Thursday, June 18, 2015

Topglov: Earnings Soared

Results Update

For QE31/5/2015, Topglov's net profit rose by 29% q-o-q or 71% y-o-y to RM72 million while revenue rose by 16% q-o-q or 15% y-o-y at RM661 million. Profit Before Tax rose sequentially due to higher sales volume, ongoing efficiency and quality enhancement initiatives, low raw material prices and a stronger US Dollar.

 
Table: Topglov's last 8 quarterly results


Chart 1: Topglov's last 36 quarterly results

Valuation

Topglov (closed at RM5.87 yesterday) is now trading at a PE of 16.3 14 times (based on last 4 quarters' EPS of 36.1 41 sen). At this PE multiple, Topglov is attractively valued.

Technical Outlook

From Chart 2 below, we can see that Topglov share price broke above the 3-month trading range of RM5.40-5.60. It is likely to test the large triangle (ABC) at RM6.40. See Chart 3 below.
 

Chart 2: Topglov's daily chart as at Jun 17, 2015 (Source: ShareInvestor.com)
 

Chart 3: Topglov's monthly chart as at Jun 17, 2015(Source: ShareInvestor.com)

Conclusion

Based on better financial performance, attractive valuation & mildly positive technical outlook, Topglov is rated a BUY. While the RM6.40 resistance may cap the stock's upside for a while, a breakout is very likely as the stock is trading at lower PE multiple than its peers.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Topglov.

No comments: