For QE31/8/2012, Topglov's net profit increased by 18% q-o-q or 144% y-o-y to RM63.5 million while revenue increased by 1% q-o-q or 12% y-o-y to RM607 million.
Table 1: Topglov's last 8 quarterly results
Chart 1: Topglov's last 25 quarterly results
The improvement in Topglov's profit margin coincided with the decline in rubber price. See Chart 2 below.
Chart 2: Rubber price as at Oct 10, 2012 (Source: Rubbernet)
Valuation
Topglov (closed at RM5.20 yesterday) is now trading at a PE of 15.9 times (based on last 4 quarters' EPS of 32.7 sen). At this multiple, Topglov is deemed fully valued.
Technical Outlook
Topglov has been still moving sideway for nearly two years. Its immediate support & resistance is at RM4.70 & RM5.50, respectively.
Chart 3: Topglov''s weekly chart as at Oct 11, 2012_3.00pm (Source: Quickcharts)
Conclusion
Despite improving financial performance, Topglov is rated a HOLD due to demanding valuation. However, if the share price can break above the resistance of RM5.50, the stock could commence on its next upleg. When that happens, the rating of the stock may be revised to a BUY.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Topglov.
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