TOP Glove Corporation Bhd (+ve)
TOP Glove (Fundamental: 2.5/3; Valuation: 0.9/3) aims to grow its nitrile glove sales, which currently account for a quarter of its sales volume, to cater to current market demand. Although sales are mostly USD-denominated, it hedges the currency risk to protect its receivables.
For 1QFYAug2015, net profit dropped 3.2% y-o-y to RM48.7 million, due to higher energy costs and weaker margins from intense competition in the nitrile glove segment. In FY2015, the glove maker is investing RM150 million to expand its nitrile gloves production lines. It targets to raise its total annual capacity by 18% to 50.4 billion pieces by 2016.
Balance sheet is healthy with net cash of RM186.7 million, or 30.2 sen per share. The stock trades at a trailing 12-month P/E of 17.3 times and 2.1 times its book. It paid out dividend of 16 sen for the past three years, giving a yield of 3.2%.
This article first appeared in The Edge Financial Daily, on February 26, 2015.