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Saturday, October 10, 2009

Top Glove Corporation Bhd (Symbol & Code: TOPGLOV 7113) - 10th Oct 2009

Posted by Daniel Wong | 10:07 PM | 0 comments »














(8 years Historical Chart)

Company Background

The Top Glove group was established in Malaysia in 1991 and is principally involved in the manufacturing, trading, and exporting of latex examination, medical/surgical, clean room, nitrile, vinyl, polyethylene (PE), high risk and household gloves. True to its name, the group is the world's largest rubber glove manufacturer, supplying about 24% of the global market.

The group was listed in KLSE's Second Board in 2001 and a year later it was transferred to the Main Board. The group acquired 60.1% equity interest in Medi-Flex Ltd (a company listed on SGX-SESDAQ) in 2007. Currently, the group has 17 glove factories (13 in Malaysia, 2 in Thailand and 2 in China) with a production capacity of 31.5 billion pieces of gloves a year. The groups exports to 180 countries worlwide, including USA, Europe and the Far East (Japan, Hong Kong and Taiwan).

The group also has upstream production with 2 plants in Hadyai, manufacturing concentrated latex and block rubber products. These 2 latex concentrated plants are able to produce 90,000 tonnes of wet latex a year and is contributing about 80% of its in-house latex concentrate consumption.

The group recently reported a 55.5% y-o-y rise in earnings to RM168.1m, on the back of 11.2% rise in revenue for FY09. As there is increasing awareness of safety and hygiene among consumers coupled with Top Glove's aggresive capacity expansion, the group is expected to continue producing good earnings growth over the next few years. Also, rubber glove business is considered a recession proof business, particularly those of latex examination and medical/surgical gloves.

Fundamentals

ROE: 19.9%

Average EPS Growth Rate: 30.3%

D/E: 0.31

Gross Profit Margin: 16.52%

Average P/E: 15.2

Dividend Yield: 3%

Fair Value: RM 8.49

Current Price: RM 8.23

Recommendation: BUY

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