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Top Glove is very much under priced


Koon Yew Yin 29 July 2020

If you examine the price chart for Comfort, Supermax and Top Glove closely, you will understand why I named the title of this article “Top Glove is very much under-priced”.  

Comfort price chart shows that it has gone up from 80 sen to close at Rm 5.27 in the last few months. 

It has gone up 6.6 times.  

Supermax price chart shows that it has gone up from Rm 1.80 to close at Rm 18.68 in the last few months. 

It has gone up more than 10 times. 

Top Glove price chart shows that it has gone up from Rm 6.00 to close at Rm 26.14 in the last few months. 

It has gone up only 4 times. 

This does not make any business sense. Top Glove being the biggest glove manufacturer in the world should be easier and faster to raise its selling price for its products. Investors must realise that any additional selling price is pure profit because it does not involve production cost. 

Unfortunately, many small investors do not want to buy Top Glove because it is priced higher than Comfort and Supermax. They do not understand that Top Glove being the biggest glove producer has the power to raise the selling price of its products easily. They do not look at the profit growth prospect which is the most powerful catalyst to push up share price. 

Nevertheless, there are 8 Investment Banks recently revised their target price for Top Glove as below. 

8 research houses updated their target prices for Top Glove as below.  

  1. Affin Hwang Outperform Rm 46.40 20/7/2020
  2. Credit Suisse Outperform Rm 37.00 15/7/2020
  3. Kenanga Investment Bank Outperform Rm 32.00 13/7/2020
  4. TA Securities Buy Rm 31.66 14/7/2020
  5. Hong Leong Buy Rm 31.31 15/7/2020
  6. Cimb Securities Buy Rm 31.30 14/7/2020
  7. Nomura Buy 30.65 14/7/2020
  8. Macquaries Outperform 30.40 14/7/2020    

Currently there are 16.929 million Covid 19 cases and 664,272 deaths in the world. These 2 figures are still spiking as shown on the charts below. As a result, the demand for medical gloves far exceeds supply and the price for glove continue to rise. All the glove manufacturers are making more and more profit which should be reflected on their share prices. 

Top Glove will announce unprecedented profit soon.  

My objective for writing this piece is to help investors to make more money. Whether you buy or not does not make any difference to the share price because the daily volume traded is several tens of million shares.  

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