Topglove's bottom-line continued to grow

Topglov has just announced its results for 2Q2009 ended 28/2/2009. Its net profit increased by 5.4% q-o-q or 22.1% y-o-y to RM36.0 million. Its turnover dropped by 10.3% q-o-q to RM346.5 million, but was 8.0% higher than the turnover for 2Q2007. Despite the lower sale, Topglove managed to lower latex & crude oil prices and favorable exchange rate. The drop in sale could be due to reduction in selling prices due to lower production cost. Its operating margin has in fact increased from 12.0% for 1Q2009 to 13.8% for 2Q2009.



Topglove's track record of steady growth is very impressive (see the table below).



Based on the 1H2009 EPS of 23.8 sen, we can arrive at a full year EPS of 47.6 sen. As such, Topglove (closed at RM4.98 yesterday) is now trading at a PE of about 10.5 times. With the impressive growth track record, I believe that Topglove is still an attractive stock at this PE multiple.

Topglove has entered a new bull phase about 1 or 2 months ago. The stock's price run-up will encounter resistance at RM5.00-10, RM5.70 & RM6.50. On weakness, it may pullback to RM4.40-50. I would the latter as good entry level to this stock.


Chart: Topglove's weekly chart as at 7/4/2009 (Source: Quickcharts)

Based on the above, we should track this stock closely & accumulate on weakness if the price retreats to RM4.40-50.