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a lot of people think with vaccine don't need to use glove. the fact that glove unlike mask are only widely used by frontliners. it is consumables not reusable. Moreover Company that holds alot of cash at this time will likely more able to diversify their business. try looking into their cash holding you will see which one are fairing better. Price accounts for the drop in demands.
we can't predict when it will bottom out. the price most likely start accounting the fact that demand going to drop soon. once market come to their senses and start looking at the valuation the price will recover.
with my opinion, vaccination requested glove won't really help SM increase their revenue as market already knew where is their profit limit now during covid in last q. uncertainly make price increase fast last time and that's also why the price drop now, as ppl don't know how much the revenue impact after pandemic. even owner might not know. let do math to see the actual value if no pandemic in 2020 with just organic demand growths 18% annually? ?
Hi Lz, reason I put this assumption is to see the lowest bottom (worst case) value, but I agree to have most reasonable case with better profit assumption and give ratio to each scenario, it might able get more correct value of SM.
I still have not own any glove stock. I just exited Novavax I was thinking to buy some local glove but the trend just not there. I do think the market overreact vaccine effect on revenue. I am waiting for reversal. valuation wise I do think they are in better position to make some changes to their business since they are holding healthy cash and dividend was not as high topglove. vaccine does not mean glove demands will return back to precovid level as it is not a public consumer product
I don't think they will go out of business though stock will tank coz most people who buy this stock are not glove users lol. it is perfectly normal. if there's a better stock to buy why not. look at supermax at its ability of doing business
Cash is not a reason for investor to invest. Many blue chips and banks hold a lot of cash that's mean they can diversified too? New entrance to market always have competitive disadvantages. Gloves company may not declare dividend and they will reserve cash for the risk of over supply in future.
