Top Glove price charts below shows that it has been dropping from Rm 9.60 on 19 Oct 2020 to close at the lowest Rm 5.20 on Friday 12 March 2021. It has been fluctuating within a few sen in the last 2 weeks. Those who did not sell their holdings earlier and all those who sold earlier are in a dilemma.
Its latest quarter ending February EPS was 35.77 sen and its previous quarter was 29.64 sen. Its half year EPS was 65.4 sen. Assuming its 2nd half year EPS will be the same as 1st half year. Its annual EPS will be Rm 1.31 per share. Price Rm 5.20 divided by Rm 1.31 = 4. It is selling at PE less than 4.
Moreover, the controlling shareholders and EPF have been buying back from the open market to prevent the shares from dropping further down, as shown on the table below. Despite their aggressive buying the share price continues to drop.
The following are the questions:
Shall I sell or not to sell?
Shall I buy some more shares to average down?
Will it continue to drop further down?
When will it rebound?
Those who sold at higher prices earlier, should they buy during this cheap sale?
I cannot advise you!
Luckily, I sold all my holdings earlier and I used all my sale proceeds to buy KPS and Dominant which shot to limit up.
All investors must believe in the price chart. What is a price chart?
It is a record of the daily price movement of a stock. If there are more buyers than sellers the share price will go up. In the case of Supermax there are more sellers than buyers in the last 5 months. As a result, the chart is showing a down trend in the last 5months.
This can only mean that there are more investors who believe the share price will not go up again because the demand for gloves is reducing due the reduction of new Covid 19 cases. The Americans have been the largest buyers of medical gloves. Since the number of new Covid 19 cases is reducing the requirement of medical glove is also reducing every day.
Moreover, all the glove manufacturers have been expanding their production capacities and there are many more new manufacturers. Even Mah Seng, a property developer also has ventured to make gloves.
In fact, besides Top Glove shareholders, all other glove stock shareholders should be in a dilemma.