Topglov has just announced its results for QE30/11/2011. Its net profit increased 20.5% q-o-q to RM31.4 million on the back of a 2.4%-increase in turnover to RM555 million. As compared to the corresponding quarter (QE30/11/2010), its net profit dropped 12.8% while turnover was up 12.9%. The improvement in bottom-line on q-o-q basis was attributed to 9.2% drop in latex prices as well as the strengthening of the USD.
Table: Topglov's last 8 quarterly results
Chart 1: Topglov's last 22 quarterly results
Valuation
Topglov (closed at RM4.44 today) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 17.55 sen). At this PE multiple, Topglov is deemed overvalued. A few research houses have rated this stock as a SELL.
Technical outlook
Topglov is still in a long-term uptrend line, with support at RM4.00-4.20. Its intermediate downtrend line resistance is at RM4.80-4.90.
Chart 2: Topglov's monthly chart as at Dec 1, 2011 (Source: Tradesignum)
Conclusion
Based on the turnaround in its financial performance & the positive technical outlook, Topglov is rated a HOLD. However, it would be a while before this stock can charge up as it is overvalued presently.
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