How should 1 play the "coronavirus" equally an investor? Should nosotros fifty-fifty invest at all? Isn't at that topographic point something "not quite right" close making coin out of for certain people's sufferings? If yous bought for certain stocks which jumped owing to the coronavirus, is it evil to intend inwards your pump that the longer the virus spreads, the meliorate my returns?
So what is ethical investing anyway? Do these funds shy away from these healthcare-related counters? Do yous purchase in addition to concord burn extinguisher companies that benefited enormously from the unrelenting Aussie bushfire??? Where practise yous describe the line? Do yous fifty-fifty bother inwards the showtime place?
Hence, my views hither are non an indication of my values barometer. I assess these stocks equally an investment option. How the province of affairs develops is business office of the fundamentals' story. So, please, exit your principles, values, morality in addition to political correctness behind.
Momentum Investing
You tin lavatory endeavor to rationalize why yous shouldn't bound in, but yous cannot block a momentum rally owing to a pregnant perk inwards "substantive factors" inwards a stock's earnings prospects.
Demand yet to surge, but this could occur anytime soon. MQ Research’s checks demonstrate glove manufacturers induce got non yet seen a surge inwards glove need on the dorsum of the virus outbreak. MQ Research believes Chinese buyers induce got increased need for cheaper vinyl gloves inwards the showtime instance. If the outbreak is prolonged, at that topographic point could go a spillover to condom gloves. The upcoming locomote menses some the Lunar New Year's Day vacation could spark an acceleration of the outbreak in addition to spur global glove demand.
Who volition go the biggest beneficiary? Glove manufacturers are running unopen to an optimal utilization charge per unit of measurement of 85%. Thus, whatever spike inwards need could contestation the pricing mightiness dorsum to the manufacturers. MQ Research believes manufacturers amongst the highest exposure to the Asia marketplace in addition to amongst the highest capacity additions could go the biggest beneficiaries inwards price of sales book from this virus outbreak. Among glove manufacturers, Top Glove has the highest capacity additions, patch Supermax in addition to Sri Trang induce got strong exposure to the Asia market.
Biggest Consideration: Utilisation Capacity, Product Mix & Clientele's Region Exposure
MQ Research believes manufacturers amongst the highest exposure to the Asia marketplace in addition to amongst the highest capacity additions could go the biggest beneficiaries inwards price of sales book from this virus outbreak. Among glove manufacturers, Top Glove has the highest capacity additions, patch Supermax in addition to Sri Trang induce got strong exposure to the Asia market.
Of MQ Research’s covered stocks, MQ Research prefers Top Glove over Hartalega due to its wider production mix, diversified marketplace exposure equally good equally the potential practise goodness it could consider from this virus outbreak. Nonetheless, Hartalega could likewise practise goodness if customers inwards developed countries (Europe in addition to United States) start stocking upwardly on condom gloves equally a preventive measure.
Is It Too Late To Get Into The Big 4?
The Big iv Heavenly Stars: Top Glove, Hartalega, Supermax, in addition to Kossan. Yes, it is belatedly if yous teach inwards NOW in addition to yous are a trader (i.e. window menses of less than a week). No, if yous planned to hold. Just expression at the long long term charts (2003-now) of some of the Big 4.
You cannot fully anticipate the outbreak of each epidemic, but residual assured epidemics or wellness scares volition go the norm moving forrad owing to the mutation abilities of viruses. As long equally yous purchase in addition to keep, EVERYBODY makes coin from glove makers. You are fifty-fifty to a greater extent than "secured now" equally the Big iv induce got reinvested heavily in addition to at 1 time carries a huge moat some their trouble organisation that volition go difficult to knock off from their perch.
Even the "political collateral damaged" Supermax maintained its long term outperformance since 2003 till now.
Just expression at the lovely ascension over the years for these stocks. These are stocks yous tin lavatory maintain in addition to maintain in addition to reinvest.
What About the Newer Players?
You hateful Careplus in addition to Comfort. well, simply expression at these ii tables:
Capital expenditure tin lavatory practise a lot of things for the same companies inwards the same industry. But when the bigger players induce got the bulge bracket, it is rattling difficult to fifty-fifty go competitive inwards price of margin. Even if need jumped 3x, they practise non induce got the upper-case alphabetic lineament to accept payoff of the situation.
Cost To Income ration, over again inwards almost whatever other industry, at that topographic point volition go niches yous tin lavatory explore. However, the overwhelming size of the Big iv volition teach inwards inevitable that every unmarried resources volition cost the small-scale guys more. The Big iv induce got economies of scale inwards almost everything.
OCNCASH, Only Small Player I Like
Oceancash Pacific Berhad, together amongst its subsidiaries, is engaged inwards the manufacture in addition to trading of non-woven products in addition to thermobond felts for thermal in addition to acoustic applications inwards Malaysia. Its products are used inwards diverse applications, including the interior in addition to outside trims of automobiles, in addition to dissonance damper for the compressors in addition to outdoor units of split upwardly unit of measurement air-conditioners, equally good equally insulation inwards buildings including roofs, ceilings, walls, partitions, in addition to floors equally carpeting underlay. The companionship is likewise engaged inwards the manufacture in addition to distribution of thermobond in addition to airthrough nonwoven stuff in addition to polyethylene celluloid for hygiene applications, which include overstep in addition to dorsum sail of diapers in addition to sanitary napkins, in addition to moisture wipes, equally good equally surgical apparel, such equally caps, masks, in addition to gowns. In addition, it produces laminates of nonwoven in addition to PE films for diverse applications. Oceancash Pacific Berhad is headquartered inwards Bandar Baru Bangi, Malaysia.
Today was exclusively the showtime solar daytime it jumped. Even so, its marketplace cap is nevertheless simply RM180m on simply 245m shares. The hygiene trouble organisation should dominate proceedings. I intend RM1.00 is some fair for a companionship that happens to go inwards the right sector, plus amongst a fantastic correlation to supplying Malaysia's best selling car.
We rest positive on Oceancash’s (OCP) trouble organisation outlook after our recent coming together amongst management. We cash inwards one's chips along to similar OCP, considering the i) favourable growth prospects inwards the hygiene’s nonwoven segment, ii) steady contribution of unusual felt sales from Thailand in addition to Indonesia, equally good equally iii) strong administration squad amongst in-depth technical know-how. At 10x 2020E PER on the dorsum of a projected EPS growth of 33% for 2020E, OCP’s valuation looks appealing. We reiterate our BUY telephone telephone amongst an unchanged cost target of RM0.61. This Federal Reserve annotation marks a transfer of coverage.
Foreign Felt Sales to Drive Insulation Segment Growth
Profitability of the insulation segment was apartment inwards 9M19 despite higher felt sales (+6% yoy) equally this was largely offset past times weaker PBT margins (-1ppt to 18.7%, exacerbated past times adverse forex drive inwards 1H19). Prospects wise, nosotros believe the increasing contribution from Thailand in addition to Indonesia (foreign felt sales accounted for c. 61% of 9M19 insulation revenue) should go to a greater extent than than sufficient to comprehend for the expected shortfall inwards local felt sales (est. 2020 TIV forecasts lower past times 1% to 590k units).
Insulation Felt Plant inwards Thailand Should go Ready for Action past times 2H20
Elsewhere, structure of the felt production facility inwards Thailand remains on rail to go completed past times 2H20, in addition to OCP is planning to relocate 1 of its ii existing Malaysian production lines to tap into 1) the strong need for resinated felt in addition to 2) increment utilisation of excess capacity (current utilisation rates: est.50%). Locally, nosotros sympathise OCP has been supplying felt to Proton refreshed models (ie. Saga, Iriz in addition to Persona), in addition to amongst this rail record, the companionship is hopeful to participate inwards the Proton Complete Knocked-Down (CKD) X50 furnish chain moving forward. We intend OCP may hand the CKD X70 contract a fille 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 nevertheless looks promising - 9M19 PBT rose past times 10% yoy to RM2.5m, on higher revenue (+1% yoy) in addition to improvement inwards PBT margins (+0.5ppt to 6.1%). We believe the cheaper resin cost (est. 80% of hygiene’s raw stuff costs) volition probable consider an uptick inwards hygiene’s margins inwards the coming quarters.
Source: Affin Hwang Research - three January 2020
Well managed, expression at the steady earnings. Now what if PBT jumps past times 100% over the adjacent 2 years. Is RM180m marketplace cap nevertheless valid???
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