Analyst Research Report Snapshot

Title:

Company Update – Top Glove (ADD, maintain) - Low-to-mid-teens growth with 4% yield

Price:

$35.00

Provider:

Affin Investment Bank

Date:

16 Oct 2012

Pages:

4

Type:

AcrobatPDF

Companies referenced:

TPGC.KL

Available for Immediate Download
Summary:

Healthy 10-15% volume growth in FY13 Following Top Glove’s (TOPG) analyst briefing yesterday, we reaffirm our ADD recommendation and lifted up our TP to RM6.28 from RM6.20 previously, based on 16x CY13 EPS as we tweak up our FY13-15 sales growth assumption by 1-3% after nudging up demand growth for surgical gloves which typically fetch lucrative margins by 3-5%. This resulted in a 1-5% increase in FY13-15 core net profit. The group recorded its strongest sales ever of RM2.3bn in FY12, and management is confident of sustaining a healthy 10-15% sales growth in FY13. We think this target is achievable, due to the resilient demand for rubber gloves from the healthcare sector of both developed and emerging markets, in view of the growing health awareness coupled with more stringent healthcare regulations. To cater to the increased volume sales, TOPG’s production capacity expansion plan will be on track, targeting a 12% production increase to 44.8bn pieces a year. Notwithstanding the capacity ramp-up, plant utilization will be sustained at 75% in FY08/13.

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