For QE31/5/2018, Topglov's net profit rose 8% q-o-q or 51% y-o-y to RM118 million while revenue rose 15% q-o-q or 27% y-o-y to RM1,101 million. Topglov attributed its improved revenue to increased in sale volume of about 8% q-o-q while higher profits was due to improvements in production efficiency and quality, coupled with new capacity coming on-stream and strong demand growth. The bottom-line could have been better if not pricing pressure from the nitrile rubber glove segment which was brought on by the uptrend in nitrile latex prices compared with 2QFY18. As a comparison, the average natural rubber latex price eased 0.5%, while the average nitrile latex price was on the uptrend, increasing by 8.5%.
Table: Topglov's last 8 quarterly results
Graph: Topglov's last 48 quarterly results
Topglov (closed at RM11.62 mid-day) is now trading at a trailing PE of 34X (based on last 4 quarters' EPS of 24.4 sen). At this PER, Topglov is deemed fully valued
Topglov has proposed a 1-for-1 bonus issue which is still pending.
Driven by strong earning growth & a generous bonus issue, Topglov share price has rallied in a steep uptrend. While the trend is your friend, a sharp rally is always a concern for me.
Chart: Topglov's monthly chart as at Jun 19, 2018_12.30 (Source: Shareinvestor.com)
Based on good financial performance and positive technical outlook, I think Topglov will likely to continue its uptrend.
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