How should one play the “coronavirus” as an investor? Should we even invest at all? Isn’t there something “not quite right” about making money out of certain people’s sufferings? If you bought certain stocks which jumped owing to the coronavirus, is it evil to think in your heart that the longer the virus spreads, the better my returns?

So what is ethical investing anyway? Do these funds shy away from these healthcare-related counters? Do you buy and hold fire extinguisher companies that benefited enormously from the unrelenting Aussie bushfire??? Where do you draw the line? Do you even bother in the first place?

Hence, my views here are not an indication of my values barometer. I assess these stocks as an investment option. How the situation develops is part of the fundamentals’ story. So, please, leave your principles, values, morality and political correctness behind.


Momentum Investing

You can try to rationalize why you shouldn’t jump in, but you cannot block a momentum rally owing to a significant perk in “substantive factors” in a stock’s earnings prospects. 

 Demand yet to surge, but this could happen anytime soon. MQ Research’s checks show glove manufacturers have not yet seen a surge in glove demand on the back of the virus outbreak. MQ Research believes Chinese buyers have increased demand for cheaper vinyl gloves in the first instance. If the outbreak is prolonged, there could be a spillover to rubber gloves. The upcoming travel period around the Lunar New Year holiday could spark an acceleration of the outbreak and spur global glove demand.

Who will be the biggest beneficiary? Glove manufacturers are running close to an optimal utilization rate of 85%. Thus, any spike in demand could tilt the pricing power back to the manufacturers. MQ Research believes manufacturers with the highest exposure to the Asia market and with the highest capacity additions could be the biggest beneficiaries in terms of sales volume from this virus outbreak. Among glove manufacturers, Top Glove has the highest capacity additions, while Supermax and Sri Trang have strong exposure to the Asia market.


Biggest Consideration: Utilisation Capacity, Product Mix & Clientele’s Region Exposure

MQ Research believes manufacturers with the highest exposure to the Asia market and with the highest capacity additions could be the biggest beneficiaries in terms of sales volume from this virus outbreak. Among glove manufacturers, Top Glove has the highest capacity additions, while Supermax and Sri Trang have strong exposure to the Asia market.

Of MQ Research’s covered stocks, MQ Research prefers Top Glove over Hartalega due to its wider product mix, diversified market exposure as well as the potential benefit it could see from this virus outbreak. Nonetheless, Hartalega could also benefit if customers in developed countries (Europe and United States) start stocking up on rubber gloves as a preventive measure. 


Is It Too Late To Get Into The Big 4?

The Big 4 Heavenly Stars: Top Glove, Hartalega, Supermax, and Kossan. Yes, it is late if you get in NOW and you are a trader (i.e. window period of less than a week). No, if you planned to hold. Just look at the long long term charts (2003-now) of some of the Big 4.

You cannot fully anticipate the outbreak of each epidemic, but rest assured epidemics or health scares will be the norm moving forward owing to the mutation abilities of viruses. As long as you buy and keep, EVERYBODY makes money from glove makers. You are even more “secured now” as the Big 4 have reinvested heavily and now carries a huge moat around their business that will be hard to knock off from their perch.

Even the “political collateral damaged” Supermax maintained its long term outperformance since 2003 till now.

Just look at the lovely rise over the years for these stocks. These are stocks you can keep and keep and reinvest.

What About the Newer Players?

You mean Careplus and Comfort. well, just look at these two tables:

Capital expenditure can do a lot of things for the same companies in the same industry. But when the bigger players have the bulge bracket, it is very hard to even be competitive in terms of margin. Even if demand jumped 3x, they do not have the capital to take advantage of the situation.

Cost To Income ration, again in almost any other industry, there will be niches you can explore. However, the overwhelming size of the Big 4 will make it inevitable that every single resource will cost the small guys more. The Big 4 have economies of scale in almost everything.

Oceacash is involved in wide ranges of hygiene manufacturing of diapers, sanitary napkins, wet wipes, surgical apparel, caps, masks and gowns.

Today was only the first day it jumped. Even so, its market cap is still just RM180m on just 245m shares. The hygiene business should dominate proceedings. I think RM1.00 is around fair for a company that happens to be in the right sector, plus with a fantastic correlation to supplying Malaysia’s best selling car. 

We remain positive on Oceancash’s (OCP) business outlook after our recent meeting with management. We continue to like OCP, considering the i) favourable growth prospects in the hygiene’s nonwoven segment, ii) steady contribution of foreign felt sales from Thailand and Indonesia, as well as iii) strong management team with in-depth technical know-how. At 10x 2020E PER on the back of a projected EPS growth of 33% for 2020E, OCP’s valuation looks appealing. We reiterate our BUY call with an unchanged price target of RM0.61. This note marks a transfer of coverage.

Foreign Felt Sales to Drive Insulation Segment Growth
Profitability of the insulation segment was flat in 9M19 despite higher felt sales (+6% yoy) as this was largely offset by weaker PBT margins (-1ppt to 18.7%, exacerbated by adverse forex movement in 1H19). Prospects wise, we believe the increasing contribution from Thailand and Indonesia (foreign felt sales accounted for c. 61% of 9M19 insulation revenue) should be more than sufficient to cover for the expected shortfall in local felt sales (est. 2020 TIV forecasts lower by 1% to 590k units).

Insulation Felt Plant in Thailand Should be Ready for Action by 2H20
Elsewhere, construction of the felt production facility in Thailand remains on track to be completed by 2H20, and OCP is planning to relocate one of its two existing Malaysian production lines to tap into 1) the strong demand for resinated felt and 2) increase utilisation of excess capacity (current utilisation rates: est.50%). Locally, we understand OCP has been supplying felt to Proton refreshed models (ie. Saga, Iriz and Persona), and with this track record, the company is hopeful to participate in the Proton Complete Knocked-Down (CKD) X50 supply chain moving forward. We think OCP may give the CKD X70 contract a miss due to unfavourable pricing, similar to our observation of other auto-parts players.

Hygiene Segment’s Margins to Benefit From Cheaper Resin Cost, …
Outlook for the hygiene segment still looks promising – 9M19 PBT rose by 10% yoy to RM2.5m, on higher revenue (+1% yoy) and improvement in PBT margins (+0.5ppt to 6.1%). We believe the cheaper resin cost (est. 80% of hygiene’s raw material costs) will likely see an uptick in hygiene’s margins in the coming quarters.

Source: Affin Hwang Research – 3 Jan 2020

Well managed, look at the steady earnings. Now what if PBT jumps by 100% over the next 2 years. Is RM180m market cap still valid???

1720 Plague, 1820 Cholera, 1920 Spanish Flu, 2020 Chinese Coronavirus. What’s going on? 

It seems that once in 100 years the world is devastated by a pandemic. The last recent pandemics we can mention are the following: In the year 1720 plague, in the year 1820 cholera outbreak and the most recent pandemic was the Spanish flu of 1920. The researchers said that all of these pandemics we mentioned above have exactly the same pattern as the coronavirus outbreak in China. However, the precision with which these pandemics occur at exactly 100 years of age makes us think better about this topic. Are these pandemics somehow artificially created by a malicious organization? In 1720 there was a deadly pandemic of bubonic plague. It started in Marseille and was later called “The Great Plague of Marseille.”

The researchers estimated the number of deaths as 100,000. In 1820 the first cholera pandemic occurred, somewhere in Asia. Among the affected countries, we can list Indonesia, Thailand and the Philippines.

And this pandemic has killed about the same number of people. About 100,000 officially registered deaths. The main reason for the infection is the consumption of water from lakes infested with this killer bacterium. In 1920 one of the most unrelenting pandemics occurred. This is the Spanish flu that has infected about half a billion people and killed 100 million.

The Spanish flu holds the official record for the deadliest pandemic officially recorded in history. It is now 2020. At the 100th anniversary of the Spanish Influenza, humanity is facing a new potential pandemic called Coronavirus. Although the Chinese authorities were reluctant to make official statements and appealed for calm, the situation deteriorated rapidly.

The Chinese authorities were subsequently forced to quarantine approximately 35 million inhabitants.

Today, the first official cases in Europe and North America were registered.

The future looks dark … What do you think about this Chinese coronavirus epidemic?



Taken from TRUE BLOG. NET

CHINA HAS WUHAN CORONAVIRUS.

Hadi to Muslims: ‘Would you rather be cow herders or pig herders?’

ICON went limit up for the wrong reasons. Some are saying its because the terms were so convoluted and that not many know how to calculate the capital reduction.

PLEASE, this is not your first rodeo, this is not the first capital reduction exercise. You are all supposed to be professional investors or advisors.

The limit up was obviously caused by the 50 into one capital reduction. A simple calculation showed that ICON had 2.377bn shares. Divide that by 50 = 47.5 million shares. That must be close to the fewest number of shares listed by a company on Bursa.

The complaining parties ARE those who SOLD SHORT unwittingly. Imagine you had 100,000 prior to the ex date. It was trading at 4 sen, you value was RM4,000, and as with 99.9999% of ICON investors, you had lost money already big time.

Then you woke up and saw the price going limit up.

(0.035 x 50) + (100 × 0.105) ÷ 101 = 0.12 

Add the 30 sen limit up, you have 42 sen, today add another 30 sen you have 72 sen.

As you can see even at 72 sen, with just 47.5m shares its market cap is just RM34.2m. Of course, there are still other derivatives to cater to but let’s forget that for now.

The main reason for the double limit up… OVERSOLD SHORT. Imagine that same guy with 100,000 shares (value RM4,000) and seeing it going limit up at 42 sen. Sell first lar… Trouble is he sold 100,000 consolidated shares when in reality he had only 100,000/50 = 2,000 shares.

Imagine you have to buy back the 98,000 … say at an average of 62 sen … you would have lost 62-42 = 20 sen x 98,000 =RM19,600

Bearing in mind your value was just RM4,000 to start with. The figures will multiply if you had shorted 1,000,000 …

Bursa has done no wrong. This has been the same process for the longest time. Even our online accounts have default settings that do not allow investors to short sell stocks, i.e. selling what you don’t have in your portfolio.

The ONLY people who can short sell are DAY TRADERS or proprietary traders or company dealers… though some bigshots do deal through company dealers’ accounts first. Hence if you kena short sell… you get very little sympathy from all.

Unlike BN, PH doesn’t have to compensate for toll cuts, Guan Eng tells Najib

Mahathir: Ruling coalition could be a one-term government

Petty issues like having breakfast together is now wrong.
If the rich and the poor do not gather together to eat then how lah.
Division starts from there.

In Japan and other countries, everyone eat together regardless the status of one’s background.
WHY???? Because if one cannot even eat together then how is one going to work and live together.

Why is there a saying that when a family eat together they stay together forever.
Breakfast is the time to show everyone is equal and there is time to smile and talk to each other.

Malaysia politicians love to divide every race and religion to show their power and ego.

My suggestion/proposal to Mahathir last year was to have a school to bring together every race and religion to work as a team and be world class developer of this nation.

The trouble with today society is that there is no cooperation to be together.

The rich will gather around those of the same class or higher.
The middle class will gather with the rich.
The poor is consider the dirtiest and worthless human being in Malaysia.

With a population of a mere 34 million we are divided right from birth till death.

And this is WHAT PH GOVERNMENT IS DOING, SIMILAR TO THE UMNO ERA.

I BELIEVE THE MENTALLY SICK OLD HORSE IS NOT WORTHY OF BEING A PRIME MINISTER AND EDUCATION MINISTER.

EVERY TIME MAHATHIR OPENS HIS BLOODY MOUTH THERE IS DIVISION.

FOR GOODNESS SAKE LEAVE THE RICH AND THE POOR STUDENTS ALONE, LET THEM BE TOGETHER FOR BREAKFAST.

THE MONEY SPENT ON BREAKFAST IS WELL WORTH ITS VALUE THEN GIVING BIG CONTRACTS TO CRONIES WHO USE THEIR WEALTH FOR DRUGS, PROSTITUTES, GAY SEX ORGY, SCREWING OTHER PEOPLE’S WIVES ETC.

I WOULD LIKE TO SUGGEST THAT ALL TEACHERS MUST EAT THE SAME BREAKFAST WITH THE STUDENTS TOO.  THIS IS TO AVOID FOOD POISONING.  MALAYSIA IS WELL KNOWN FOR GIVING EXPIRED AND BAD FOOD TO STUDENTS.

REMEMBER THE MANY MILK INCIDENTS?

Pengurusan Ekonomi Style Kuda Liar – Dr Mahathir Lanjutkan Toll 18 + 20 Tahun Lagi !!

I really could not believe my eyes when I read this in The Star today. 

Cabinet decided not to sell PLUS to any bidders, not attractive enough, says Dr M

“We have studied all bids and by Khazanah Nasional.

“We decided best way is not to sell PLUS to anybody

keep it with Khazanah and EPF  he saidDr M said PLUS would be given 20-year extension of toll concession

(OSTB : Huh!! Why?? Why burden the people with another 18 years + 20 years = 38 years of paying toll?) 

He added people need not worry about 20-year extension of toll 
reduced flat rate, when compared against future ringgit rates, will be minimal.

“PLUS have to reduce toll by 18%, but remember, 18% is set at today’s rate

20 ys’ time, 18% when compared with ringgit rate then will not be very high

value and purchasing power of ringgit will go down

so what PLUS earn afterwards (in 20 years) is not as big as people think 

because we are looking at it at the present rate

it will be a flat rate minus 18%, said Dr Mahathir 

(OSTB : Huh ?? What type of logic is this?  

Why should people worry about PLUS’s future earnings? 

The people are worried about their own purchasing power. 

Who cares about PLUS.)

‘when compared against future ringgit rates’?  

(OSTB : This is an illogical statement. 

What is Dr Mahathir trying to say here? 

What future Ringgit rates? 

Ringgit rates against what? 

If Dr Mahathir is talking about the Ringgit’s value, well we do not even know what will be the Ringgit’s value tomorrow. 

How does Dr Mahathir know the value of the Ringgit 20 years or 38 years from now?

.
And please tell us in which economics or management text book did Dr Mahathir get this strange idea?  

.
“when compared against future ringgit rates’?”  
.
I say, ini teori ekonomi ikut kepala hotak siapa pula? 
Propesor Emeritus Kang bin Kung?)

.
value and purchasing power of ringgit will go down

so what PLUS earn afterwards (in 20 years) is not as big as people think

(OSTB : Huh? I say kawan, if the value and purchasing power of the Ringgit goes down so will the purchasing power of the people. 

This means the people will feel a bigger and bigger pinch when they have to keep paying tolls for 38 more years. 

Lower purchasing power means the people will see an even bigger hole in their pocket.

The people do not care whether PLUS’ earnings will be big or small. 

The people only care what their own earnings and purchasing power will be. 

Plus the fact that they have to keep paying tolls forever.)

Conclusion :

This so called solution is not a solution at all.  
In fact it only burdens the people more. 
Once again Dr Mahathir is also trying to cheat the simple people
Especially the Malays who Dr Mahathir knows very well do not know how to calculate things or understand business and economics. 
Dr Mahathir is once again taking advantage of the Malay peoples’ ignorance of such simple matters.

Here is a simple apple and apple comparison.

Dr Mahathir suggests to reduce the toll by 18%.  

WRONG. This is NOT a reduction. 

Why is this NOT a reduction ?

Because the TOLL CONCESSION is being extended – by an extra 20 YEARS.

So the people are going to end up paying even more toll. 

Here is something else. The TOLL will be reduced 18%.

But the concession is being INCREASED by 111% .  
20 yr extension / 18 yrs remaining  x 100% = 111%.

By simple logic, after pretending to reduce the TOLL by 18% but you want to kaut balik that 18% reduction through a longer concession period,  then you should only extend the toll concession period also by 18%.  

That means 18% x 18 yrs remaining = 3.24 years extra only.

So 18yrs + 3.24 yrs = 21.24 yrs only extended toll period. 

An extra 3.24 years extension only.

How in the name of Putrajaya did Dr Mahathir get that 20 year extension?
I say kawan, itu 20 tahun extra mana mari? 
Macam mana kira lah?

This is called ‘Pengurusan Ekonomi Style Kuda Liar’. 

You cannot find this type of economic theory or business management in any textbook anywhere in the world. 

Except maybe  Buku Ekonomi Kapten Blackbeard – Penyamun Unggul Laut Carribean.

My suggestion :

Priority No 1 Option.  Issue those 18 year Highway Bonds (say for RM35 billion). Settle all of PLUS debts, buy out EPF and KNB. Wind up PLUS. Abolish all tolls. Pay off the Highway bonds from taxpayers funds over the next 18 years, 20 years etc.  

2nd option not so good :  Reduce the toll by at least 30% with NO MORE INCREMENT IN TOLL, NO EXTENSION of the remaining 18 years concession period (ie until 2038) AND NO COMPENSATION PAYMENTS TO EPF OR KNB.

3rd option even less exciting :  The do nothing option.  Don’t do anything. Just let the people suffer until the toll expires in 2038. 

The only silver lining is that under option 2 and 3, the people will kick out the Pakatan Haprak government in the next GE in 2023 (three years from now). 

The people have paid enough tolls for the past 35 years. 

Enough is enough.  

Dr Mahathir you should really stop cheating and lying to the people.

OutSyed The Box