Top Glove shares soar to 21-month high

PETALING JAYA: Shares of Top Glove Corp Bhd rose to a 21-month high today after it registered stellar fourth-quarter earnings and announced the proposed acquisition of Eastern Press Sdn Bhd, which is involved in printing and supplying of packaging materials, for RM47.25 million.
The stock rose as much as 44 sen or 7.3% to RM6.45 before closing 38 sen or 6.3% higher at RM6.39, with 13.55 million shares changing hands.
Top Glove registered Q4 FY17 revenue and earnings of RM902.4 million and RM98.6 million respectively.
Due to the improved earnings performance, MIDF is revising up its earnings forecasts for FY18 by 2.7% in anticipation of higher average selling price (ASP) as the result of an increase in both raw material prices as well as new production capacity coming in FY18.
Following the earnings revision, MIDF reiterated its “neutral” call on Top Glove with a higher target price of RM5.53.
However, the research house said it continues to be wary of the currency movements and raw material prices, which could have an adverse impact on the group’s earnings.
“Additionally, we are also wary of any potential delay in its capacity expansion as this could disrupt its revenue and earnings growth going forward.”
Meanwhile, HLIB Research, which maintained its “hold” recommendation for Top Glove with a higher target price of RM5.74, said it still favours the group for its exposure in the resilient export market, in view of rising protectionism in global trade, and it being a benefactor of the strong US dollar.
PublicInvest Research believes Top Glove should see better results ahead, with higher nitrile gloves sales, which command higher ASP coupled with new capacity and internal efficiency credited to ongoing improvements in the manufacturing process.
The improvements also enabled the group to manage costs more efficiently, reduce wastage whilst improving its glove quality.
The research house maintained its “neutral” call on Top Glove with an unchanged target price of RM5.93 as it believes growth is currently priced in.