Using a layman method and looking from a different angle.
Use Topglov as example.
Eventually Topglove profit will normalize, say rm0.71 per share a year, as per CIMB research report (22/07/2020) for Topglove FY Aug 2022.
Give a high PE ratio of 20x =RM14.20
Give a high PE ratio of 25x =RM17.75
Give a high PE ratio of 30x =RM21.30
Many brokers gave 25x as at end of 2019 when things were normal, assuming fair value is RM17.75
What happen to all the super profit? RM0.59 (FY Aug20) + RM1.97(FY Aug21) = RM2.56. You may get nothing if they don’t pay out as special dividend. But assuming they pay all as dividend.
Buy at Topglove price RM26 now.
Get RM2.56 special dividend
Cost RM23.44
Later the target price become RM17.75
The above is just a sample analysis using one research report. Other analysts give higher or lower figures. They may adjust the figures upward or downward based on result announcements or news or other developments.
Of course, there are many uncertainties, no vaccines or delay or more cases. Or vaccines are earlier than expected.
The above is just a different way of looking at things when the company has one of two years of super profit.
