Should we buy Top Glove since it has been plunging due its 28 factories shut down?

Koon Yew Yin 26 Nov 2020

Many people in my chat group wanted to know if we can take advantage of Top Glove’s price plunge to make some money. 

Top Glove

The 1-month price chart shows it has dropped from Rm 8.90 to close Rm 6.65, a drop of 25%. 

Its latest quarter ending August EPS was 15.95 sen and its previous quarter EPS was 6.80 sen, an increase of 135%. 

Just assumed that it cannot increase its selling price for its gloves, its EPS for the next 4 quarters will be 15.95 X 4 = 63.8 sen 

Based on PE 15 X 63.80 = Rm 9.57, its target price.    

Supermax

For comparison I will use the same way I used to calculate the target price for Top Glove.

The 1-month price chart shows that it has dropped from Rm 9.85 to close at Rm 8.08, a drop of 18%. 

Its latest quarter ending September EPS was 30.58 sen and its previous quarter was 15.29 sen, an increase of 100%. 

Just assumed that it cannot increase its selling price for its gloves, its EPS for the next 4 quarters will be 30.58 X 4 = Rm 1.22 

Based on PE 15 X Rm 1.22 = Rm 18.30, its target price.