Updated: Aug 1
Top Glove engages in the manufacture and trading of rubber gloves. As with other medical supplies provider, it had enjoyed a tremendous year in 2020 due to the pandemic. Price has since corrected 53% from its peak of $3.18 in October 2020. After 6 months of correction, the valuation of Top Glove is looking attractive, especially with its P/E ratio trading at 6.4x, the lowest ever seen more than 15 years ago.
You can see from its monthly chart on the left, using my valuation cycle index for P/E, P/B and P/S, all 3 indicators are trading at its Buy Zone. The previous time they were all in the same buy zone was back in February 2019, which was followed by 1.5 years of bull run, bringing its share price from $0.50 to above $3.
On its daily chart, the last 1.5 months of price action looks to be in an attempt to established a base. Volume analysis had also indicated possible accumulation over this period or consolidation. DBS Vickers had issued a Buy recommendation with a 12-month target price of around S$2.33. You can refer to the attached report for detail of their thesis. Based on its price chart, this has also coincided with its resistance of $2.30 and its support is at $1.50.
As usual, this writeup was broadcast to Clients on 22 April 2021 but posted here only on 26 April 2021.
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