Top Glove

[winston]

vested

2Q Results

Revenue: +336% yoy
EPS: 20.4 times (35.77 vs 1.67)
RNAV : RM 0.86
Dividends: 0.252 Ex-Date March 23, 2021

https://www.bursamalaysia.com/market_in ... id=3136974

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vested

2QFY21: Boosted by higher ASPs

1HFY8/21 core net profit of RM5.4bn (+2,283% yoy) was within expectations, at 52% of our and 54% of Bloomberg consensus full-year estimates.

We are not overly concerned on potential decline in ASPs from 2HFY21F onwards, as we have accounted for this in our ASP estimates in FY21-23F.

We reiterate our Add call with an unchanged TP of RM7.80 (14x CY22 P/E).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... DB165F89EE

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vested

Top Glove’s earnings may peak soon

The brokerage remained negative on Top Glove’s listing on the Hong Kong Exchange (HKEX).

PETALING JAYA: Although most brokerages are bullish on Top Glove Corp Bhd, Maybank Investment Bank (MaybankIB) appears less enthusiastic, downgrading its call on the company’s shares to “hold” from “buy” previously.

The brokerage has also lowered its target price for the world’s largest glovemaker to RM4.85 from RM8.65 previously.

The lower discounted-cash-flow (DCF) based target price followed MaybankIB’s rolling forward its valuation for Top Glove to the financial year (FY) ending Aug 31,2024, from FY21 previously, and lowering its long-term-growth estimate to 3.5% from 4.5% previously, in view of the aggressive expansion by the China’s glovemakers.

According to MaybankIB, Top Glove may reduce its nitrile glove average selling prices (ASPs) by 3%-5% month-on-month in April-June 2021, bringing its nitrile glove ASP to around US$100 (RM412) per 1,000 pieces by June 2021 and converge with the ASPs of the price laggards.

“Earnings may peak in the third quarter (Q3) of FY21 and fall from Q4’FY21 as ASPs decline. We maintain our FY21-FY23 estimated net profit, which has already assumed for lower ASPs ahead, ” MaybankIB said in its report yesterday.

“However, our FY21-FY23 estimated earnings per share is reduced by 4%, 14%, 14%, respectively, on a higher share base, as we assume that its proposed listing in Hong Kong will go through, ” it added.

Meanwhile, RHB Research reiterated its “buy” call on Top Glove, but it lowered its DCF-based target price for the counter to RM6.80 from RM8.45 previously.

“We reduced the target price, as we expect a lower long-term nitrile gloves ASP of US$40 per 1,000 pieces, ” the brokerage said, noting the near-term high ASPs would encourage more competition in the future.

RHB Research said Top Glove was currently undervalued.

“After the share price declined 43% from its peak, Top Glove turned into a value play with its attractive near-term dividend yield of 16%, a low FY23 price-earning (PE) multiple of 10.5x (average: 18.0x), and strong balance sheet with net cash of RM4.06bil, ” it explained.

CGS-CIMB Research said it was not overly concerned about the potential decline in ASPs from the second half of FY21, as it had accounted for this in its ASP estimates in FY21-FY23.

On that note, the brokerage reiterated its “add” call on Top Glove, with an unchanged target price of RM7.80.

Despite Top Glove’s strong earnings prospects, CGS-CIMB Research said it based the counter’s target price on 2022 PE multiple of 14x, which was negative one standard deviation below its five-year mean, given ongoing environmental, social, and governance issues (treatment of foreign labour) and US Customs and Border Protection ban on two Top Glove subsidiaries since July 2020.

The brokerage remained negative on Top Glove’s listing on the Hong Kong Exchange (HKEX).

“If its HKEX listing is completed, our theoretical target price would be at RM6.80 (based on an enlarged share base of 9.7 billion), ” it explained.

Top Glove’s net profit jumped 22 times to RM5.23bil for the first half ended Feb 28,2021, from RM227.11mil in H1’FY20, while revenue increased three-fold to RM10.12bil from RM2.44bil.

The strong results, which were largely in line with Bloomberg consensus estimate, was mainly attributable to continued strong demand for gloves globally.

Source: The Star

https://www.thestar.com.my/business/bus ... -peak-soon

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HLIB maintains ‘buy’ call, target price on Top Glove amid expectations of stronger q-o-q 3Q results

by Justin Lim

The research house anticipated a stronger set of results despite an expected decline in the average selling prices (ASPs) of nitrile gloves and powder-free natural rubber gloves by 3% to 5% in April and May, from levels seen in February and March.

The lower nitrile glove ASP will be offset by the higher ASP of powdered natural rubber gloves, which is expected to rise by 3% to 5% going forward, as the latter is mainly sold to emerging markets, which have not rolled out their vaccination programmes.

The company said the nitrile lead time remains strong as current lead time for delivery stood at 170 days, higher than the pre-pandemic levels of 30 to 40 days — but below its peak of over 500 days.

Top Glove’s net profit for 2QFY21 rose 20.76% q-o-q to RM2.87 billion from RM2.38 billion.

Revenue grew by 12.74% to a record RM5.37 billion from RM4.76 billion.

Source: theedgemarkets.com


https://www.theedgemarkets.com/article/ ... 3q-results

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US CBP begins seizing disposable gloves by Top Glove
https://www.thestar.com.my/business/bus ... -top-glove

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八点最热报 30/03/2021 被指涉及强迫劳动 顶级手套再遭美国封杀
https://m.youtube.com/watch?v=D-1sZ2HS4l4

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vested

Top Glove dips to 10-month low, over RM5b market cap lost since Monday

by Tan Siew Mung

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... ost-monday

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Top Glove remains a 'value buy', says Kenanga

KUALA LUMPUR: Top Glove Corp Bhd remains a value buy despite the US Customs and Border Protection determining a finding of forced labour in the group's production of disposable gloves, says Kenanga Research.

"In the short term, we believe that any loss in its US market share should be offset by demand from other countries, as the number of global COVID-19 cases remains high.

"Pending the outcome of the CBP review, we maintain our earnings estimates, at this juncture," it said.

The research house said it maintained its FY21-23 earnings forecasts on Top Glove.

From an ESG standpoint, the news is negative among investors, although there is a lack of earnings impact.

However, Kenanga's target price of RM6.80 has priced in 10% ESG and operating risk discounts.

Top Glove said yesterday in a filing with Bursa Malaysia it was unable to ascertain the quantum of the impact of the issue on its financial and operation performance at this juncture.

In 1HFY21, the group's sales volume in North America accounted for 22% of its total sales volume.

Top Glove's share price has fallen 46% since its peak recorded in October 2020.

The stock is trading at 3.8x FY21F P/E, and offers a about 17% dividend yield.

By using an expected trough earnings per share for FY23F, it is trading at a FY23 price-earnings of 10.2x (-0.72SD, or at a 42% discount from its average of 18x).

Source: The Star

https://www.thestar.com.my/business/bus ... ys-kenanga

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Top Glove boss says the group can still ship gloves produced outside Malaysia to the US

by Justin Lim & Lynette Hew

The company has 50 factories — 43 in Malaysia, five in Thailand, and one each in Vietnam and China.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... urt-us-ban

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not vested

MIDF Research sees US seize order on Top Glove harming manufacturer’s sales, earnings in North America

KUALA LUMPUR, April 9 — The United States’ Withhold Release Order (WRO) on Top Glove Corporation Bhd is expected to have a negative impact on the rubber glove manufacturer’s sales in the North America markets, MIDF Research said.

However, it believed Top Glove would be able to relocate the supply to other markets which are experiencing a resurgence in Covid-19 cases.

“Its factories outside of Malaysia will still be able to export to the US. As such, we do not expect the WRO to have a significant impact on Top Gloves’ sales and earnings,” it said in a note today.

It noted that Top Glove had recently said its rubber gloves average selling price (ASP) would be adjusted by about five per cent to match the current market prices.

MIDF opined that the reduction in sales to the US might have a slight negative impact to its ASP due to the higher ASPs in the region.

“That said, we believe that the diversion of trades to other markets will cushion the impact.

“Moreover, its production capacity was capped by the halt in operations previously. Hence, the higher volume produced is likely to offset the impact in ASP adjustment,” it said.

Yesterday, Top Glove held a briefing to update on the improvement it has made based on the findings of the International Labour Organisation’s (ILO) forced labour indicators.

It said that it would continue to rectify existing issues so that the US Customs Border Protection (CBP) would modify or revoke the WRO.

Of the 11 findings, six have been resolved, and the company is looking to resolve the debt bondage issue as it had paid out the final tranche of the remediation fees to its foreign workers earlier this month.

As such, MIDF has maintained its “buy” call on the company, with an unchanged target price of RM8.29.

Similarly, Kenanga Research, which had set an “outperform” call on the company, said Top Glove’s ASP is expected to soften, albeit at a slower pace on the back of still robust demand.

“In the second quarter financial year 2021 results’ briefing, the group highlighted that nitrile glove’s ASP is expected to decline by between three to five per cent month-on-month or adjusted down to be in line with peers.

“Management is of the view that the ASP is unlikely to fall off a cliff despite average lead time being reduced from 300 days in early Jan 2021 to 170 days currently, compared to 20-30 days pre-Covid-19,” it said.

Kenanga Research said post-Covid-19, the inventory restocking cycle is expected to spur demand, coupled with increased usage arising from new users and increased hygiene awareness.

“We still see significant value being derived from Malaysian glove players which command 65-68 per cent of global market share. Downside risk to our call is lower-than-expected ASP in the second half of 2021,” it said.

Meanwhile, AmInvestment Bank maintained a “hold” call on the company, as it is still wary of falling glove ASP, impact from of the WRO and the accompanying reputational risks.

“We believe that until the CBP lifts the sanction, Top Glove’s future outlook remains significantly uncertain,” it said.

At 11.57am, Top Glove’s shares fell 14 sen to RM5.26, with 21.26 million shares transacted.

Source: Bernama

https://www.malaymail.com/news/money/20 ... es/1965128