Top Glove Corporation Bhd (+ve)

World’s largest rubber glove manufacturer, TopGlove (Fundamental: 2.5/3, Valuation: 1.3/3), closed 1.2% higher at its one-year high of RM5.85 yesterday. 

Investors likely expect the company to post better 3QFYAug2015 earnings results this Wednesday. With over 80% of its sales come from export markets, TopGlove is seen as a beneficiary of the stronger USD. 

However, the company also hedges its currency risk on a weekly basis.

To recap, TopGlove posted weaker results for 1QFY2015, but bounced back in 2QFY2015. For 1HFY2015, revenue increased 1.6% y-o-y to RM1.14 billion while net profit rose 14.1% to RM104.8 million, on higher sales volume and better margins from more efficient glove machineries. 

It has a solid balance sheet with net cash of RM142.8 million, or 23 sen per share. 

The stock trades at a trailing 12-month P/E of 18.5 times and 2.45 times its book. The company paid consistent dividends of 16 sen for FY2012-FY2014, giving a net yield of 2.8%.

This article first appeared in The Edge Financial Daily, on June 16, 2015.