gloveharicut
TOPGLOV Q4 Result Estimation - Net Profit 1 Billion. Target Price min RM30. Smartest Uncle Koon guided me how to estimate the profit
gloveharicut
Publish date: Tue, 16 Jun 2020, 02:40 PM
A lot of people ask me why Q4 net profit is 1 BILLION.
I checked with my Remissier and I share this in my post.
It is simple estimation by factor in
- The capacity growth
- ASP growth
Capacity
TOPGLOV increase 7% total capacity & the capacity usage increase from 95% to 100%
To make the calculation simple, capacity increment = 5% + 7% = 12%
ASP
80% capacity - ASP increase 15% every month from Jun to Aug = 30% increase.
20% capacity - It will sell based on spot price i.e. more than 100% increase.
ASP increase = 80% * 30% + 20% * 100% =44%
Q4 Profit = 1 Billion?
I use Q3 Revenue as the base
Q3 Revenue = 1.688B
Q4 Revenue = Q3 Revenue x Capacity growth x ASP growth = 1.688B x 1.12 x 1.44 = 2.72B
The smartest Uncle Koon pointed out correctly in his post: It did not cost our company anything to increase the selling price. The additional selling price was pure profit.
Q4 margin = Q3 margin + ASP increase = 20% + 44% = 66%
Well you may said company need to reward staff & increase expenses when make good money. OK, use Q4 margin = 40%
Q4 Profit = 2.72B x 40% = 1 Billion
Target Price: Above RM30
Topglov should able to deliver a better FY2021 because (1) Capacity growth another 20% (2) increment of the ASP until 2021.
The most pessimistic estimation: FY21 net profit = 1 Billion x 4 Quarter = 4 Billon
Peg it wth PE20, the lowest TOPGLOV market cap = 80 Billion (Target Price : RM30)
The smart analyst will upgrade the Price target when they see clearer picture.
My top pick is TOPGLOV. Thank you
Tan Sri Lim gave good news in his zoom briefing. Read the SLIDE !
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Discussions
Be the first to like this. Showing 20 of 20 comments
It is pretty. But underlining this massive increase in glove sales and prices is the massive increase in Covid19 cases and deaths. I look forwards to unbelievable profits for TG next quarter and next year... I just hope I am alive and healthy to enjoy it. Keep safe everyone. The virus is uncontrolled in Africa, South America, America, India and Middle east.
2020-06-16 16:31
Q3 increase to rm350m+ fm Q2 rm100m+...
Q4 further increase to rm1B ah fm rm350m+?
Better than robbing the banks
2020-06-16 17:06
Everyday post articles like this wont make top glove make more money nor the share price.....be realistic....
2020-06-16 17:41
Topglove is Tzuji members. He wont mark up so high to take advantage of this pandemic.
2020-06-16 20:49
U guys never read analyst reports? CGSCIMB already estimate RM3.7 BILLION net profit FY21.
2020-06-17 05:10
But can they post such fantastic results for the next 10 years? If they cant i will not buy...
2020-06-17 06:40
Guys who are hooked to gloves makers unfortunately are stuck with ultra high hopes like addicted to drugs or gambling in casino.
So far they hv used speculators to push up prices which are more than enough to clear all their indebtedness to banks.
Now be wary of big shareholders unloading to reap bonus and retire. Take heed-enough is enough. Time to pack up and leave the scene unless you want to be crushed by bulls rushing out from bear attack.
Good luck, guys.
2020-06-17 07:26
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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At RM 15.56 per share, its market cap is RM 41.7 billion.
I project Topgloves' total earnings for this and next 3 quarters to be RM 1.4 billion.
2020-06-16 15:27