Koon Yew Yin 5 June 2020
The following is a small excerpt of the 5 pages article by Credit Suisse on Top Glove with a target price of Rm 23.00.
The above is the Top Glove price chart. At first, I thought it was not realistic because about 6 weeks ago, it was only around Rm 6.50 and the last traded price was Rm 15.44. But after I studied the report carefully, I believe the target price of Rm 23 is achievable because the company can sell gloves at 3-4 times the normal price to customers who requires the gloves urgently. It is called spot price or cash on delivery.
The normal margin of profit is only about 20-30% of the sale revenue. If the company can double its revenue, its profit will be phenomenal. The complete additional revenue becomes profit.
The last traded price was Rm 15.44. If the target price of Rm 23.00 is achievable, it will surely lift up all the other glove shares such as Comfort and Supermax. That is why I named the title of this article “A rising tide lifts all boats”.