RHB ups Top Glove fair value (7113)

RHB Research raised its fair value on Top Glove Corp to RM5.71 per share from RM5.64 after the world’s largest rubber glove maker by volume said that it was buying a smaller rival for RM24.1 million.

“We are positive on the acquisition as the acquisition is in line with the group’s expansion plan of increasing its global market share to 30 percent from 25 percent currently, over the next three years,” the research house said in a note on Wednesday.

Maintaining its "trading buy" rating on the stock, RHB said the acquisition would add about 570 million pieces per annum to Top Glove’s existing capacity of 38.5 billion pieces and would add to its earnings from the financial year ending August 2013 onwards.

“While the additional capacity arising from the acquisition is relatively small, we note that there is still an additional 8 acres of vacant land on the site, which can be used for further capacity expansion,” RHB added.

By 9.30am, the counter rose 0.37 percent to RM5.45 per share, outperforming the Malaysia’s benchmark stock index’s 0.27 percent rise. -- Reuters