[ad_1]
KUALA LUMPUR (September 18): After posting a record net profit of RM1.87 billion for the financial year ended August 31, 2020 (fiscal year 2020), Top Glove Corp Bhd’s earnings are expected to grow further of ten times in fiscal year 21, according to the forecasts of some analysts.
The surprising growth in profitability is due to higher-than-expected Average Selling Prices (ASP) and longer demand lead times.
Most optimistic of all was Maybank IB Research, which predicted that the glove maker’s net profit will rise to RM11.22 billion, backed by RM27.8 billion in revenue.
Maybank IB said it sees room for the ASP of powder-free latex gloves to rise even further, due to strong demand due to a shorter lead time and lower price compared to nitrile gloves.
“Our model has already assumed a higher ASP through 3TFY21 and a decline from 4QFY21 with more new offering,” the research firm said.
Maybank IB has set its target price (TP) for the group at RM9.53.
Credit Suisse, which set its TP at RM16.20, expects Top Glove’s net profit to rise to RM10.97 billion with solid revenue of RM21.5 billion.
CGS-CIMB Research expected the group’s net profit to skyrocket to RM10.38 billion, thanks to RM20.42 billion in revenue at a higher ASP, as strong global demand is expected to hold up to at least the end of fiscal year 21.
The company also increased its TP from RM9.20 to RM10, based on 17 times CY22 as its valuation year progressed.
RHB Research Institute, which has set its TP at RM9.50, is forecasting a net profit that will hit RM9.47 billion, as revenues rise to RM23.25 billion.
PublicInvest Research has set its TP at RM9.70 and predicts a net profit of RM9.15 billion based on revenue of RM17.83 billion.
He noted that cash orders are currently priced at around US $ 120 per thousand pieces, with 30% of the group’s total capacity allocated to such orders.
“As such, we raised our profit forecast for fiscal 21-22F by 203% to 354% as we incorporated the effects of a higher ASP and increased production capacity into our earnings projections,” said the house. research.
With a TP of RM10.68, Kenanga is forecasting RM6.67 billion in net profit for fiscal year 21, with a revenue of RM17.29 billion.
Meanwhile, AmInvestment Bank expects net earnings to reach RM6.54 billion and revenue to RM21.81 billion. It has also raised the glove maker’s TP to RM 8.40.
However, net profit is expected to decline in FY22 as demand for gloves weakens. “We reiterate that such supernormal earnings are not sustainable in nature and earnings growth should slow from fiscal year 22 onward,” PublicInvest said.
For fiscal year 22, Credit Suisse expected net earnings to fall to RM4.96 billion with revenue of RM14.6 billion. Maybank IB predicts a net profit of RM4.26 billion backed by an income of RM17.8 billion, while AmInvestment predicts a net profit of RM2.37 billion based on RM11.6 billion in revenue.
Meanwhile, CGS-CIMB forecasts a net profit of RM5.3 billion with a revenue of RM14.32 billion. RHB expected net profit to fall to RM7.26 billion, supported by RM20.11 billion in profit, while PublicInvest forecast RM4.21 billion in net profit with revenue of RM12.34 billion. Meanwhile, Kenanga expected earnings to drop to RM4.1 billion, with a revenue of RM13.51 billion.
At the time of writing, Top Glove is up 21 sen or 2.7% to RM8, valuing the group at RM66.25 billion. He saw some 57.82 million shares change hands.
[ad_2]
