Top Glove

[winston]

Undervalued at current prices

We deem 1QFY8/21 net profit of RM2.6bn (+2,198% yoy) to be in-line at 24.7% of our FY21F estimate but above Bloomberg consensus.

TOPG should record stronger results in quarters ahead, backed by:
i) higher ASPs
ii) increase in production capacity and
iii) higher economies of scale.

We reiterate our Add call with a lower TP of RM8.90 (16x CY22 P/E).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... f251dca359

[winston]

vested

Best is yet to come

1QFY21 core net profit (+2x QoQ) beat street’s expectations.

We expect a stronger 2QFY21E on ASP hike of c.30% QoQ and flattish sales volume.

We maintain our FY21E EPS but raise our FY22-23E EPS by 50%/73% on higher ASPs.

We derive our new TP of MYR8.65 (-9%) based on DCF methodology (from P/E), which assumes for WACC of 8.2%(higher than our assumed WACCs for other glove players as we account for its social compliance issues)and LTG of 4.5%.

Dividend yield of 11%/6% in FY21-22E is also attractive.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/2 ... 359e02.pdf

[winston]

vested

Malaysia's Top Glove reaps record profit, sees strong demand

KUALA LUMPUR, Malaysia — (AP) — Malaysia's Top Glove Corp., the world's largest rubber glove maker, said Wednesday it expects a shortage of gloves over the next three years as it reported a record quarterly profit fueled by the coronavirus pandemic.

Top Glove said its net profit grew 21-fold from a year earlier to 2.4 billion ringgit ($590 million) in the three months through November, while revenue almost quadrupled to 4.76 billion ringgit ($1.17 billion).

“We do not see a slowdown ... even with a vaccine, we expect (glove) usage to be stronger than the pre-COVID era due to an increase in healthcare and hygiene awareness," managing director Lee Kim Meow said in an online news conference.

The company projected glove demand will outstrip supply over the next three years, jumping 25% in 2021 and another 15% annually for the following two years. Growth was about 10% a year in the pre-pandemic period.

Lee said Top Glove, which produces about a quarter of the global supply or 90 billion gloves a year, has earmarked 10 billion ringgit ($2.46 billion) to expand its capacity by 100 billion pieces over five years.

Source: AP

https://www.actionnewsjax.com/news/heal ... MEZJCJ6VU/

[winston]

vested

What’s New

Earnings boosted by higher volume and ASP

Higher ASP more than offset increase in raw material costs; declares bumper dividend

Expect earnings to stay robust in the coming quarters as demand remains strong

Maintain BUY with higher TP of RM10.40

Source: DBS

https://researchwise.dbsvresearch.com/R ... =fjbgckiia

[behappyalways]

Tropicana’s purchase of Top Glove shares raises eyebrows
https://www.theedgemarkets.com/article/ ... s-eyebrows

[winston]

vested

Top Glove (TOPG MK)
Down But Not Out

Looking beyond the noise, Top Glove’s prospects remain firmly intact.

ASPs continue to uptrend, while 2022’s ASP outlook of a gradual normalisation is encouraging.

Rising ASPs should comfortably absorb higher raw material costs too.

Meanwhile, the COVID19-related operational setbacks and detention order by the US CBP that have weighed on sentiment should be resolved soon.

Maintain BUY. Target price: RM12.30.

Source: UOBKH

https://research.uobkayhian.com/content ... 75183cc0b4

[winston]

Here's what Top Glove has to say about sustaining its super profits

by Justin Lim

Yesterday, JP Morgan initiated coverage on its stock, but with a fair value of RM3.50 — about half its last traded price of RM6.90 — as it sees the passing of a supernormal growth cycle for glove makers, in anticipation of a huge oversupply in the market, as glove demand decelerates in tandem with the pace of testing for Covid-19. Rising costs are also expected to eat into profitability.

Your profit margin stood at 49.9% in the first quarter ended Nov 30, 2020 (1QFY21). Is the current profit margin sustainable?
Answer by Lim: The coming quarters performance will be better due to the reasons below:
1. Additional 10% new capacity
2. Higher nitrile gloves mix by switching some latex capacity, and sufficient NBR (Nitrile Butadiene Rubber) latex
3. Higher ASP which is in line with market prevailing price. ASP for 2Q is expected to be 30% higher from 1QFY21
4. Demand continue to increase, underpinned by in both healthcare and hygiene awareness

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... er-profits

[behappyalways]

Malaysia's Top Glove fired whistleblower before virus outbreak
posting.php?mode=reply&f=78&t=3952

[winston]

vested

Kenanga maintains 'outperform' on Top Glove
10 Dec 2020

KUALA LUMPUR: Kenanga Research maintained an "outperform" call on Top Glove Corp Bhd after raising its FY21 net profit forecast by 40% to account for higher average selling prices.

"Raised FY21E net profit by 40% after hiking our ASP from USD55/1,000 pieces to USD70/1,000 pieces and assuming 80% utilisation or 75b pieces volume sales (taking into account of the temporary production loss in Klang factories).

"Our FY22E ASP assumption remains conservatively pegged at USD40/1,000 pieces," it said.

The research house said its target price on the counter was maintained at RM10.68 based on 11.5x 2021 raised earnings per share of 92.9 sen.

Following a conference call with Top Glove, Kenanga said management is confident of robust demand over the next two years due to continuous acure shortage and surging cases of Covid-19 in Europe and the US.

"Looking ahead into 2QFY21, we highlight that TOPGLOV’s ASP in 2QFY21 is expected to jump by 30% QoQ, with higher volumes (+10% from new capacities) and product mix skewed towards higher margin nitrile gloves," it said.

Source: The Star

https://www.thestar.com.my/business/bus ... -top-glove

[winston]

vested

Top Glove Corporation (TOPG MK/BUY/Target: RM10.40).

Our target price is based on 11.0x 2021F PE, or close to -3.5SD of its 5-year forward PE mean.

We believe the valuation should be at a deep discount to its historical PE mean as:
a) it is being pegged to windfall peak earnings;
b) upside to earnings is increasingly being factored in; and
c) the risk-toreward at this juncture is increasingly pronounced.

That said, our PE peg is reasonable as Top Glove is an established FBMKLCI component index constituent with a sublime earnings CAGR of 450% (FY19-21F).

Furthermore, its explosive qoq earnings growth over the next two quarters could be supportive of valuations.

Source: UOBKH