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gloveharicut

Author: gloveharicut   |   Latest post: Sat, 15 Aug 2020, 1:57 PM

 

MACQUARIE raised Top Glove's Target Price to RM30.40

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I am reproducing the MACQUARIE research to my blog.

 

Glove is the vaccine to your wealth in this pandemic.

 CIMB: No concern on lower ASPs and oversupply on GLOVE. Toppick is TOPGLOV (RM25) and SUPERMX (RM9.80)

TOP GLOVE is having trouble keeping up with demand even at full capacity

TAN SRI DR LIM WEE CHAI spend 25 million to buyback TOPGLOV share again. He bought at RM16 and RM17

 

https://www.malaysiawarrants.com.my/marketnews/highlight?cat=todayhighlight&id=6269

Glove demand remains robust, with Macquarie Equities Research (MQ Research) expecting the demand to be sustained into 2021, which should support a higher average selling price (ASP) and delivery of strong earnings by glove maker Top Glove Corporation (TOPGLOV). In a report today (3 Jul), MQ Research reiterates Outperform on TOPGLOV, raising its target price to RM30.40, 73.7% above the current share price.
 
Bullish investors may consider Macquarie’s call warrants TOPGLOV-C79 and TOPGLOV-C80.
 
Read on for more.
 
 
Event

  • MQ Research is reiterating its Outperform (OP) rating on the shares of TOPGLOV and raising its target price to RM30.40, based on a lower target price-earnings (PE) of 23x (was RM20.50 on a target PE of 40x). In MQ Research’s view, the market is underestimating glove makers’ abilities to raise ASPs, and, hence, the potential ASP upside has not been fully priced in. MQ Research’s FY21E profit after tax (PAT) is 108% above consensus’.

 

 
 
Impact

  • Spot order enquiries on the rise. Management has indicated that enquiries for spot orders from the United States and Europe are on the rise due to the second wave of COVID-19. As such, the company is looking to raise the spot order allocation to more than 20% (vs last two weeks’ guidance of 20%). In MQ Research’s assumptions, it is projecting Top Glove will gradually increase its spot order allocation to 30% from 20% through 2Q FY21E (February 2021).
  • ASP rise higher than expected. Management has indicated that overall lead time has increased to nearly 15 months from 13–14 months two weeks ago, and the company is seeing higher conversion orders. This should provide Top Glove the power to raise its ASP. The company now plans to increase the ASP for August order deliveries higher than initial guidance of 15%. As such, MQ Research is increasing its FY20E/FY21E/FY22E ASP assumptions 3%/57%/4% to factor in both higher ASP increases and spot order allocation.
  • Lowering target PE on supernormal FY21E earnings. Based on the aforementioned strategy, MQ Research is projecting that FY21E’s net profit will be triple FY20E net profit. Given MQ Research’s belief that FY21E will be the peak of strong earnings that are unlikely to be repeated in following years, MQ Research is lowering its target price-earnings ratio (PER) to 23x (+0.5 SD) from 40x. To cross check the long-term fair value of the stock, MQ Research uses a discounted cash flow (DCF) methodology to derive a fair value of RM18.70, which translates to 10x FY21E/56x FY22E PERs. MQ Research views gloves as a staple within the healthcare industry and that the shares should trade at a premium multiple long term.

 

 
 
Earnings and target price revision

  • MQ Research is raising its FY20E/FY21E/FY22E EPS 10%/188%/20% to reflect higher monthly sequential ASP increases and higher spot order allocations. MQ Research is also raising its target price to RM30.40 from RM20.50. MQ Research’s bear-case valuation is RM11.80.

 

 
 
Price catalyst

  • 12-month price target: RM30.40 based on a PER methodology.
  • Catalyst: quarterly earnings and consensus upgrades.

 

 
 
Action and recommendation

  • MQ Research is reiterating its OP rating with a higher target price of RM30.40, which is based on a lower PER of 23x.

 

 
 
12-month target price methodology

  • TOPG MK: RM30.40 based on a PER methodology


 

 

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Labels: TOPGLOV

Related Stocks

Chart Stock Name Last Change Volume 
TOPGLOV 23.82 -1.18 (4.72%) 26,386,800 

  Be the first to like this.
 
tips888 LUCKY I ALREAD BOUGHT 300 LOT AT 14.94. NOT GOING TO SELL TILL IT TOUCH RM 50.00
03/07/2020 2:14 PM
calvintaneng Wait

Don't miss the New Supplier of Glove chemical

TEXCHEM!!!

YES TEXCHEM (8702) WILL NOW RECONFIGURE ALL ITS CHEMICAL TO MAKE NITRIL & RUBBER GLOVE CHEMICALS TO MEET THE HUGE DEMAND CREATED BY SUCH POWERFUL SALE OF GLOVES (ONCE IN A CENTURY!)
03/07/2020 8:35 PM
calvintaneng See this chun chun and so good entry at this cheap price now https://klse.i3investor.com/blogs/www.eaglevisioninvest.com/2020-06-26-story-h1509595299-TEXCHEM_NOW_INTO_GLOVE_CHEMICAL_PRODUCTION_TEXSHIELD_FACE_MASK_HAND_SAN.jsp
03/07/2020 8:43 PM
winston1 Looks like most likely there will be bonus issue soon.
03/07/2020 11:00 PM
PureBULL ... THIS IS TOPGLOVE TRUE FUNDAMENTAL:- price is what U pay today, VALUE is what U buy.
TODAY is again the v NEW Beginning, 1st day into uni ...

At this Quantum Leap phase, TOPGLOV shall power up to give U 50 sen to $2 up a day to
1st, to exceed HARTA's mkt cap asap
2nd, to reach the total combined mkt cap of HARTA, KOSSAN, SUPERMX n COMFORT
3rd, add 30% MORE mkt cap ...

____________________________________________________________

this is the PROOF why all analysts r calling OP tp of $23 to $30.50 basing on the earnings report of all the glove plc stated below:-


stock, last QR. PAT ... MKT CAP

HARTA .......... 116 ...... 52B
KOSSAN ......... 64 ...... 12B
SUPERMX ........ 71 ...... 12B
COMFORT ........ 16 ....... 2B
__________________________________
Total ............. 267 ...... 78B

TOPGLOV ....... 348 is way > $267 mill

The above showed the high potential VALUE ahead for
TOPGLOVE = > HARTA + KOSSAN + SUPERMX + COMFORT = > RM 78B

TOPGLOV has the right to the price per share = > $28.95 now + $8 overshoot

sure to fly once it crosses $18 soon ...
02/07/2020 10:52 AM

++++++++++++++++++++++++++++++++++++++++++++++++++++
KISS:
TOPGLOV is LARGER than all 4 combined, is the real McCoy in glove biz.
A true under valued gem yet to be discovered!
i.e. the reason why tan.sri lim is buying his stock from the open mkt.
Tis the margin of safety: Every-time these 4 stocks go up, it's creating higher VALUE for TOPGLOV.
04/07/2020 7:39 AM
freetospeak If like that count...if supermax qtr 4 profit is more tahn 350 mil. Than supermax market cap shld b 76b = rm58...lol..
04/07/2020 7:48 AM
wendycwl Buy and keep
04/07/2020 8:23 AM
Effendy Tay Rubberex is not in the list? Comfort and rubberex performance, which is higher? If rubberex merge with hextar definitely outperform than comfort. Just wondering the ranking.
04/07/2020 8:29 AM
26RICKY Rubberex closed at 3.30 but one company is offering 1.80 to take over it.Should one invest in Rubberex now?
04/07/2020 11:49 PM
kelvin61 More anal-list are trying to trap newbies and suckers daily. Bring it on MAN as memories are short. Let's see how far this party will run.
05/07/2020 1:03 AM
ahbah Buy
05/07/2020 2:01 PM
EngineeringProfit Bought ady.....recent pullback below 15
05/07/2020 2:22 PM
EngineeringProfit Not sifu lah. Don't know how to teach others....Got nothing to teach wih regards to stock.....

......just got a little bit of diligent to dig for informatiom here and there

Plus plenty of time to monitor every day
05/07/2020 2:33 PM
DickyMe TULIP MANIA in Glove
06/07/2020 12:06 AM


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