I guess the fact that glove counters will continue to make profits has already been priced in and the current high prices are the premium valuations given to the glove counters for their increasing ASP. Considering the fact that the number of competitors will increase in the near future, the supply is expected to overtake the demand. When this happens, glove companies cannot increase ASP in their favour anymore. This might not happen in the next few months but definitely in the near future.

It's almost certain that the coming QRs will be good. What matters here is the sustainability of the premium valuation given to the glove counters. The stock market is always ahead of the real economy by two to three quarters (as mentioned in some books). As we can see from the price chart, the price skyrocketed in the previous months before the QRs were released. The previous old prices reflected the QRs you read now and the next few quarters.

Thanks Dexter. I agree with you. The problem is most glove counter prices (in fact, most virus-related counters) have been largely retail-driven. Volatility is expected to reduce post-moratorium. It will be interesting to see how things move for this year’s last quarter. Your replies are the kind I enjoy (unlike another site starting with “i” and “3” haha)

We should hang out. Trading is a hobby to me. I’m in real estate

Dexter, to answer your gloves counter 'current high prices are the premium valuations'
Below are those finance research institution for TopGlove's TP on July 2020,
1) Affin Hwang Outperform Rm 46.40
2) Credit Suisse Outperform Rm 37.00
3) Kenanga Investment Bank Outperform Rm 32.00
4) TA Securities Buy Rm 31.66
5) Hong Leong Buy Rm 31.31
6) Cimb Securities Buy Rm 31.30
7) Nomura Buy 30.65
8) Macquaries Outperform 30.40

The current price for TG is 26+- which is now below those finance research institution price expectation (undervalue), where i also believe it is same applicable to others gloves counters including comfort. Thus, i personally dont think the current price for gloves counter are consider as 'premium valuations'. Unless you'r telling me those TP given by finance research institution are 'super premium valuations'.

Second, I agree the increase of glove companies will create the strength of competitiveness in future which i believe it has to take at least 2-3 years after. However, it does not meant will bring down needs from healthcare production for global. One of my reason was because the pandamic had made human around the world be more conscious on this healthcare production. It had made them very memorably lesson. one time pandamic can jeopardize your 10 years+ business. This is why many companies wanted to venture gloves businesses in future

Hi Lee MJ. Thank you for the information. I'm aware of the TPs put forward by the research houses. However, we should not ignore the last line in every report that the valuation was based on the assumption that downside risks such as stiff competition, the discovery of vaccines and rising raw material prices are absent. We can't deny that the discovery of vaccines will entail more consumption of gloves.

However, will the post-pandemic consumption of gloves come with the current high ASP? I think current high prices of glove stocks are made in the assumption that they can keep increasing their ASP. When the supply is enough and the pandemic slows down, will the companies be able to retain their high ASP? When the high ASP tumbles, will current high prices sustain? That's what I am thinking. :)

We don’t even know the real pandemic numbers. Conspiracists say all countries lie about infections and deaths and even “recovered” stats. Sigh... all I know is that rubber gloves hopefully will be used by administers of the vaccine as that should be the SOP

Lee MJ, I don’t know about you (or anyone else for the matter) but I view TPs as, uh, “evil instruments”. I never pay any attention to it when it comes from research houses; I set my own TP

yes, we do not know whether the ASP growth would long sustain or not in future (2-3 years). I guess the gloves company management also cant guarantee on top of that But one thing can be sure, at this moments and period, what else the industry and business can earn solid profit rather than gloves industry? Hospitality? construction? aviation ? well, just sharing.. haha

hi anthony, thanks for sharing. im not saying those finance research institution are 100% accurate, but you can refer this as a references line to cross check whether the current price for glove counters are 'premium valuation' or not. of course you can have your own valuation set.

Lee MJ. Agree with you that no one knows how long the current high ASPs will last at the moment. Maybe it will last for a few quarters, or maybe it will last for a few years. Anyways, I wish you the best of luck in your investment. Hope you make lots of money here. :)

Lee MJ, that is why I said all these research houses TP are “evil instruments”. By right, these research houses should have already factored in the following scenarios when they posted their regular TPs waaaay back then :

1. Possibility of true vaccine
2. Probability of true vaccine
3. Estimated timeframe for universal approval of true vaccine
4. Estimated timeframe for fill-finish of true vaccine
5. Expected surge in global glove supply vis-a-vis demand

These research houses don’t really do their work IOW