Top Glove jumps 11%, overtakes TNB as third biggest stock on Bursa in market value

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KUALA LUMPUR (July 13): Top Glove Corp Bhd, whose share price leapt 11% this morning, has overtaken utility giant Tenaga Nasional Bhd (TNB) as the third largest company on Bursa Malaysia in terms of market capitalisation (market cap).

As at 10.45am, Top Glove's share price had soared RM2.44 or 11.13% to an all-time high of RM24.36. Its market cap swelled to RM65.7 billion, ranked third among the FBM KLCI component stocks after Malayan Banking Bhd (Maybank), whose market cap was at RM88.35 billion, and Public Bank Bhd at RM71.58 billion. TNB, which dropped to the fourth position, had a market cap of RM64.46 billion.

Some 10.8 million of Top Glove shares changed hands in less than two hours after the morning bell.

To boot, it was also the top gainer on the local bourse today in terms of value, while its peers Supermax Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Holdings Bhd were on the list too as investors continued to snap up shares in rubber glove manufacturers in view of rising numbers of new Covid-19 infections in several countries, such as the US, India, Japan and Australia.

At the current price level, Top Glove's executive chairman Tan Sri Lim Wee Chai's 25.74% stake is valued at RM16.9 billion.

In a note today, Kenanga Research ‘s Raymond Choo raised his target price (TP) for the counter to RM32, from RM25 previously. The upgrade came after Choo revised his net profit forecast for the financial year ending Aug 31, 2021 (FY21) to RM4 billion or earnings per share (EPS) of 148.4 sen. 

Choo wrote that the TP of RM32 was based on 21.5 times calendar year 2021 estimated (CY21E) EPS of 152.3 sen (from 36 times previously).

“We lowered our PER (price-earnings ratio) rating as we believe valuations are pegged to supernormal earnings; hence, the upside to peak earnings should have been factored in. 

“Its merits are: i) strong management, ii) a resilient earnings base due to its pricing power and its sheer size in capacity in the industry; and iii) solid earnings growth averaging over 100% for FY21E compared to a PER of 15 times,” Choo noted while maintaining his "outperform" call on the stock.

According to a Bernama report yesterday, Lim said the global shortage of rubber gloves could be worsened by a freeze on bringing in more foreign workers.

He also announced that the company would be building two factories a year to keep up with surging demand for rubber gloves, adding that it is open to mergers and acquisitions (M&A), joint ventures and diversification opportunities. 

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Kenanga Research raises target price for Top Glove to RM32