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Wednesday, October 19, 2011

Top Glove Corporation – No gripping story from briefing (CIMB)

Capacity glut continues to overhang the glove sector and it could take 2-3 years to absorb the excess supply. Although Top Glove‘s earnings have probably bottomed, consensus numbers imply an unachievable 49% qoq rise in net profit. Consensus earnings downgrades will follow. We retain our SELL rating, earnings and RM3.29 target, based on 13.05x forward P/E. Though a turnaround is near, the share price is still ahead of its fundamentals.

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