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KUALA LUMPUR: CIMB Equities Research is retaining its Add call for Top Glove with a target price of RM 5.90 based on a CY17F price-to-earnings (P/E) of 17.5 times.
It said on Wednesday it is retaining its earnings forecasts as there is no fundamental impact on the company’s financials from the proposed secondary listing on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST).
Top Glove was granted approval by the Securities Commission Malaysia (SC) for its secondary listing on the Main Board of SGX-ST. It is still awaiting approvals from both SGX-ST and its shareholders before moving forward with the secondary listing.
“We understand that management expects approval from SGX-ST soon, while an extraordinary general meeting (EGM) to seek approval from shareholders is tentatively set for mid-June 2016,” it said.
“Management also confirmed that the group will not be issuing any new shares through this listing. Instead, one of T Top Glove’s main shareholders is likely to sell a portion of their stake, with an approximate value of S$20mil (RM59.4mil or US$16.8mil) in the open market on SGX-ST to create liquidity.
“We think the seller could be Tan Sri Lim Wee Chai as he is the majority shareholder. Even so, we expect a lower volume of trades in its Singapore listing compared to its primary listing on Bursa,” it said.
Top Glove has set end-June 2016 as the tentative listing period. The introductory price on SGX will be of the same value as its Bursa trading price on the same day after currency conversion. We estimate that the cost of the one-off secondary listing should not be more than RM2mil, with an annual listing fee of RM200,000 (S$70,000).
“We are neutral on the group’s proposed secondary listing as it has no fundamental impact on the company’s prospects. Nevertheless, the listing provides an opportunity for Top Glove to raise its profile and trading liquidity given that Singapore is regarded as a global financial hub,” it said.
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