Stock With Momentum: Top Glove corporation

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Top Glove corporation Bhd (-ve)

TopGlove (Fundamental: 2.5/3, Valuation: 1.3/3), the world’s largest rubber glove manufacturer, closed 8.35% higher at a 3-year high of RM6.36 yesterday after posting stellar 3QFYAug2015 earnings results. 

For 9MFY2015, revenue increased 6.2% y-o-y to RM1.8 billion while net profit rose 31.9% to RM177.0 million, due mainly to higher sales volume, operational efficiencies, USD gains and lower raw material prices. 

The company will continue to expand its production capacity, with Factory 27 in Port Dickson, Factory 6 in Thailand and Factory 30 in Klang set for completion by January, July and December 2016 respectively. 

The expansion will increase its total production capacity to 52.4 billion gloves per year, up 17.5% from current capacity of 44.6 billion gloves per year. 

The stock trades at a trailing 12-month P/E of 18.78 times and 2.5 times book. The company declared a first interim dividend of 8 sen for FY15, which will go “ex” on June 30.

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This article first appeared in The Edge Financial Daily, on June 19, 2015.