Topglov's net profit inched up 1.9% q-o-q but declined 42% y-o-y to RM26 million. Turnover inched up 1.2% q-o-q to RM542 million but was unchanged when compared to the same quarter last year.
The improved bottom-line was attributed to a 10%-decline in the price of latex as well as better profit margin to the higher sales of nitrile gloves.
Table: Topglov's last 8 quarterly results
Chart 1: Topglov's last 21 quarterly results
Valuation
Topglov (closed at RM4.07 yesterday) is now trading at a PE of 22.2 times (based on the last 4 quarters' EPS of 18.3 sen). Based on this pE multiple, Topglov is rated overvalued.
Technical Outlook
Despite the recent sharp rally, Topglov's downtrend remained intact. The stock is likely to be range-bound RM3.80 & RM4.75.
Chart 2: Topglov's weekly chart as at Oct 12, 2011_12.30pm (Source: Quickcharts)
Conclusion
Based on lackluster financial performance, high PE multiple & bearish technical outlook, Topglov should be avoided.
I should dump this TG shares and accumulate on much much lower prices.. around PE 10 level.
ReplyDeleteThanks for earlier thoughts on EPIC.. Cheers...
Hi Alex
ReplyDeleteSupermx looks like it's going to rebound.
Hi Alex
ReplyDeletePls comment UOADev whether is a good buy for middle term say 3 months.
TQ
Hi Alex:
ReplyDeleteWith the never ending natural disasters happened in Thailand -the biggest rubber growing countries , the rubber price will be appreciated in the near term/medium term/long term. So what is left for the rubber glov industries?
Hi leslieroycarter
ReplyDeleteRain can come & go. The impact on rubber latex supply, if any would be only for the short-term. The rubber glove makers should have sufficient supply to weather the flood & the new latex supply interruption for a few weeks.