Topglov: Earnings soared!

Results Update

For QE30/11/2015, Topglov's net profit rose 24% q-o-q or 164% y-o-y to RM128 million on the back of a revenue which rose 13% q-o-q or 41% y-o-y to RM800 million. Revenue increased due to increase in sales volume of 15% y-o-y, largely attributed to nitrile glove sales which increased 54% compared with 1QFY15. PBT soared y-o-y due to  increased levels of efficiency throughout the manufacturing process as a result of intense focus on automation,  R&D  and  re-engineering, which led to enhanced quality output and substantially reduced downtime. The Group's bottom-line was also boosted by the strong US Dollar and lower raw material prices.


 
Table: Topglov's last 8 quarterly results


Chart 1: Topglov's last 38 quarterly results

Valuation

Topglov (traded at RM11.90 as at 3.45pm) is now trading at a PE of 20.5 times (based on last 4 quarters' EPS of 58 sen). At this PE multiple, Topglov is fairly valued as compared to Harta & Kossan which are trading at their respective trailing PERs of 40 & 30 times..

Technical Outlook

Topglov is still in an uptrend. The current move may mirror the strong rally of 2009 when the stock rose 280% after surpassing the 20-month EMA line. If Topglov can chalk up a similar gain of 280% after surpassing the 20-month EMA line, then the potential target is RM14.00.


Chart 2: Topglov's monthly chart as at Dec 15, 2015_3.00pm (Source: ShareInvestor.com)


Chart 3: Topglov's monthly chart as at Dec 15, 2015_3.00pm (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation & positive technical outlook, Topglov is a good stock for long-term investment.

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.