SUPERMX (7106) - On Hot Shots

SUPERMX (7106) SUPERMAX CORPORATION BHD 

Supermax - On Hot Shots

The global equity market had been shedding off trillion in value after seeing a strong note of profit taking and selling down which had took the market into a correction. Many are still puzzle on whether this is a correction on the existing bull run, or the start of the economy slow down effect in the equity market. To put more confusion into the decision making of the investor and trader, ECB had announced it's decision to keep the interest rate at 0.05% and outlined an asset buying program that is to be started this month. While Ukraine and Russia had negotiated a truce, the latest shelling near the Donetsk's Airport had put the truce on the thin line again. And October will be a month where the US bond buying program will see a stop, raising speculation of a earlier than expected interest rate hikes which had sparked a strong buy back on the USD as US Funds are selling their foreign holdings and cling on to the USD.

While all these had been happening, the seemingly yet to be controlled Ebola Virus had reportedly spread it's wing into the US after Texas confirmed on it's first case of Ebola Virus infection on Thomas Eric Duncan. Currently, more than 80 people that had been in contact with the patient is under monitoring from the state. The deadly virus had infected more than 7,200 people in Africa and had then taken more than 3,300 lives.


With all this global event (Stronger USD and Ebola Virus Pandemic) that is happening, Supermax would somehow looking to call the shots as both event had inevitably benefit the glove sector.

Let's have a quick look at Supermax latest price chart.

Supermax had reached quite a bottoming level after sliding down from a peak of RM 3.00. However, Supermax will be looking to challenge higher after consolidating at the range of RM 2.25 for 2 months with double fuel boost from stronger USD and Ebola Virus Pandemic to charge Supermax into higher ground in the coming days.


Supermax - All The Reason For An Uppercut

Supermax had a very funny character with the KLCI - Inverse Relationship. Let's have a quick look on Supermax and the performance of KLCI from December 2013 to the current level.

From the past, Supermax had successfully displayed a relatively strong inverse relation towards the movement of the KLCI. With the current global market development, the KLCI will be looking to inch lower, possibly towards the support range of 1800 in the coming days due to :

1.) Stronger USD against the MYR.
2.) Ongoing Ebola Virus infection with no proven and guaranteed vaccination at the moment.


The USD will be looking to get stronger in the coming days due to the anticipation of a earlier than estimated interest rate revision from the Feds after the last tranche of bond buying program ends in October this month. The steep and strong pick up of the USD against the MYR will be looking to hit MYR 3.40 against USD 1 in the coming days.

Supermax which trades gloves in USD will see a boost on top of another boost after expecting a rising demand in gloves from the US and European Country amidst the Ebola Virus infection while riding on a stronger USD with will translate to a greater gain in forex.


Supermax will be even more interesting after being looked as the only laggard in the gloves industry that had saw it's competitor charging up.

1. Hartalega Holdings Berhad - 5168

2. Kossan Rubber Industries Berhad - 7153

3. Top Glove Corporation Berhad

4. Careplus Group Berhad

In a conclusion, Supermax is just another big bomb that will explode upwards in the market of red sea. Supermax will be a good counter to be traded / invested based on :
- Stronger USD outlook against the MYR, with a projection of reaching RM 3.40 for USD 1.
- BNM had just recently announced the unchanged OPR at 3.25%, pegging the nation interest rate for at least another quarter to half year period, hence putting away speculation of a sudden increase in OPR to counter the currency outflow.
- Rising global concern on Ebola Virus infection, with 1st US patient confirmed in Texas.
- Supermax being a laggard compared to all it's peers which had responded towards both the events
- Supermax to see factory expansion producing more output in FYE 2014.


A quick outlook will see Supermax challenging RM 2.50 based on approximately 10% capital appreciation from the current level of RM 2.24. Supermax will definitely be the next big thing in KLSE with all the factors lining up for a great run upwards.

Punching in? You decide.
Bone's short term TP: RM 2.50

Cheers and have a nice day

Regards,
Bone
http://bonescythe.blogspot.com