Upgrade to Buy. We have turned positive on Top Glove: (i) its sales has picked up further and is almost back to its H1N1 peak; and (ii) latex cost (key input) has begun its seasonal downtrend and is likely to sustain at lower levels due to global rubber supply surplus this year. We raise our FY12-14 EPS forecasts by 8-12% on lower latex cost assumption. Post-revision, Top Glove trades at 13x CY13 PER, below its 5-year average of 16x. We upgrade the stock to Buy (from Sell), with a higher TP of MYR5.40 (+29%) on 16x PER target (previously 14x). Its share price has fallen by 15% from its peak in Jan '12.

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Source: Maybank Research - 24 April 2012