KUALA LUMPUR, June 12 — Several research firms have maintained their “buy” calls with higher target prices (TPs) on Top Glove Corporation Bhd after the company said it foresees an even better performance for the fourth quarter ended Aug 31, 2020 (Q4 2020).
In a bourse filing on Thursday, the world’s largest glove maker said its net profit surged 365.92 per cent to an all-time high of RM347.90 million for Q3 2020 versus RM74.67 million in the same period last year.
Revenue jumped 42 per cent to RM1.69 billion from RM1.19 billion previously, attributable to the group’s extraordinary performance with unparalleled growth in sales volume on the back of the COVID-19 pandemic.
Based on the all-time high performance in Q3 2020, Maybank Investment Bank Bhd Research (Maybank IB Research) has maintained its “buy” call on Top Glove with a higher TP of RM21.90 from RM20.00 previously .
“The Q3 2020 results were above our expectations as we expect the average selling price (ASP) hikes-led net profit of RM 782 million in Q4 2020,” it said in a note today.
RHB Investment Bank Bhd (RIBB) also maintained its “buy” call on Top Glove, with a higher TP of RM20.50 versus RM16.70 earlier.
“Prospects for Q4 2020 and FY21 (financial year ending Aug 31, 2021) are extremely good, as tight demand-supply conditions mean the ASP increase should continue,” it said, adding that it also expected a stronger Q4 2020 net profit and positive long-term prospects.
The research house also estimated that Top Glove’s ASP should increase further in Q4 2020, as the company focuses on allocating more of its new capacity to cater for spot orders, which fetch a much higher price.
Similarly, AmInvestment Bank Bhd maintained its “ buy” call on Top Glove with a higher fair value of RM20.06 per share from RM17.38 previously.
“We believe Q4 2020 will prove to be an even better quarter for the group due to a full-blown impact of COVID-19 pandemic, with significantly higher selling prices and sales volume.
“Hence, we think that the results are in line with our expectations but above consensus,” it said.
Meanwhile, AllianceDBS Research Sdn Bhd also reiterated its “buy” call on Top Glove with an unchanged TP of RM18.45 on positive earnings outlook.
“The impressive results in Q3 2020 were driven by stronger sales volume and ASP, as well as lower raw material prices.
“The results were within our expectations, and we anticipate stronger Q4 2020 results,” it said.
At 10.54 am, Top Glove’s share jumped 18 sen to RM16.88 with 11.57 million shares transacted.