Topglov has just announced its results for QE28/2/2011. As expected, its net profit dropped by 30% q-o-q or 64% y-o-y to RM25.4 million while its turnover was also lower by 1% q-o-q or 5% y-o-y to RM485 million. The company attributed its poorer performance to higher latex prices & unfavorable forex movement.
Table 1: Topglov's last 8 quarterly results
Chart 1: Topglov's last 19 quarterly results
Prospective Performance
As noted in a recent post, rubber glove producers should enjoy some recovery in the coming months due to possible recovery in USD as well as lower rubber latex prices. See teh chart below.
Chart 2: TOCOM RSS3's price chart as at Mar 1, 2011 (Source: Rubbernet)
Technical Outlook
Topglov has rallied after recovering from a break below its strong horizontal support at RM4.90. It broke above its horizontal resistance at RM5.35 yesterday before profit-taking kicked in earlier today. It may slide back to the psychological RM5.00 level for a short while as the market digests the current poor results. You have to look ahead to a possible improvement which may signal a recovery for this stock.
Chart 3: Topglov's daily chart as at Mar 16, 2011 (Source: Quickcharts)
Conclusion
Based on possible better performance in the near term, Topglov is a BUY on weakness.
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