Top Glove - Multiple Headwinds Still Ahead
- Top Glove (SGX:BVA)'s 1HFY22F (Sep 2021 to Feb 2022) core net profit of RM272m (-95% y-o-y) was below expectations, due to lower-than-expected ASPs and surge in operational costs.
- While ASPs may have bottomed in 3QFY22, we expect multiple headwinds in terms of higher raw material costs and increase in operating expenses.
- Top Glove's dual-listing plans on HKEX is on hold. We are positive given the EPS-dilutive nature of the listing
- We cut our FY22-24F EPS estimates to account for higher raw material prices and operating costs. We reiterate REDUCE call on Top Glove with a lower target price of RM1.30 (20x CY23F P/E, in line with its current 5-year mean P/E). In our view, the worst is not yet over for Top Glove as we believe that its current valuations (a 21.4% premium to its 5-year mean) have yet to account downside to its earnings, while the operating environment remains weak.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Walter AW CGS-CIMB Research | https://www.cgs-cimb.com 2022-03-09 2022-03-09
Read also CGS-CIMB's most recent report:
2022-06-10 Top Glove - Record-Low Quarterly Profits From Weak ASP
Check out the most recent target prices at Top Glove Target Prices. Listing of analyst research reports at Top Glove Analyst Report.
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