Topglov: Earnings Improved Sequentially

Results Update

For QE28/2/2017, Topglov's net profit rose 13% q-o-q but dropped 21% y-o-y to RM83 million while revenue rose 8% q-o-q or 23% y-o-y to RM852 million. Revenue  rose q-o-q due to upward price revisions. Despite less favorable conditions (arising from higher raw material prices and a competitive environment), profits rose q-o-q due to improvements adopted across the manufacturing process.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 43 quarterly results

Valuation

Topglov (closed at RM5.20 yesterday) is now trading at a trailing PE of 22.9X (based on last 4 quarters' EPS of 22.71 sen). At this PER, Topglov is deemed fully valued.

Technical Outlook

Topglov is resting on its intermediate uptrend line, SS at RM5.20. Its immediate resistance comes from the horizontal line at RM5.35.
 
 
Chart 1: Topglov's weekly chart as at as at Mar 16, 2017 (Source: ShareInvestor.com)

The longer term chart shows a stock with a strong uptrend until 2008. Thereafter its uptrend moderated until recently. Despite an upside breakout in late 2015, the rally was short-lived. It was driven by a jump in earning that didn't sustain and excitement over the dual listing on SGX. Can Topglov "make used" of this breakout? We will have to wait & see.
 

Chart 2: Topglov's monthly chart as at as at Mar 16, 2017 (Source: ShareInvestor.com)

Conclusion

Despite satisfactory financial performance, Topglov's full valuation & unexciting technical outlook rendered the stock as a HOLD

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.