KUALA LUMPUR: Top Glove advanced in early trade on Thursday, July 29 as Citi Group global markets research sees more upside for the glove manufacturing sector.

At 9.32am, Top Glove was up 12 sen to RM6.68 with 253,900 shares done.

Citi Research had initiate Kossan and Supermax at Buy/Low Risk with target prices of RM4.95 and RM7.40 respectively, underpinned by earnings growth of 15-24% and ROE of 31%.

“Top Glove is rated Hold/Low Risk given its lower earnings growth of 10.5% and ROE of 25%,” it said.

The research house said its RM7.25 target price values the stock at 16x FY11E EPS, or 1SD above its historical P/E of 13.5x.

Citi Research said while it believes the stock to continue to command premium valuations given its larger earnings base and excellent track record, “we expect the premium gap to narrow as earnings growth momentum moderates and growing market share becomes increasingly challenging”.