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Wednesday, January 11, 2012

Top Glove Corporation – How low can you go? (CIMB)

Top Glove’s 1Q12 briefing revealed that demand has not picked up despite a 40% slump in rubber latex price from last Apr’s peak. This is due to overcapacity and cautious business sentiment in the EU and US. Also, hospitals and governments are better prepped for flu outbreaks. We maintain our Sell rating and target price of RM3.61, which is still based on a forward P/E of 13.05x. Consensus numbers are still too high and valuations expensive. Hartalega is a better proxy for the glove sector.

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