KUALA LUMPUR (Jan 15): Top Glove Corp Bhd shares rose 2% this morning after it signed a conditional share purchase agreement with Adventa Capital Pte Ltd to acquire the entire equity interest in glove manufacturer Aspion Sdn Bhd for RM1.37 billion.

At 9.10am, Top Glove added 18 sen to RM9.18 with 347,000 shares traded.

Top Glove said RM1.23 billion of the purchase consideration will be satisfied with cash, funded entirely from a combination of conventional term loan and Islamic term financing.

The remainder RM137 million would be via the issuance of some 20.51 million new Top Glove shares at about RM6.68 apiece.

The group also plans to buy two more companies this year and is on the lookout to acquire four more companies by 2019.

Meanwhile, CIMB IB Research maintained its “Add” rating on Top Glove Corp Bhd at RM9 with a higher target price of RM10 (from RM7.92) and said the company’s strong 1QFY18 core net profit of RM101 million (+37.7% year-on-year) can be attributed to robust sales growth (+17% y-o-y) and higher economies of scale.

In a note today, the research house said Top Glove believes that sales volume of gloves should remain strong in 2018 on higher usage in emerging markets and as a substitute given lower vinyl supply in China.

“We raise our FY18-20F EPS by 3-20% to reflect Aspion’s earnings contribution to the group.

“Maintain Add on Top Glove, with a higher target price of RM10.00, now based on 22.4x CY19F P/E vs. 19x previously, a 20% discount to our target P/E for Hartalega (28x),” it said.