Topglov: Earnings Growth Continued

Results Update

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

Valuation

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

Corporate Exercise 

Topglov has proposed a 1-for-1 bonus issue which is still pending.

Technical Outlook

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)

Conclusion

Based on good financial performance and positive technical outlook, I think Topglov will likely to continue its uptrend. 

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.