Thursday, February 25, 2021

Purchased Top Glove

While in the past, I was critical but unsure of the company, this time around I think it is grossly oversold. The company had not paid much dividend as yet and has been repurchasing a substantial amount of its stocks over the pandemic period. The company remains to be the largest gloves manufacturer and is probably the company that benefitted the most in terms of revenue and profits due to the pandemic.

This is probably due to the aggressive nature of the management where they had increased capacities through organic and acquisition growth. The super abnormal profits have given opportunities I believe for many of the gloves manufacturers to improve on their efficiencies in the long run as they took this period to push more automation as well as improve on the living conditions of their workers especially the foreign workers.

I think given that Top Glove is trading at RM43billion valuation, it could be cheap. Post pandemic which for many countries could be seen by end of this year or mid of next year, we will potentially see restocking as these countries do not want to be shocked again by another similar situation. I think these gloves companies despite the coming on stream of other new entrants as well as much increased capacities of the existing company (including China and Thailand) may still see the plants running at full capacities.

I have hence bought 1500 units of Top Glove at RM5.19.


  

3 comments:

yauwenchin said...

Negatives sentiment on gloves. Risk reward ratio appears reasonable for long term, having consider the dividend payout ratio by TopG. At RM4.90, with the pretext of forward estimated PAT of RM12b, RM5b and RM3b, and (RM1.5b to RM2.0b remaining years), I think is safe to say, next 10 years average profit per annum about RM2.4b p.a.

felicity said...

My thoughts is the same and considering gloves will not go out of style or rather needs.

yauwenchin said...

OMG, Top Glove is RM4.50 per share or RM38b on April Fool 2021, while coming 3-4 years can make RM20b, and distribute about RM11b. Value stock picking is dead or what? USA bullying is not new, they did it to the palm oil (when I was Head of IR of a PLC), using recycle video clips, spread rumours, even causing foreign banks to cease provide funding assistance by using their superior media. So sad.