Highlight HLIB Research maintains Buy on Top Glove, ups target to RM10.98

by **Cals** Wed 21 Oct 2015, 12:35

Highlight

[size=28]HLIB Research maintains Buy on Top Glove, ups target to RM10.98

By theedgemarkets.com / theedgemarkets.com | October 21, 2015 : 8:48 AM MYT

KUALA LUMPUR (Oct 21): Hong Leoing IB Research has maintained its “Buy” rating on Top Glove Corporation Bhd ([You must be registered and logged in to see this image.]Valuation: 1.10, Fundamental: 2.50) with a higher target price of RM10.98 (from RM9.49) and reiterated its views that Top Glove would continue to benefit from favourable environment both internally (improved efficiency) as well as external tailwinds (appreciation of USD and low raw material prices).

In a note today, the research house said it learned that Top Glove’s latest factory was currently able to produce 40,000 pieces (pcs) per hour, narrowing its gap with Hartalega ([You must be registered and logged in to see this image.] Valuation: 0.50, Fundamental: 2.60)’s NGC of 45,000 pcs per hour.

“Management shared that its payout ratio for FY15 (44%) fell below its dividend policy of 50% after considering cash balances as well as its planned M&A exercise

“We lifted our target price from RM9.49 to RM10.98 as we factor in higher US dollar rate in our forecast (from 3.60 to 3.70 based on FY15 average).

“Our valuation is pegged to unchanged multiple of 20x CY16 EPS based on +2SD above its 3-year historical average P/E (similar to Kossan Rubber Industries Bhd ([You must be registered and logged in to see this image.] Valuation: 0.70, Fundamental: 2.10)). This is also in-line with FY16 P/E of Hartalega Holdings Bhd and Kossan. Maintain Buy,” it said.
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