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Results Note – Top Glove (REDUCE, maintain) - A muted quarter




Affin Hwang Investment Bank Bhd


17 Jun 2014





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9M FY14 earnings came in below expectations Top Glove (TOPG) reported 3Q FY14 results on 17 June. Revenue declined 3.9% yoy to RM1.7bn in 9M FY14, mainly due to: i) declining average selling prices (ASPs) in tandem with lower raw material costs (9M FY13 average latex price: RM5.86/kg vs 9M FY14: MYR4.88/kg) and ii) marginal volume sales growth (+2% yoy) due to lower sales from its natural rubber (NR) gloves segment, which offset the higher contribution from its nitrile gloves segment. ASPs have decreased approximately 9% yoy to US$23/1000 pcs. Overall, 9M FY14 core earnings decreased 4.6% yoy to RM132.4m. This is below our and consensus expectations, making up only 66% of both full-year forecasts. The company has also declared its first single-tier interim DPS of 7 sen (9M FY13 DPS: 7 sen). We maintain our FY14 DPS forecast for now at 15 sen.

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