KUALA LUMPUR (June 20): Top Glove Corp Bhd shares rose 2.65% this morning after its net profit for the third financial quarter ended May 31, 2018 (3QFY18) surge 51.4% to RM117.57 million from RM77.71 million in 3QFY17, thanks to increased demand for gloves.
At 9.11am, Top Glove rose 30 sen to RM11.62 with 216,200 shares done.
In a filing with Bursa Malaysia yesterday, Top Glove said it had delivered sales revenue of RM1.1 billion in 3QFY18, a 26.6% increase year-on-year (y-o-y) and the first time Top Glove has achieved sales revenue of above RM1 billion within a single quarter. The group reported revenue of RM869.64 million in 3QFY17.
It also declared a first interim dividend of 7 sen per share, payable on July 17.
For the nine-month period ended May 31, 2018 (9MFY18), Top Glove reported a 41.8% y-o-y increase in net profit to RM332.03 million from RM234.08 million, while revenue went up by 19.6% to almost reach RM3 billion from RM2.51 billion in 9MFY17.
Meanwhile, Hong Leong IB Research maintained its “Hold” rating on Top Glove at RM11.32 with a higher target price of RM10.81 (from RM9.95) and said Top Glove’s 9MFY18 core PATMI of RM336.6 million (+45.8% YoY) was within house and consensus expectation.
In a note today, the research house said utilisation rate is still hovering at circa 90%, reflective of robust global demand.
“We adjust our FY19-20 earnings upwards by 7.5% and 5.0% as we factor in F30 and F31 with a combined capacity of 7.4 billion pieces (+13% to existing capacity).
“However at these levels, Top Glove is trading at 27.1x FY19 PE which is above 2SD. Thus we maintain our Hold rating, albeit with a higher target price of RM10.81.
“We expect the share price to be supported by sentiment driven weakness in the Ringgit, which will continue to whet investors’ appetite for export stocks,” it said.