Top Glove remains research firms’ favourite

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KUALA LUMPUR, Dec 10 — Research firms remain optimistic over Top Glove Corporation Bhd’s outlook, in view of the higher average selling price (ASP), recovery in production capacity and sales mix to drive growth.


Maybank Investment Bank Bhd (Maybank IB) has maintained its financial year 2021 (FY21) estimate earnings per share (EPS) for the company, and raised its FY22 and FY23 estimate (FY22-23E) EPS by 50 per cent and 73 per cent, respectively, largely premised on higher ASP assumptions.

“We now project for its blended ASP to jump 3.1 times in FY21E and to fall 32 per cent and 27 per cent in FY22-23E as the new supply could catch up with demand.

“In contrast, glove players such as Top Glove are projecting for demand to outstrip supply for the next three years,” the research house said in a note today.

Maybank IB has kept its “buy” recommendation on Top Glove, with a new target price (TP) of RM8.65.

Meanwhile, Kenanga Investment Bank Bhd said post-COVID-19, the inventory restocking cycle is expected to spur demand for rubber gloves, coupled with increased usage arising from new users and increased hygiene awareness.

Looking ahead into the second quarter of FY21 (Q2FY21), it expects Top Glove’s ASP to jump by 30 per cent quarter-on-quarter (QoQ), with higher volumes and product mix skewed towards higher margin nitrile gloves.


“We raised our FY21E net profit by 40 per cent after hiking our ASP from US$55 for 1,000 pieces to US$70 for 1,000 pieces, and assuming 80 per cent utilisation or 75 billion pieces volume sales.

“Our FY22E ASP assumption remains conservatively pegged at US$40 for 1,000 pieces,” it said, maintaining its “Outperform” recommendation.

MIDF Amanah Investment Bank Bhd (MIDF) expect Top Glove’s ASP to increase by about 30 per cent QoQ in Q2FY21.

It said production by 28 of the rubber glove maker’s factories — which had been suspended last month due to a large number of COVID-19 infections among its workers — is expected to resume within the next two to three weeks.

Seven factories have resumed their operations under stage one.

MIDF said Top Glove would also add another 10 per cent capacity to its production for the quarter, while increasing its nitrile glove production as it had been able to secure sufficient nitrile rubber for its production.

“We think that its upcoming quarters will remain strong as demand continue to exceed supply, while its operations are expected to improve with the reopening of its plants in Meru, Klang,” it said.

As at 11.06 am, Top Glove’s share on Bursa Malaysia stood at RM7.00, after rising 14 sen, with 4.05 million shares changing hands. – BERNAMA

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