Written by Joseph Chin
Wednesday, 09 September 2009 09:54
KUALA LUMPUR: Maybank Investment Equities Research has reaffirmed its Buy on Top Glove at RM7.05 with a target price of RM8.30.
In a report issued on Sept 9 following a company visit, it said Top Glove's 4Q results are set to meet its forecasts, but beat street estimates, with FY09 net profit to be up a strong 45% to 48% year-on-year. A higher dividend is also on the cards.
"We like Top Glove’s commanding market leadership, earnings growth potential, strong cash flows and solid balance sheet," it said.
Maybank Research said Top Glove's 4Q net profit could reach RM47 million to RM50m (up 11% to 18% on-quarter), driven by an expansion in orders (up 3%), lower interest expenses following the retirement of loans, and lower input costs as latex prices were down 14% on-quarter.
This would bring full year net profit to RM160 million to RM163 million. The result is to be released in October.
"We expect a second DPS of 8 sen to 9 sen to be declared on the improved earnings (4Q08: 6 sen). Dividend payout should remain at slightly above 20% of net profit (FY08: 22%).
"Top Glove should also remain in a net cash position for the 3rd consecutive quarter (May 2009: RM83 million)," it said.
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