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| Maybank Research maintains buy call on Top Glove |
| Written by Surin Murugiah | |||
| Wednesday, 17 June 2009 09:28 | |||
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The research house in a note today said Top Glove's 3QFY09 results were expected to beat its and streets' estimates. "Interim dividend per share (DPS) may also be higher and the group would stay net cash for the second consecutive quarter," it said. "We have raised our estimates by 3%-6% for the next three years and the target price by 17% to RM7." Maybank Research said it sees Top Glove's net profit growing by 6%-17% quarter-on-quarter (q-o-q)to RM38 million-RM42 million, higher than the earlier projection of 1%-5%. "9MFY09 net profit should range from RM108 million-RM112 million, matching FY08's earnings and accounting for 76%-81% of our and consensus forecasts of RM138 million-RM141 million for FY09," it said. "We expect a higher interim DPS of 7 sen-8 sen to be declared in the 3QFY09 (3QFY08 DPS: 6 sen) on improved year-on-year earnings. Top Glove is expected to remain in a net cash position." It said the Top Glove 3QFY09's stronger growth is likely to be a result of higher sales volume (estimated +10% q-o-q vs +5% previously). It has also benefited from a lower gas price (down 32% to RM15/mmBtu effective April 09), said the research house. "As such, we expect EBIT margins to improve (+0.5-ppt q-o-q on: i) lower operating costs (as the full impact of energy/gas cost savings may not have been passed back to customers in the quarter), and ii) improved product mix that yielded higher margins," it said.
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