2020 TopGlove Fair Value

Let's do some proper homework to find out the fair value atleast at the short term instead of just following the crowds chasing glove counter without knowing what price you are paying for.

According to analyst research report, the pre-CoVID19 ASP is USD0.029 per 1000.

Thus, the ASP is RM0.116 per piece.

Supermax said will increase ASP by 30%+
Topglove said will increase around 5% to 15% (according to analyst).

Thus, i assume for April, May and June the average increase on ASP price is 10%.

0.116 x 10% = RM 0.0116.

On 2019, the total glove capacity produced is 73.4Billion pieces. Since topglove said after March ,the utilization is max at 100%, so, i would take 73.4 billion for calculation.

Thus, the extra profit gain from the 10% increased of price will be 0.0116 x 73.4 billion = 851million ringgit per annum.

according to 2Q2020 result, the net profit is 115million.

So, my profit estimation for the next 1 year = 115*4 + 851 = 1311 million ringgit.

the total shares is 2608m.

thus , my forecast EPS is 1311/2608 = 0.50 cent.

i would say the normal PE for topglove is 40 if we look at pre-covid19, it is trading at PE 40+.

So, my fair value for Topglove on 2020-2021 is 0.50 x 40 = RM20.