CIMB IB Research keeps Add on Top Glove, cuts target to RM5.90

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KUALA LUMPUR (March 17): CIMB IB Research has maintained its “Add” rating on Top Glove Corporation Bhd at RM5.20 with a lower target price of RM5.90 (from RM8) and said the glove maker’s 1HFY8/16 earnings rose by 100.2% to RM221.1 million, 54% of house full-year forecast, which it deemed as in line given expectations of a weaker 2HFY16.

In a note today, the research house however said 2QFY16 earnings were weaker quarter-on-quarter despite lower raw material prices.

“Hence, we project a softer 2HFY16 in line with management’s cautious outlook due to intensified pricing pressure, less volatile US dollar and uptrend in raw material prices.

“Thus, we lower our FY16-18F earnings by 8.2-11.1%. Maintain Add, with a lower target price of RM5.90 (based on CY17F EPS of 17.5x),” it said.