Maintain Sell. Top Glove’s upcoming 2QFY12 core net profit is likely to
overshoot our forecasts but be in line with consensus estimates. Despite
our earnings upgrade (+9-11%), the stock is still trading at a pricey
CY13 PER of 16x. We think rising latex costs, a weakening USD, minimum
wage hikes and a high foreign shareholding of 35% will impinge on the
stock’s performance. Maintain Sell, but our TP is raised to RM4.20
(+24%) post our earnings upgrade and as we peg the stock at 14x CY13 PER
(DCF previously).
Maybank Research 14 March 2012
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