Medtecs Intl    Last:0.123   -

Medtecs

Thank you everyone for your positive responses and constructive feedback, especially those who contributed useful information like Forumer " furances" .

I too, believe that my estimate for a 50% rise in profits for Q1 is being too conservative. Given that  Covid-19 only started spreading globally starting middle of February, if Medtecs just achieve the same revenue and profit margins as they did from mid-Feb to end-Mar (half of Quarter 1), then Q2 profits would have already doubled that of Q1. 

In addition, I believe that adopting a PE ratio of 15 is reasonable given that Medtecs' peers in other markets like the US or Hong Kong are trading at much higher valuations (PE ratio of 30 and above). And given that market indexes are already close to pre-Covid 19 levels, many blue chips and other companies are also trading at rather rich valuations. This would make Medtecs an even more attractive company for investors.

My analysis will benefit those who wants to play it safe and adopt a more conservative approach. Those who with a higher risk appetite will likewise be rewarded with even greater profits should the actual numbers beat our estimates. Other bros here like " gregtan123" , " Longtermer" and " chiachiawee" should have earned a handsome sum investing in Medtecs. I was fortunate to have bought Medtecs at one of the lowest pricse ($0.056). I have since been adding more and revising my target prices with every new information and changing circumstances that come along. 

Although we cannot predict the future and actual numbers, our combined insights and information will help everyone here make an informed decision based on your own risk appetite :)

Quality_Invest      ( Date: 20-Jun-2020 23:44) Posted: I have been following this forum for the past few months and have benefited from the sharing by some experienced investors/traders here. Seeing that many people here are confused about Medtecs&rsquo recent announcement (positive event) that contrasted with the Friday&rsquo s plunge in stock price (negative event), I will share my insights here. In this post, I will be as detailed and objective as possible, covering most of the points and questions that others have shared here. ------------------------------ Fundamental Analysis According to the Medtecs&rsquo announcement on 5th May 2020, Q1 profits is US$3.672 million and Q2 profits is higher than Q1. In the follow-up announcement on 18th June 2020 (Thursday), it was mentioned that profits in the second half of 2020 will be AT LEAST on par with profits in the first half of 2020. To calculate the full year profits, we need to know Q2 profits, which was not provided. In this case, I will use the information we have on hand, which is that Covid-19 only started spreading globally starting middle of February (half-way into Q1). Hence, we can reasonably assume that Q2 profits will be 50% higher than Q1. With the above information, we can derive the following: Q1 profits: US$3.672M Q2 profits: US$5.508M (50% higher) Q3 & Q4 profits: US$9.18M (at least on par with first half)   Full year 2020 profits = US$18.36M = S$25.7M (exchange rate of 1:1.4) Given that Medtecs has about 550million shares, Earnings Per Share (EPS) will be S$0.0467. If we use the average PE Ratio of 15, multiplied by EPS, the value of the stock price should be S$0.70. Given that investors around the world are highly bullish about the medical sector, PE ratio can easily be higher than the average of 15, which means the value of the stock price can go even higher than S$0.70. Current stock price is only $0.295.   However, one point which many people here missed out in their calculations is that investors do not just look at one year&rsquo s profits to determine the value of the company. Hence, we have to make some predictions for 2021 at the very least. Medtecs&rsquo sales are expected to drop next year, since this year is a black swan event. However, given that (1) the high infectability of the Covid-19 virus where total number of cases worldwide continue to break record highs, (2) vaccines are not expected to be readily ready until at least start of next year and (3) governments and organisations around the world will want to stockpile on medical supplies after learning their lessons the hard way, we can safely assume that Medtecs&rsquo sales will still be decent. Assuming a 50% drop in sales next year, EPS will be S$0.023. Take 2020 and 2021&rsquo s combined EPS and divide it by 2 years, multiply by PE ratio of 15, the short-term fundamental value of the stock will be S$0.522 (78% gain from current stock price).   For those long-term investors, you might ask, what happens after 2 years? For 2020 and 2021, Medtecs as a company would have earned unprecedented profits, running in the tens of millions of dollars as calculated earlier. A good management would use this money to expand in future growth areas so that even after the Covid-19 has been completely eradicated, future revenue and profits will continue to be much higher than what it achieved in the past.   In summary, Thursday&rsquo s announcement is actually very positive as we are only in the middle of June, but the company is already confident to announce that profits from second half of the year will be AT LEAST on par with profits from first half of the year.   Question: If Thursday&rsquo s announcement is very positive, why did Medtecs share price plunge on Friday late afternoon? I offer two possible explanations: First, as we all know, markets are not always rational. Many people buy and sell company shares without proper knowledge or homework, but based on their feelings and sentiments. These people can be easily taken advantage of by real investors/traders who have done their homework. This leads me to the second explanation.   The second explanation is that Friday&rsquo s movement is manipulated to flush out contra players, people who bought the company shares without doing their homework, as well as people who sold the shares based on fear. Senior Executives or seasoned investors will know that most companies&rsquo AGM is merely a formality to pass down resolutions and re-appoint directors for the next year. No one is expecting new information or surprise announcements that can significantly affect a stock&rsquo s price. Medtecs&rsquo AGM on Friday is no different. Resolutions were passed, directors were re-appointed, and it ended without fanfare. However, just within minutes after the AGM ended, more than 10 million shares were intentionally thrown down, causing the stock price to drop from S$0.32 to S$0.295. This sparked panic in many of the weak holders that I mentioned earlier, causing more to sell and others to cut loss. Legit investors would have never dumped their shares immediately after an AGM ended where nothing fancy is expected in the first place. Such a move is highly likely to be pre-mediated with the intention to earn by shorting, and quickly buying back even more shares from people who sold in a panic to prepare for an even bigger rise down the road. Friday&rsquo s afternoon movement has nothing to do with the company&rsquo s fundamentals and positive news that was announced earlier. For those who believe in the company&rsquo s fundamentals, it can be a good opportunity to buy.   ------------------------------ Macro-outlook Although many people may think that Covid-19 is coming under control with economies re-opening, truth is that the number of Covid-19 cases worldwide has continued to break record highs ( Link here: https://www.worldometers.info/coronavirus/worldwide-graphs/#daily-cases ) and new regions are becoming emerging hotspots. With this backdrop, medical supplies will continue to be in high demand by governments, organisations and hospitals worldwide. And this is to keep in mind that stockpiling of medical supplies for the future has barely begun in many countries. Hence, we can expect Medtecs business to remain blooming for at least until second half of 2021.     Other Questions Medtecs is going to face increased competition from new companies starting to produce masks and PPE. How is this going to affect the company? Governments, organisations (e.g. World Health Organisation) and hospitals will be the main people buying PPE and they would most definitely want to buy from trusted sources, not some random company who just started operations 6 months ago and may close down anytime. In this regard, Medtecs benefit from its brand and credibility, as it has been operating for more than 30 years. As shared in their Thursday&rsquo s announcement, Medtecs is &ldquo the preferred trading partner and supplier by international buyers, who have praised our products for quality&rdquo .   Summary Covid-19 has negatively impacted most industries and companies around the globe, and its impact is expected to continue for at least the next 1-2 years. The Medical sector on the other hand, is one of the rare few which has benefited greatly from it. Although most other companies in the Medical sector are already seeing rich valuations in their stock prices, Medtecs Intl remains undervalued with a Fundamental value of S$0.520 as compared to its current stock price at S$0.295. Medtecs Intl' s management has also expressed willingness to consider paying out dividends from its bumper profits. Combined with the backdrop that many investors are looking to invest in sectors that can benefit from this outbreak, especially when stock market indexes worldwide are already at pre-Covid 19 levels, Medtecs Intl is a rare gem and should see its stock price continue to break record highs in the very near term. ------------------------------ Hope the above insights help everyone here in making your decision on Medtecs next week! 😊 Full article linked here:  https://flyinginvest.wixsite.com/mysite/post/sgx-546-si-medtecs-intl

 

Your Q2 extrapolation is a little far fetched, especially how you gave a ball park figure of a multiple of 10. There could be more suppliers who may take on the increased demand.

wolverine23      ( Date: 21-Jun-2020 16:39) Posted: Q1 2020: - Q1 net profit USD3.7m - Wuhan virus became a global concern somewhere mid Feb. So we can assume USD3.7m was accounted for largely in 1.5months till end Mar 2020. (Accounted when Payment received or forward contract?) Q2 2020: - From April to June 2020, Wuhan Virus mutated to COVID (international) and caused a global panic. Prices of PPE rocket. Medtecs margins would have shot through the roof. - In these 3 months, Medtecs would have ramped up production and sold PPE at much higher margins.     - One can simply conservatively assume Q2 net profit at (USD3.7m x 2) = USD 7.4m if Medtecs does not increase pricing (personal opinion: no way!!!) - Or be aggressive, and assume that medtecs can sell its PPE at 10 times the price. Q2 net profit (USD USD 3.7m x 2 x 10) = USD74m 2H 2020: - Conservative 1H net profit = USD 11.1m - Aggressive 1H net profit = USD 77.7m - Correspondingly, 2H net profit could range from USD 11.1m to anything beyond USD77.7m FY 2020: - Net profit: USD 22.2m to beyond USD155.4m - EPS: USD 4.04 to USD 28.3 cents ( SGD 5.66 cents to SGD 39.62 cents) Dividends: - potentially SGD 4.25 cents to SGD 29.7 cents Target price PREDICTION : 10x PE: SGD 0.56 to SGD 3.96 Anybody' s guess...   iinvestor      ( Date: 21-Jun-2020 16:02) Posted: commendable analysis to justify high prices..P/E 15 is too high for me...a lot of forward pricing assumptions. This reminds me of Best World...profits forecast keep revising until one day everything crash. Beware..not for core holdings.

 

Why do u say its fortune telling? Is everything luck to u?

The figures I gave are based on charts.. charts are not 100 percent accurate..

U need to learn alot more in investing..

Have u done ur homework on this counter?

Have u attended the AGM and know whats going on?

Do u even know what this counter is abt?

Do u know what prdts they produce?

U dont even know how the numbers came abt.

Dont use mouth to trade bro.. provide some insights instead... let us be impressed with ur post instead okay?

U need to grow up today onwards in terms of mindset and in terms of trading..

Dont go around being a nuisance in this world and wasting oxygen level..

U have issues with other ppl on Rex and u are coming here to create a scene?

Come on bro... grow some hair okay?

Grow up okay?

Dont talk like champion.. talk so much and so much contradictions..

If nothing to say or contribute.. keep quiet 🤫

Djsoul80      ( Date: 21-Jun-2020 20:18) Posted: Haha. What a Fortune teller to be...😅 Go and guess what's the 1st ori e for Toto and 4 D leh.. Lolz Bennytan23      ( Date: 18-Jun-2020 23:02) Posted: Expecting to kick off with 0.33 or 0.335 at opening.. Test resistance at 0.35.. once break, test level 0.380.. 0.38 is gonna be a big big wall.. May end the day with 0.38 +/- 2 pips.. Since they answered the million dollar Q alr.. unlikely test level at 0.4 Huat to those who held this since 0.25 or earlier 0.15..

 

Sorry, Wirecard missing money is SGD3 billion not USD3 billion. My bad. Don't want to be accused of spreading fake news. Lol

Investor8      ( Date: 21-Jun-2020 20:19) Posted: To put in perspective, Best World created/boosted their own revenue through related-company transactions. This is in effect fictitious transactions. Unless you suspect that Medtecs' sales/revenues are also of the same nature, it would not be fair to make such a comparison. In any markets, it is almost impossible to detect fraud within listed companies until the company cannot hide these transactions any further or if there is a whistle-blower. There are many examples in Sg and internationally. The latest is Wirecard with USD3 billon found to be missing. So, retail investors just have to be vigilant and do their own due diligence. iinvestor      ( Date: 21-Jun-2020 20:09) Posted: It is not the related party transactions that brought Best World down... Rather the hype n extremely high expectations of more profit qtr after qtr.. Any hint of a drop in volume or sales....and the party stops. Markets never change. Demand will drive supply explosion. This is not a strong business with barriers to entry.

 

If anybody have 3million dollar, then he can decide the share to gap up or gap down for tomorrow. haha.....

 

To put in perspective, Best World created/boosted their own revenue through related-company transactions. This is in effect fictitious transactions. Unless you suspect that Medtecs' sales/revenues are also of the same nature, it would not be fair to make such a comparison. In any markets, it is almost impossible to detect fraud within listed companies until the company cannot hide these transactions any further or if there is a whistle-blower. There are many examples in Sg and internationally. The latest is Wirecard with USD3 billon found to be missing. So, retail investors just have to be vigilant and do their own due diligence.

iinvestor      ( Date: 21-Jun-2020 20:09) Posted: It is not the related party transactions that brought Best World down... Rather the hype n extremely high expectations of more profit qtr after qtr.. Any hint of a drop in volume or sales....and the party stops. Markets never change. Demand will drive supply explosion. This is not a strong business with barriers to entry. Goldfinger      ( Date: 21-Jun-2020 16:33) Posted: Errr... Best World is a different story. There were related party transactions involved.

 

Haha. What a Fortune teller to be...😅 Go and guess what's the 1st ori e for Toto and 4 D leh.. Lolz

Bennytan23      ( Date: 18-Jun-2020 23:02) Posted: Expecting to kick off with 0.33 or 0.335 at opening.. Test resistance at 0.35.. once break, test level 0.380.. 0.38 is gonna be a big big wall.. May end the day with 0.38 +/- 2 pips.. Since they answered the million dollar Q alr.. unlikely test level at 0.4 Huat to those who held this since 0.25 or earlier 0.15.. hokpin      ( Date: 18-Jun-2020 22:13) Posted: Bro, what do you think the opening price tomorrow? 0.34

 

It is not the related party transactions that brought Best World down... Rather the hype n extremely high expectations of more profit qtr after qtr.. Any hint of a drop in volume or sales....and the party stops. Markets never change. Demand will drive supply explosion. This is not a strong business with barriers to entry.

Goldfinger      ( Date: 21-Jun-2020 16:33) Posted: Errr... Best World is a different story. There were related party transactions involved.    iinvestor      ( Date: 21-Jun-2020 16:02) Posted: commendable analysis to justify high prices..P/E 15 is too high for me...a lot of forward pricing assumptions. This reminds me of Best World...profits forecast keep revising until one day everything crash. Beware..not for core holdings.

 

Yes, do agree that Medtecs do increase revenue and profits but lots of factors to consider too, like production capacity, raw materials availability etc, 

furnaces      ( Date: 21-Jun-2020 16:36) Posted: Estimating Medtecs Q2 Revenue and Profitability. It seems like there are still many investors who are underestimating the upcoming Q2 result, thinking that it may just be slightly above Q1 result. If you draw reference from iMedtecs' TW competitors, then you will not think it will be only slightly above Q1 result. Taiwan companies do release monthly revenue result, so we can estimate Medtecs result from its competitor. One of its competitor is 恒 大 (1325), making medicals mask and other PPE equipments. Below is its monthly revenue table. For 恒 大 ， revenue for Jan-Mar is 428,099,000 TWD. However just Apr-May alone, the total revenue is 755,582,000. Based on the trend, Jun' s revenue should be at least 500,000,000. This means that we could looking at 1,255,582,000 TWD for Apr-Jun period. This is 2.93 times its Q1 revenue. Now if we plug similar figures to Medtecs, Medtecs Q2 revenue could potentially be around 2.93 times of Q1, which is US$117m. Assuming only the same Q1 gross profit margin of 17.9% (which I highly doubt so that it will stay so low), Gross profit could easily be US$20,943,000. Substracting the admin expenses, finance cost etc, base net profit is easily US$15m. This is only the baseline as I think Medtecs could achieve higher gross profit margin. With this, no wonder TW side is trading like 70% higher than SG side. August Q2 result is most likely going to exceed everyone' s expectation. Look at its competitor' s revenue figures and draw your own calculations. https://histock.tw/stock/1325/%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8

 

hopefullly can maintain 30c

Superfast      ( Date: 21-Jun-2020 17:43) Posted: 30c I see that's the opening.... tofudidi      ( Date: 21-Jun-2020 17:24) Posted: Tomorrow opening 280?

 

This is the hottest forum for discussion. I would say 90% are supporter. If tmr open 0.280, pls 'hop' (pick up) the durian.

 

30c I see that's the opening....

tofudidi      ( Date: 21-Jun-2020 17:24) Posted: Tomorrow opening 280?

 

For you, can open 200

tofudidi      ( Date: 21-Jun-2020 17:24) Posted: Tomorrow opening 280?

 

Tomorrow opening 280?

 

No problem, yes buy during retracement and wait for August result.

Goldfinger      ( Date: 21-Jun-2020 16:39) Posted: This is a very important piece of comparison and data. Thank you for this. I may buy more, based on such analysis. Please let this be shorted down even more to allow us the benefit. furnaces      ( Date: 21-Jun-2020 16:36) Posted: Estimating Medtecs Q2 Revenue and Profitability. It seems like there are still many investors who are underestimating the upcoming Q2 result, thinking that it may just be slightly above Q1 result. If you draw reference from iMedtecs' TW competitors, then you will not think it will be only slightly above Q1 result. Taiwan companies do release monthly revenue result, so we can estimate Medtecs result from its competitor. One of its competitor is 恒 大 (1325), making medicals mask and other PPE equipments. Below is its monthly revenue table. For 恒 大 ， revenue for Jan-Mar is 428,099,000 TWD. However just Apr-May alone, the total revenue is 755,582,000. Based on the trend, Jun' s revenue should be at least 500,000,000. This means that we could looking at 1,255,582,000 TWD for Apr-Jun period. This is 2.93 times its Q1 revenue. Now if we plug similar figures to Medtecs, Medtecs Q2 revenue could potentially be around 2.93 times of Q1, which is US$117m. Assuming only the same Q1 gross profit margin of 17.9% (which I highly doubt so that it will stay so low), Gross profit could easily be US$20,943,000. Substracting the admin expenses, finance cost etc, base net profit is easily US$15m. This is only the baseline as I think Medtecs could achieve higher gross profit margin. With this, no wonder TW side is trading like 70% higher than SG side. August Q2 result is most likely going to exceed everyone' s expectation. Look at its competitor' s revenue figures and draw your own calculations. https://histock.tw/stock/1325/%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8

 

By the way... Medtec which only allow to export it's mask outside Philippines... Allowed to sell to the local during this pandemic.... Another source of income in

 

This is a very important piece of comparison and data. Thank you for this. I may buy more, based on such analysis. Please let this be shorted down even more to allow us the benefit.

furnaces      ( Date: 21-Jun-2020 16:36) Posted: Estimating Medtecs Q2 Revenue and Profitability. It seems like there are still many investors who are underestimating the upcoming Q2 result, thinking that it may just be slightly above Q1 result. If you draw reference from iMedtecs' TW competitors, then you will not think it will be only slightly above Q1 result. Taiwan companies do release monthly revenue result, so we can estimate Medtecs result from its competitor. One of its competitor is 恒 大 (1325), making medicals mask and other PPE equipments. Below is its monthly revenue table. For 恒 大 ， revenue for Jan-Mar is 428,099,000 TWD. However just Apr-May alone, the total revenue is 755,582,000. Based on the trend, Jun' s revenue should be at least 500,000,000. This means that we could looking at 1,255,582,000 TWD for Apr-Jun period. This is 2.93 times its Q1 revenue. Now if we plug similar figures to Medtecs, Medtecs Q2 revenue could potentially be around 2.93 times of Q1, which is US$117m. Assuming only the same Q1 gross profit margin of 17.9% (which I highly doubt so that it will stay so low), Gross profit could easily be US$20,943,000. Substracting the admin expenses, finance cost etc, base net profit is easily US$15m. This is only the baseline as I think Medtecs could achieve higher gross profit margin. With this, no wonder TW side is trading like 70% higher than SG side. August Q2 result is most likely going to exceed everyone' s expectation. Look at its competitor' s revenue figures and draw your own calculations. https://histock.tw/stock/1325/%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8

 

Q1 2020:

- Q1 net profit USD3.7m
- Wuhan virus became a global concern somewhere mid Feb. So we can assume USD3.7m was accounted for largely in 1.5months till end Mar 2020. (Accounted when Payment received or forward contract?)

Q2 2020:
- From April to June 2020, Wuhan Virus mutated to COVID (international) and caused a global panic. Prices of PPE rocket. Medtecs margins would have shot through the roof.
- In these 3 months, Medtecs would have ramped up production and sold PPE at much higher margins.    
- One can simply conservatively assume Q2 net profit at (USD3.7m x 2) = USD 7.4m if Medtecs does not increase pricing (personal opinion: no way!!!)
- Or be aggressive, and assume that medtecs can sell its PPE at 10 times the price. Q2 net profit (USD USD 3.7m x 2 x 10) = USD74m

2H 2020:

- Conservative 1H net profit = USD 11.1m
- Aggressive 1H net profit = USD 77.7m
- Correspondingly, 2H net profit could range from USD 11.1m to anything beyond USD77.7m

FY 2020:
- Net profit: USD 22.2m to beyond USD155.4m
- EPS: USD 4.04 to USD 28.3 cents ( SGD 5.66 cents to SGD 39.62 cents)

Dividends:
- potentially SGD 4.25 cents to SGD 29.7 cents

Target price PREDICTION :

10x PE: SGD 0.56 to SGD 3.96


Anybody' s guess...






 

iinvestor      ( Date: 21-Jun-2020 16:02) Posted: commendable analysis to justify high prices..P/E 15 is too high for me...a lot of forward pricing assumptions. This reminds me of Best World...profits forecast keep revising until one day everything crash. Beware..not for core holdings.

 

Anyway, I bought at 13 cents, and I am definitely keeping this under my pillow and not going to sell.  The profits and newsflow will only get better.  Common sense, and do not need the Chairman to tell me this. This was a luckly stock that was in a fading, sunset industry faced with massive foreign and cheaper competition, that suddenly found itself red hot and a new sunset darling industry, due to a tiny little virus that came out of nowhere.  And they were already making these masks and PPE for years and years, and already have the economies of scale and credentials.
If 4 billion peole all want a new surgical mask every day, and hospitals make their staff throw away their PPE and wear new ones, and armies get them for their soldiers - what do you think the demand and potential is like?

 

Estimating Medtecs Q2 Revenue and Profitability.

It seems like there are still many investors who are underestimating the upcoming Q2 result, thinking that it may just be slightly above Q1 result. If you draw reference from iMedtecs' TW competitors, then you will not think it will be only slightly above Q1 result. Taiwan companies do release monthly revenue result, so we can estimate Medtecs result from its competitor.

One of its competitor is 恒 大 (1325), making medicals mask and other PPE equipments. Below is its monthly revenue table.


For 恒 大 ， revenue for Jan-Mar is 428,099,000 TWD. However just Apr-May alone, the total revenue is 755,582,000. Based on the trend, Jun' s revenue should be at least 500,000,000. This means that we could looking at 1,255,582,000 TWD for Apr-Jun period. This is 2.93 times its Q1 revenue.

Now if we plug similar figures to Medtecs, Medtecs Q2 revenue could potentially be around 2.93 times of Q1, which is US$117m. Assuming only the same Q1 gross profit margin of 17.9% (which I highly doubt so that it will stay so low), Gross profit could easily be US$20,943,000. Substracting the admin expenses, finance cost etc, base net profit is easily US$15m. This is only the baseline as I think Medtecs could achieve higher gross profit margin.

With this, no wonder TW side is trading like 70% higher than SG side. August Q2 result is most likely going to exceed everyone' s expectation. Look at its competitor' s revenue figures and draw your own calculations.

https://histock.tw/stock/1325/%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8