Posted by
Daniel Wong |
4:03 PM
|
Top Glove
|
Fair Value: RM 11.85
Current Price: RM 12.58
Recommendation: HOLD
Recently, Top Glove annouced its quarterly profit report. Its 2nd quarter profit almost doubled compared to previous year. Thus, I'm revising its Fair Value from RM9.97 to RM11.85. As the current market price has overshot this fair value, I'm giving it a
Hold recommendation.
Refer to previous write-up
here for more info on this company.
Disclaimer
This is a personal weblog, reflecting the author's personal views. All information provided here, including recommendations (if any), should be treated for informational purposes only. The author should not be held liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.
Hi Daniel, I just happened to come across your blog while searching for top glove. You blog is very informative to me and thank you for all the information, as well as tips shared. I was wondering if this Top glove is worth to buy now as I have read somewhere on the news where they are aiming to grow their share value to 17. Not sure how valid is the news but looking at their performance throughout the years, what do you think?
Hi Jerry,
Different analyst uses different methods to analyse a stock's fair value. Some use current EPS to calculate the fair value, while some use future EPS. You may also notice that when a stock's price reaches an analyst's fair value, some analyst will say Hold and some will say Sell.
All my fair value recommendation in this blog is calculated using current EPS. For Top Glove, the next fair value for the next quarter could be around RM 13. The market price might or might not drop to my current fair value of RM 11.85. That's the reason why one needs to learn how to budget his investment. Let's say you have RM 10k to invest in Top Glove now, and you want to use the next quarter fair value of RM13 as your guide, then it's good to invest about RM5k first at the current price of RM12.58. If the market price do drop to the current fair value, you would have another RM5k to average down your cost per share. If the market price don't come down after you bought it at RM12.58, just move on to another opportunity with your RM5k ;)
Some uninformed investors are quick to blame the analysts for causing them to have paper lost (unrealised lost) without knowing the workings behind the calculation of fair value. Therefore it's good to know how to calculate the fair value on your own to gain confidence in your investment. It's always a great feeling to invest with confidence :)