CIMB Research maintains Add on Top Glove, ups target to RM16

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KUALA LUMPUR (Dec 16): CIMB IB Research has maintained its “Add”rating on Top Glove Corporation Bhd at RM11.86 with a higher target price of RM16 (from RM11) and said Top Glove’s 1QFY16 core net profit beat both house and consensus expectations, coming in at 39% and 37% of the respective full-year forecasts.

In a note yesterday, the research house said Top Glove’s 1QFY16 core net profit surged by 125% year-on-year due to higher shipment volume, improving operating efficiency from automation and favourable forex movements.

“Nitrile segment contribution grew to 32% in 1QFY16 (vs. 24% in 1QFY15).

“We raise FY16-18 EPS by 40-44%.

“Maintain Add rating on the stock, with a higher target price of RM16.00 – based on 21x CY17 P/E (still at 10% discount to Hartalega Holdings Bhd’s target P/E).