Topglov: Earnings Soared 366% y-o-y

Results Update

For QE31/5/2020, Topglov's net profit soared 201% q-o-q or 366% y-o-y to RM348 million while revenue rose 37% q-o-q or 42% y-o-y to RM1.688 billion. Revenue increased q-o-q due to growth in Sales Volume (Quantity Sold) of 25%  and average selling prices (ASP) of 14%. The company expects the further increase in profits in the next few quarters due to soaring demand and higher ASP.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 71 quarterly results

Valuation

Topglov (closed at RM16.70 yesterday) is now trading at a trailing PE of 65 times (based on last 4 quarters' EPS of 25.6 sen). However, if you forecast Topglov's forward earnings based on its EPS for QE31/5/2020 number, its EPS for next year would be at least 54 sen (assuming no further increase in earnings). Thus its forward PE would be only 31 times. At the forward PE of 31 times, Topglov is deemed fairly attractive

Technical Outlook

Topglov broke above the horizontal line of RM6.30-6.50 in mid-March. Thereafter, the share price went into an exponential rise which added RM10.00 to above RM16.00 now.


Chart 1: Topglov's weekly chart as at June 11, 2020 (Source: Malaysiastock.biz)


Chart 2: Topglov's semi-log monthly chart as at June 11, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and attractive valuation, Topglov is a good stock for long-term investment.

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.