KUALA LUMPUR: Kenanga Research maintained an "outperform" call on Top Glove Corp Bhd
after raising its FY21 net profit forecast by 40% to account for higher average selling prices.
"Raised FY21E net profit by 40% after hiking our ASP from USD55/1,000 pieces to USD70/1,000 pieces and assuming 80% utilisation or 75b pieces volume sales (taking into account of the temporary production loss in Klang factories).
"Our FY22E ASP assumption remains conservatively pegged at USD40/1,000 pieces," it said.
The research house said its target price on the counter was maintained at RM10.68 based on 11.5x 2021 raised earnings per share of 92.9 sen.
"We lowered our target PER as we believe that its earnings growth will moderate towards more sustainable levels beyond FY21.
"Despite this, there remains ample upside to our target price of RM10.68," it said.
Following a conference call with Top Glove, Kenanga said management is confident of robust demand over the next two years due to continuous acure shortage and surging cases of Covid-19 in Europe and the US.
"Looking ahead into 2QFY21, we highlight that TOPGLOV’s ASP in 2QFY21 is expected to jump by 30% QoQ, with higher volumes (+10% from new capacities) and product mix skewed towards higher margin nitrile gloves," it said.
Meanwhile, the group has already invested RM70mil on more workers' accommodations and improving existing ones while spending RM20mil purchasing 100 apartments and renting more houses for its workers.
Over the medium term, the group has earmarked approximately RM100m to be invested in workers’ facilities and accommodation, which includes building mega hostels in Klang and Banting with a combined capacity of 7,300 pax fully equipped with a suite of
amenities and facilities.
after raising its FY21 net profit forecast by 40% to account for higher average selling prices."Raised FY21E net profit by 40% after hiking our ASP from USD55/1,000 pieces to USD70/1,000 pieces and assuming 80% utilisation or 75b pieces volume sales (taking into account of the temporary production loss in Klang factories).
"Our FY22E ASP assumption remains conservatively pegged at USD40/1,000 pieces," it said.
The research house said its target price on the counter was maintained at RM10.68 based on 11.5x 2021 raised earnings per share of 92.9 sen.
"We lowered our target PER as we believe that its earnings growth will moderate towards more sustainable levels beyond FY21.
"Despite this, there remains ample upside to our target price of RM10.68," it said.
Following a conference call with Top Glove, Kenanga said management is confident of robust demand over the next two years due to continuous acure shortage and surging cases of Covid-19 in Europe and the US.
"Looking ahead into 2QFY21, we highlight that TOPGLOV’s ASP in 2QFY21 is expected to jump by 30% QoQ, with higher volumes (+10% from new capacities) and product mix skewed towards higher margin nitrile gloves," it said.
Meanwhile, the group has already invested RM70mil on more workers' accommodations and improving existing ones while spending RM20mil purchasing 100 apartments and renting more houses for its workers.
Over the medium term, the group has earmarked approximately RM100m to be invested in workers’ facilities and accommodation, which includes building mega hostels in Klang and Banting with a combined capacity of 7,300 pax fully equipped with a suite of
amenities and facilities.
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