AstraZeneca, SputnikV) registered a vaccine efficacy (VE) of >90%. Meaning to say, in a targeted vaccinated group people, you expect a >90% reduction of covid cases. As long as VE is less than 100%, we gonna live with Covid with no end in sight.

Ok, cut this crap. We all know this. Let's highlight something that the company can offer in midst of a pandemic.
 

Basically, they offer everything that you can find inside a hospital ward, ranging from hospital crank beds to even a pillow case.

Well, cut this crap again. You could have explore this on your own here

Ok, let's get into something which I think might move the share price. After all, share price going up is what we, as investors want.

  • SUPPLY OF NITRILE EXAMINATION GLOVES ; SUPPLY OF NITRILE GLOVES (WeiHai) & DISTRIBUTORSHIP AGREEMENT with AT

    Honestly, if you ask me, I would believe that these are some bogus contracts and MOUs. Afterall, provided that you have the connections and contacts, it does not take much $ to come out with an agreement. Based on the above announcement, I draw the following links.%3CmxGraphModel%3E%3Croot%3E%3CmxCell%20id%3D%220%22%2F%3E%3CmxCell%20id%3D%221%22%20parent%3D%220%22%2F%3E%3CmxCell%20id%3D%222%22%20value%3D%22%22%20style%3D%22edgeStyle%3DorthogonalEdgeStyle%3Brounded%3D0%3BorthogonalLoop%3D1%3BjettySize%3Dauto%3Bhtml%3D1%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20edge%3D%221%22%20source%3D%223%22%20target%3D%225%22%20parent%3D%221%22%3E%3CmxGeometry%20relative%3D%221%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%223%22%20value%3D%22ATGE%20(%26quot%3BAT%26quot%3B)%22%20style%3D%22rounded%3D0%3BwhiteSpace%3Dwrap%3Bhtml%3D1%3BfillColor%3D%23B2C9AB%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%2235%22%20y%3D%22200%22%20width%3D%2280%22%20height%3D%2280%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%224%22%20value%3D%22%22%20style%3D%22edgeStyle%3DorthogonalEdgeStyle%3Brounded%3D0%3BorthogonalLoop%3D1%3BjettySize%3Dauto%3Bhtml%3D1%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20edge%3D%221%22%20source%3D%225%22%20target%3D%226%22%20parent%3D%221%22%3E%3CmxGeometry%20relative%3D%221%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%225%22%20value%3D%22LKLAM%20(%26quot%3BLKL%26quot%3B)%22%20style%3D%22rounded%3D0%3BwhiteSpace%3Dwrap%3Bhtml%3D1%3Bdirection%3Dsouth%3BfillColor%3D%23B2C9AB%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%22240%22%20y%3D%22200%22%20width%3D%2280%22%20height%3D%2280%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%226%22%20value%3D%22%26lt%3Bfont%20face%3D%26quot%3BArial%26quot%3B%26gt%3B%26lt%3Bpre%26gt%3BShang%20Hong%20International%20(Hong%20Kong)%20Limited%26lt%3B%2Fpre%26gt%3B%26lt%3B%2Ffont%26gt%3B%22%20style%3D%22rounded%3D0%3BwhiteSpace%3Dwrap%3Bhtml%3D1%3BfillColor%3D%23B2C9AB%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%22406%22%20y%3D%22200%22%20width%3D%22300%22%20height%3D%2280%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%227%22%20value%3D%22%26lt%3Bfont%20face%3D%26quot%3BArial%26quot%3B%26gt%3B%26lt%3Bpre%26gt%3BRM163%2C209%2C183.00%26lt%3B%2Fpre%26gt%3B%26lt%3B%2Ffont%26gt%3B%22%20style%3D%22text%3BwhiteSpace%3Dwrap%3Bhtml%3D1%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%22370%22%20y%3D%22320%22%20width%3D%22110%22%20height%3D%2251%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%228%22%20value%3D%22%22%20style%3D%22curved%3D1%3BendArrow%3Dclassic%3Bhtml%3D1%3BexitX%3D0.5%3BexitY%3D1%3BexitDx%3D0%3BexitDy%3D0%3BentryX%3D1%3BentryY%3D0.5%3BentryDx%3D0%3BentryDy%3D0%3BstrokeColor%3D%23788AA3%3BfontColor%3D%2346495D%3B%22%20edge%3D%221%22%20source%3D%226%22%20target%3D%225%22%20parent%3D%221%22%3E%3CmxGeometry%20width%3D%2250%22%20height%3D%2250%22%20relative%3D%221%22%20as%3D%22geometry%22%3E%3CmxPoint%20x%3D%22390%22%20y%3D%22250%22%20as%3D%22sourcePoint%22%2F%3E%3CmxPoint%20x%3D%22440%22%20y%3D%22200%22%20as%3D%22targetPoint%22%2F%3E%3CArray%20as%3D%22points%22%3E%3CmxPoint%20x%3D%22480%22%20y%3D%22370%22%2F%3E%3CmxPoint%20x%3D%22380%22%20y%3D%22380%22%2F%3E%3C%2FArray%3E%3C%2FmxGeometry%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%229%22%20value%3D%22Nitrile%20Gloves%22%20style%3D%22text%3Bhtml%3D1%3Balign%3Dcenter%3BverticalAlign%3Dmiddle%3Bresizable%3D0%3Bpoints%3D%5B%5D%3Bautosize%3D1%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%22320%22%20y%3D%22219%22%20width%3D%2281%22%20height%3D%2218%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3CmxCell%20id%3D%2210%22%20value%3D%22Rubber%20latex%20gloves%26lt%3Bbr%26gt%3Band%20Nitrile%20gloves%22%20style%3D%22text%3Bhtml%3D1%3Balign%3Dcenter%3BverticalAlign%3Dmiddle%3Bresizable%3D0%3Bpoints%3D%5B%5D%3Bautosize%3D1%3BfontColor%3D%2346495D%3B%22%20vertex%3D%221%22%20parent%3D%221%22%3E%3CmxGeometry%20x%3D%22115%22%20y%3D%22206%22%20width%3D%22116%22%20height%3D%2231%22%20as%3D%22geometry%22%2F%3E%3C%2FmxCell%3E%3C%2Froot%3E%3C%2FmxGraphModel
    Both contracts are very much dependent on AT, as we do not know whether LKL has any other distributorship agreement with other glove suppliers. LKL does not manufacture gloves. The whole thing look much more convincing should they ink an agreement with the big brothers (TopG, Supermx, Hartalega, Kossan). For now, with AT, I would give them benefit of doubt.

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Let us assume that only 40% of the both contracts sum (240m) will materialize (that's 96m - I'm being very conservative here). Out of 40%, let's assume that 5% of it will be reflected in upcoming financial period ended 30 April 2021 - that's a contribution of RM4.8m on top line in 1 quarter. Well, is there a delivery news for us (or will they announce such thing)? I'm not sure. Perhaps someone can send an email to LKL's IR and ask them about it. Well, I'll do you a favour after this.
 

  • Supply from AT alone, is insufficient

    Reason why I give 2 question mark (as diagram above) is that I believe there will be more glove suppliers than, to a single supplier, which is AT. RM 240m is not a small sum. You wouldn't want to concentrate everything on AT. If there's more than 1 supplier to it, the whole "bogus" contracts could be real. If contracts are real, hmm, I will leave it to your imagination.

 

Do you buy the contract supply news? Hmm, if you ask me. I do. That's why I'm writing this. For now, I'll put 35% of my capital as initial bet. If there's further news or announcement to it, probably I'll up my stake to 70%.

Current price is RM0.90. I bought some. I hope within 1 month, share price would have at least, at least, touch RM1.00. That's an upside of 11% based on current price. However, to be realistic, here's my target.

Last Trading Day of Expected TP (RM)
Dec-20 0.96
Jan-21 1.0 - 1.05
Feb-21 1.10 - 1.2
Mar-21 1.20 - 1.35

 

 

Thank you for reading.

FYI - I'm sharing my personal rational of buying, as well as my investment journey here. Suggest to do your own due diligence before you make any buy and sell decision.

https://klse.i3investor.com/blogs/DoubleDown/2020-12-21-story-h1538313767-LKL_It_s_Coming_Up_Hopefully.jsp

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