I called uncle again (he has more than 30 years’ experience). We talked about the drop in glove counters yesterday whether it is an opportunity to buy in the market. I call him Sifu or master in English. Some of the things that he told me are as below:
Sifu told me HARTA bottom is RM15
Sifu said HARTA can fetch RM19
Sifu said buy and wait for 3 months. Don’t contra and don’t buy on margin
1. Sifu told me HARTA bottom is RM15
Last Q Harta made RM220m, next quarter should hit RM500m looking at increasing COVID-19 global cases and the result of other gloves company.
So RM500m * 4 = RM2000m per year
No of shares 3427m
One Year EPS = RM0.58
Bottom PE = 25x ...
Historically 33x PE for Hartalega is the normal level that the stock usually trade at. But during extreme crazy situation like now, sometimes you can get Hartalega at 25x PE
So 25 * 0.58 = RM14.50
2. Sifu said HARTA can fetch RM19
Using the usual 33x PE
33 * 0.58 = RM19.1 round to RM19
3. Sifu said buy and wait for 3 months. Don’t contra and don’t buy on margin
Me: How about vaccine? People told me we are going to have it soon!
Sifu: I have answered you previously about vaccine. We have to be humble and don’t simply assume that this vaccine or that vaccine will save us all in a short time. I don’t know about vaccine date but to take care of downside, the RM2000m sustainable earnings already take care that one day Gloves Physical Price (GPP) will decline. But from now until that day, GPP will still go up. So it average each other you see.
https://klse.i3investor.com/blogs/feliciawong/2020-09-03-story-h1513312299-Hartalega_HARTA_How_low_can_it_go.jsp
