Share Market NEWS | Top Glove remains a Buy for Affin Hwang Research

KUALA LUMPUR: Affin Hwang Capital Research is holding its Buy call for Top Glove with a 12 month target cost of RM5.40.

It said on Wednesday it loved the world's greatest glove creator's undemanding valuations and continuous effectiveness change activities. An adjusted item blend could give a relief against estimating weight in the nitrile section.

It said the RM5.04 target cost depended on 18 times its CY17E EPS. Notwithstanding, the danger is the coin instability.

Affin Hwang Research said Top Glove is planned to declare its 4QFY16 results in mid-October. Evaluating weight stays pervasive however continuous computerization endeavors and adjusted item blend administration could give a parkway to fundamental edge extension.

"Notwithstanding US$ normal offering cost (ASP) increments all through the quarter, we expect the general top line to stay flattish to a great extent because of negligible limit increases and lower acquiring days, which dragged down deals volume development. General edges could incline lower on higher crude material costs and the execution of the lowest pay permitted by law, prompting higher creation costs.

The center net benefit (CNP) could be level on-quarter at RM60mil to RM70mil, to a great extent because of lukewarm deals volume development and higher generation costs.

This will bringing FY16 all out CNP to RM355mil-RM365mil, which implies it would undershoot the examination house's estimate of RM372mil.

"We are certain on Top Glove's proceeded with venture into Thailand after our late visit to Factory 7 in Songkhla Province. At present Top Glove has two glove industrial facilities and two latex preparing plants in Thailand. Venture into Thailand is key and legitimate, offered its eight-year charge reprieve and in addition positive work supply conditions.

"Southern Thailand is likewise populated with elastic tree ranches, making it perfect for sourcing crude materials and cutting lead times," it said.

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