Topglov: Earning Improved

Results Update

For QE31/8/2016, Topglov's net profit rose 5% q-o-q but dropped 36% y-o-y to RM66 million while revenue rose 7% q-o-q or 2% y-o-y to RM722 million. The increase in revenue has more than offset the decline in PBT margin, leading to a 2.8%-increase in PBT. PBT margin declined to 10.5% from 11.0% in QE31/5/2016,  due to intensive competition and cost increases stemming from hikes in minimum wage, as well as the natural gas tariff.

 
Table: Topglov's last 8 quarterly results


Chart 1: Topglov's last 41 quarterly results

Valuation

Topglov (closed at RM5.00 yesterday) is now trading at a trailing PE of 17.3X (based on last 4 quarters' EPS of 28.91 sen). This compared favorably to Harta's PER of 32X or Kossan's PER of 21.8x. (Note: Harta closed at RM4.90 yesterday & its rolling 4 Qs' EPS is 15.3 sen. Kossan closed at RM6.90 yesterday & its rolling 4 Qs' EPS is 31.7 sen.)

Technical Outlook

Topglov broke above its intermediate downtrend line, RR at RM4.70 5 weeks ago. Topglov then rallied past the strong horizontal line at RM5.00 before correcting. If it can surpass the RM5.00 resistance again, it may continue with its prior uptrend.

 
Chart 2: Topglov's weekly chart as at as at Oct 12, 2016 (Source: ShareInvestor.com)
 

Chart 2: Topglov's monthly chart as at as at Oct 12, 2016 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, fairly valuation & mildly bullish technical outlook, Topglov could be a good stock for a trading BUY if it can surpass the RM5.00 mark.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.