Chairman of Top Glove, Tan Sri Lim Wee Chai during interview (Sin Chew) said the most important element for investment is looking at value of the company. You may think the share price is high now,but after 3 months or one year down the road, investors may think the share price is not high anymore.
Besides Tan Sri Lim said sales increase by 10 times (8TV).
-This coming 6 months , or even 1-2 years – business is still growing.
-17/9 result announcement –will be good. Tan Sri Lim expect market capitalization will surpass Maybank by the end of this month (September) or in early October.
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1)COVID CASES KEEP INCREASING TREND. |
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2)GLOVE DEMAND WILL KEEP ON INCREASING. |
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3)ASP WILL KEEP ON INCREASING TOO as capacity roll-out will take time. |
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4)Profit reported of the company keep increasing . |
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5)Share price eventually will increase. |
The value of the glove companies keep increasing due to increase in profit of the company. The basis of the increase in profit is because glove demand outweight supply many many times due to COVID 19 cases still prevalent. So glove company can easily increase its selling price. Research house UOB Kay Hian and Citibank predict earning to surge over next 3 quarters by factoring in the upcoming step changes in ASP and higher spot-sales mix. WHen profit of the company keep increasing, value of the company will definitely keep increasing, and eventually share price will keep increasing. This is the most basic for a successful investment but most of the times investors tend to forget and get carried away by emotion in making an investment decision.
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Net profit (‘000) |
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Share Price during result announcement |
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Q2 Feb 2009 |
35997 |
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2.67 |
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Q2 Feb 2010 |
70526 |
Profit x1.96 |
7.00 |
Share price x2.62 |
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Q2 2020 |
115683 |
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6.20 |
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Q4 2020 |
850000 (347895x2.5) |
Profit x7.35 |
60.00 (after bonus, RM20 TP) |
Share Price x9.8 |
During H1N1 pandemic, during initial outbreak , Top Glove announce a net profit of 36 million, Q2 Feb 2009. Its profit jump to 70.5 million during its profit peak on Q2 Feb 2010, a multiple of 1.96 increase in profit. The share price during that time increase from 2.67 to 7.00 , an increase by multiple of 2.62.
For the current Covid 19 pandemic, its profit may jump from 115 million (Q2 2020) to 850 million (upcoming Q4 2020 conservatively). Supermax register a x5.62 times increase in net profit Q3 to Q4 2020 result. Thus , let said Top Glove conservatively only register a multiple of x2.5 increase in profit , its 347895 x2.5, its profit should be 870 million . This is a multiple of 7.35 increase in net profit compare to Q2 2020. Thus its share price is estimated to increase by 9.8 times based on the ratio. RM6.20 (Q2 2020) should rise to 60.00, if the history repeat itself. The target price of TopGlove of RM60.00 (After bonus, target price should be RM20) is not a dream, it is achievable. Don’t forget it is only two quarters of increasing profit which market is expected still have few quarters of increasing profit to come . This is once in a lifetime opportunity for all the investors.
https://klse.i3investor.com/blogs/FEIMAOINVESTBLOG/2020-09-16-story-h1513525760-TOPGLOVE_THE_MOST_IMPORTANT_FOR_INVESTMENT_SUCCESS_IS_FUNDAMENTAL_VALUE.jsp
