Topglove (closed at RM4.02 today) is now trading at a trailing PE of 10.4 times (based on last 4 quarters' EPS of 38.6 sen) or at a Price to Book of 1.7 times (based on NTA per share of RM2.41). At these multiples & current market climate, Topglove is deemed fairly valued.
From the daily chart below, we can see that Topglove has been sliding from its high of RM10.00 in December 2006 to a recent low of RM3.50. In the past 3 days, the stock has gained 52 sen (from its close at RM3.50 as at 31/12/2008 to today's close of RM4.02) and it has surpassed its 100-day SMA of RM3.84. The stock is likely to consolidate its recent gain, before going higher.
Chart: Topglove's daily chart as at Jan 5, 2009 (source: Tradesignum.com)
Based on better financial performance, I think the worst could be over for Topglove. For those who like this stock, you may accumulate it slowly over the next few months. I believe the present share price may have run ahead of the stock's fundamentals. Personally, I prefer Kossan due to cheaper valuation.
2 comments:
Sir,what do u think of Supermx? How much of its reasonable price?
TQ!
Hi pharmacyproduct2u,
Supermax has been negatively affected by its takeover of APLI. It has now decided to throw in the towel and will cease to waste management time & resources on this lost cause. This could be the beginning of the recovery of Supermax.
Fundamentally, Supermax is doing reasonably well. Comparison of its last 4-q results ending 30/9/2008 to the preceding 4-q ending 30/9/2007 shows that its net profit has increased by 20% to RM60.5 million on the back of a 62%-increase in turnover. EPS for the 2 periods increased from 19 sen to 23 sen. Its current ratio is fair but gearing is elevated at 1.0 times its shareholders' funds.
Technically, Supermax has nearly broken above its immediate downtrend line with resistance at RM0.90 (which is also a strong horizontal resistance). If the RM0.90 level can be overcome, then the outlook of this stock could change to neutral or even mildly bullish.
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