LUXCHEM VERSUS COMFORT GLOVES, RUBBEREX, TOP GLOVE, HARTA, SUPERMAX (Compare & contrast) Calvin Tan Research

Hi guys,
Looks like Malaysia Gloves Companies are in bull phase due to world wide demand for Gloves due to coronavirus
Much have been written about Comfort Gloves, Rubberex, Top Gloves, Hartalega & Supermax.
One hidden gem is LUXCHEM (5143)
Why?
Answer: BECAUSE LUXCHEM IS A PROXY TO ALL GLOVE COMPANIES IN MALAYSIA AS IT SUPPLIES BOTH LATEX RESIN & NITRILE RESIN TO GLOVE COMPANIES
So if Glove production increases there will be a corresponding increase for Latex resin & Nitrile resin
And LUXCHEM stands to gain as all Glove Companies are all collectively firing up their production

Let's look at their respective reports

1) COMFORT GLOVE

SUMMARY OF KEY FINANCIAL INFORMATION 31 Oct 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Oct 2019	31 Oct 2018	31 Oct 2019	31 Oct 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	134,501	126,950	372,093	343,344
2	Profit/(loss) before tax	9,361	10,039	28,327	25,069
3	Profit/(loss) for the period	7,413	7,068	22,940	18,509
4	Profit/(loss) attributable to ordinary equity holders of the parent	7,413	7,068	22,940	18,509
5	Basic earnings/(loss) per share (Subunit)	1.30	1.26	4.01	3.29
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.5200		0.4900

2. RUBBEREX

SUMMARY OF KEY FINANCIAL INFORMATION 31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	54,635	39,516	222,965	205,235
2	Profit/(loss) before tax	6,788	4,073	15,744	10,141
3	Profit/(loss) for the period	3,883	3,685	11,353	8,685
4	Profit/(loss) attributable to ordinary equity holders of the parent	3,883	3,685	11,353	8,685
5	Basic earnings/(loss) per share (Subunit)	1.54	1.46	4.50	3.44
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	1.00	1.75
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.8100		0.8500

Definition of Subunit:

In a currency system, there is usually a main unit (base) and subunit that is a fraction amount of the main unit.
Example for the subunit as follows:

3. TOP GLOVE

SUMMARY OF KEY FINANCIAL INFORMATION 30 Nov 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		30 Nov 2019	30 Nov 2018	30 Nov 2019	30 Nov 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	1,209,100	1,261,965	1,209,100	1,261,965
2	Profit/(loss) before tax	125,452	141,879	125,452	141,879
3	Profit/(loss) for the period	111,757	111,671	111,757	111,671
4	Profit/(loss) attributable to ordinary equity holders of the parent	111,426	110,055	111,426	110,055
5	Basic earnings/(loss) per share (Subunit)	4.36	4.31	4.36	4.31
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	1.0100		1.0000

4. HARTALEGA

SUMMARY OF KEY FINANCIAL INFORMATION 31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	796,550	723,393	2,146,075	2,143,990
2	Profit/(loss) before tax	159,697	150,001	418,678	438,186
3	Profit/(loss) for the period	121,661	119,335	320,121	364,804
4	Profit/(loss) attributable to ordinary equity holders of the parent	121,273	119,755	319,203	364,844
5	Basic earnings/(loss) per share (Subunit)	3.60	3.60	9.49	10.97
6	Proposed/Declared dividend per share (Subunit)	1.80	2.20	5.50	6.60
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.7300		0.6700

5. SUPERMAX

SUMMARY OF KEY FINANCIAL INFORMATION 31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	385,497	385,101	755,438	752,153
2	Profit/(loss) before tax	41,829	54,317	74,272	106,993
3	Profit/(loss) for the period	30,022	38,721	54,982	74,690
4	Profit/(loss) attributable to ordinary equity holders of the parent	30,165	38,136	54,912	74,078
5	Basic earnings/(loss) per share (Subunit)	2.31	2.91	4.21	5.65
6	Proposed/Declared dividend per share (Subunit)	0.00	1.50	0.00	1.50
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.8600

6. LUXCHEM (PROXY TO ALL 5 OF ABOVE AS IT SUPPLIES BOTH LATEX RESIN & NITRILE RESIN TO THEM)

SUMMARY OF KEY FINANCIAL INFORMATION 31 Dec 2019

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31 Dec 2019	31 Dec 2018	31 Dec 2019	31 Dec 2018
		$$'000	$$'000	$$'000	$$'000
1	Revenue	187,155	206,246	765,480	814,086
2	Profit/(loss) before tax	12,757	11,189	50,122	49,880
3	Profit/(loss) for the period	9,418	8,475	36,956	37,378
4	Profit/(loss) attributable to ordinary equity holders of the parent	9,569	8,576	37,645	37,788
5	Basic earnings/(loss) per share (Subunit)	1.09	1.00	4.27	4.42
6	Proposed/Declared dividend per share (Subunit)	1.25	1.25	2.25	2.25
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	0.3400		0.3300

OK FROM THE CLOSING PRICES AS AT 2PM 17th April 2020

1) Comfort Glove Rm1.01
1.3 sen profit qtr (4 qtr = 1.3 x 4 = 5.2 sen)
Hmmm? P/E = Rm1.01 divides by 5.2 = 19.42 (Real time)

2) Rubberex Rm1.09
1.54 sen profit (4 x 1.54 = 6.16)
P/E 17.69



3) Top Glove Rm6.84
4.36 (4.36x 4 = 17.44)
P/E = 39.22

4) Hartalega  Rm7.75
3.6 (3.6 x 4 = 14.4)
P/E = 53.8

5) Supermax Rm1.97
2.31 (2.31 x4 = 9.24)
P/E = 21.3

NOW LOOK AT LUXCHEM
Price 47.5 sen
1 qtr 1.09 (1.09 x 4 = 4.36)
P/E = 10.89

THAT MEANS THAT IF EVERYTHING GOES AS NORMAL LUXCHEM WILL DOUBLE IN PRICE BY 10.9 YEARS
HARTALEGA WITH P/E 53.8 WILL ONLY DOUBLE YOUR MONEY IN 53.8 YEARS

FROM HERE WE SEE HARTA IS OVERVALUED BY VIRTUE OF IT BEING THE MOST POPULAR
AND LUXCHEM BY VIRTUE OF ITS BEING UNKNOWN TO MOST HAS THE BEST VALUE
OK IF LUXCHEM IS UNDERVALUE THEN WHAT WILL BE ITS TRUE VALUE?
FOR THAT WE TAKE THE LAW OF AVERAGE P/E BY ADDING ALL 5 GLOVES & DIVIDES THEM BY 5
So
Comfort 19.42 (Note Comfort should have an edge due to its mostly examination gloves as opposed to rubberex industrial gloves)
Rubberex 17.69
Top Glove 39.22
Harta 53.8
Supermax 21.3 (Calvin's favourite)
All 5 = 151.43
After division = 30.28 (P/E)
Now what if LUXCHEM's P/E adjusted to 30.28 WHAT WILL BE ITS FAIR SHARE PRICE BE?
The formula is
30.28/ 10.89 X 47.5 sen
= Rm1.32
IS LUXCHEM WORTH RM1.32?
Of course Luxchem is not primarily into chemical for gloves (although its Melaka factory (extra 35% capacity) Perak (Extra 20% capacity  ) can scale production to MEET ADDITIONAL DEMAND)
Let's give a 30% discount
Rm1.32 x .7 = 92.4 sen
92.4 SEN? IS IT?
YES VERY POSSIBLE

Best Regards
Calvin Tan Research

Please buy/sell after doing your own due diligence. In doubt consult your remisier/fund manager

One more reminder
If you own NETX (Calvin is in Top 30 Holders) please don't sell Netx for LUXCHEM
NETX WILL BE OUR SUPERSTAR IN NFCP BULL RUN
Gloves now in Bull run for 6 months to 2 years possible
NFCP BULL RUN WILL BE A 5 YEAR MARATHON
Happy investing

Additional comment from feedback
From supermax forum

Targeted Luxchem margins are rather slim

17/04/2020 2:59 PM

 

Calvin replies:

 

Luxchem feed stock were Crude Oil & Rubber Latex

 

Now crude oil has fallen by more than 50%. Rubber too is now at historical low

 

See https://tradingeconomics.com/commodity/rubber

 

With cost of feed stock production dropped by 50% t0 60% LLuxchem profits will explode upward

https://klse.i3investor.com/blogs/www.eaglevisioninvest.com/2020-04-17-story-h1506016450-LUXCHEM_VERSUS_COMFORT_GLOVES_RUBBEREX_TOP_GLOVE_HARTA_SUPERMAX_Compare.jsp