KUALA LUMPUR (June 4): Credit Suisse has raised its target price for Top Glove Corp Bhd to RM23, more than double of RM11.30 previosly, on the ground that there has been a recent rise in ad hoc and spot orders by government agencies needing urgent deliveries.
In a note dated June 3, Credit Suisse analyst Joanna Cheah said while pricing was not locked in upfront for these volumes, the group took deposits between 10% and 30%, based on projected average selling price (ASP) increases depending on the expected month of delivery and thus, Top Glove had decided to allocate 10% of its capacity for these spot orders.
"Given the long lead time for normal orders, it is therefore no surprise that ASP for the ad hoc spot orders is much higher.
"According to management, some of these orders were priced above US$100 per 1000 pieces, which is more than three times higher than the current blended ASP for the normal orders," Cheah said.
In addition, while the company was previously guiding for 5%-10% increases in ASP every quarter, given the further squeeze in demand-supply for gloves, it was now guiding for a monthly double-digit ASP increase at least for the next two months.
"Given the revised strategy and ASP guidance by the company, we have raised our FY20 (financial year 2020)-FY22 earnings per share by 20%-135%. We now expect the group's earnings to grow 182% in FY20, a further 122% in FY21 but decline by 63% in FY22 as ASP normalises.
"Our earnings forecast assumes that ASP will rise by 20% in FY21 for both nitrile and powder-free gloves, and decline by 20% in FY22," she said.
She added that Top Glove's results for the third quarter of FY20 set to be released on June 11 are expected to be strong and should drive further rerating of the stock.
"One of the key concerns has been the risk of oversupply as the rubber glove players embark on expansion and demand settles post the pandemic. Looking at the current planned supply by the top five major players (including Sri Trang), we think there will be a squeeze in demand-supply for the next two years," she said.
Just yesterday, the price-earnings valuation of Hartalega, Top Glove and Rubberex breached the 100 times mark, which is rarely seen among manufacturing-oriented companies.
She noted the current demand is estimated to be 50%-60% higher if not for capacity constraints resulting in long lead time.
Meanwhile, estimated supply is expected to grow by 9% cumulatively between now and end-2020 and another 12% by end-2021.
At the midday break today, Top Glove rose 1.49% or 22 sen to RM14.92, valuing it at RM39.25 billion.
Yesterday may i ask those stupid investor already sold finish the share? Still think about Uncle kyy margin, please la, please take care yourself. Congratulations for those all smart investors, follow swin with big shark. In Malaysia anything also will happen. So big of bank, doing this kind of cut margin things wanna cover lose of warrant. Halo, if i sign agreements with you borrow 500,000, you can simply say now i want change to borrow you RM200,000, you pay back be RM300,000? You is a big bank leh! please la. Other country government is helping push up the share market, you see US and Hong Kong market. But Malaysia is want press down the share market, please la, you doing this kind of things future who will come invest Malaysia Stock?
@ying don't asking stupid question here, if u want to know the answer u call to Director and ask him, same question, everyday, every second repeat and repeated. If u want earn fast money hv to be hardworking, check back all previous msg.
Guys, please be smart abit. You can see maybank trading platforms today system down until one o'clock, i want buy big comfort also no chance. Please dont so easy eat by big shark. You think yourself, the system down that time who buying big? Is it invesment bank?
New IPO: Building management systems (BMS), solar thermal systems and energy-saving services provider, Solar District Cooling Bhd aims to list on the Ace Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
晓雨霖
1,680 posts
Posted by 晓雨霖 > 2020-06-04 15:15 | Report Abuse
AHAHAAHAHA !!!!
AHAHAAHAHA !!!!
AHAHAAHAHA !!!!