PETALING JAYA: Top Glove Corp Bhd’s coming quarters are expected to be exceptionally strong on the back of the Covid-19 outbreak that is currently affecting 162 countries, according to PublicInvest Research.
“Top Glove sales order book has doubled as a result of this outbreak and average selling price (ASP) has also been revised upwards by 3-5%, and we believe the ASP revision will result in margin expansion in the coming quarters,” it said in a report.
The research house noted that in the initial stage of the outbreak, the extra demand was mainly coming from Asian countries, but as the virus spread across different continents, demand is now largely coming from the US and the European Union.
“The group has also secured large orders for delivery in the coming months, with some clients already placing orders six months ahead of time, as opposed to the usual three months.“
PublicInvest Research reiterated its outperform call on Top Glove with an unchanged target price of RM8.60.
The group’s six-month net profit was flat with a 0.7% increase year on year (yoy) to RM227.1 million, which came in within estimates.
Top Glove currently has 711 lines installed with a totalled installed capacity of 73.4 billion pieces per annum. It targets to commission its F40’s first phase (+2.7 billion nitrile gloves per annum) in the second quarter and F8A’s first phase (+3.5 billion nitrile gloves per annum) in the fourth quarter.
Construction is under way for Top Glove’s new vinyl glove plant in Vietnam, which will see an additional capacity of 2 billion pieces per annum and commissioning of lines for the plant is expected to begin in the third quarter.
By the end of the year, the group’s total installed capacity will effectively reach 81.6 billion pieces per annum.
source https://www.thesundaily.my/business/exceptionally-strong-quarters-ahead-for-top-glove-says-publicinvest-research-EM2169107
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