Investors should not get excited about Top Glove’s interims as the outperformance came from wider margins arising from a 21.5% qoq fall in natural rubber (NR) prices. This is unsustainable as NR prices went up 15.4% qoq in 2Q. Switch to Hartalega, our top glove pick. 1HFY8/12 net profit came in at 64% of our full-year forecast and 55% of consensus estimates. Factoring in better margins, we upgrade FY12 EPS. Our target price (13.05x CY13 P/E) rises slightly from RM3.61 to RM3.63 as our FY13 EPS is only tweaked. Still aSell.
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