TOPGLOV / 7113 - 2010 Q2

TOP GLOVE CORPORATION BERHAD

Listing Date: 16.05.2002
IPO Price: 2.700
Market: MAIN
Sector: INDUSTRIAL
Par Value: 0.50
Major Industry: Apparel & Textiles
Sub Industry: Apparel Manufacturers
Market Cap : 4,155,782,368.50 (12 April 2010)
NTA per share : (929267-22457)/299212=3.0307
P/B : 13.5/3.0307=4.4544
Fixed Asset Turnover(3 year) : (1.3528+1.2419+1.1662)/3=1.2536
Liquidity Ratio : 684454/293275=2.3338
Receivables Collection Period : (206596+228574)/2/(1531909/365)=51 days

Top Glove Corporation Berhad is a Malaysia-based investment holding company providing management services. The Company’s subsidiaries are engaged in the manufacture and trading of gloves; producing and selling latex concentrate, and property investment and trading of machinery. It operates in Malaysia, Thailand and People’s Republic of China. The Company's subsidiaries include Top Glove Sdn. Bhd., TG Medical Sdn. Bhd., Great Glove Sdn. Bhd., Top Glove Engineering Sdn. Bhd. and TG Medical (U.S.A.) Inc.

OSK TP: 15.15
My TP: 14.1+0.22=14.32 (PE 15, EPS 0.94, DPS 0.22), 14.01% price increase from current price 12.56
My decison: BUY
Reason: Undervalue, revenue and profit growth, strong cash flow

My study based on 2010 Q2 report (number in '000):
- The Group continues with its strong profit growth momentum as it managed to capture additional market share, especially from the emerging countries and also benefiting from cost saving measures implemented at all factories, improvements in product quality, productivity, as well as aggressive marketing strategies to maintain its world number one market position
- The Group managed to increase the profit as compared with the preceding quarter mainly due to good cost control, management efficiency, glove quality improvement and also stronger demand due to the increasing healthcare standards and greater hygiene awareness
- My estimate next 4Q eps after 2010 Q2 result announced = 0.235*4 = 0.94, estimate PE on current price 12.56 = 13.13(DPS 0.22)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.217*4 = 0.868, estimate highest/lowest PE = 14.31/10.75 (DPS 0.22)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.191*4 = 0.764, estimate highest/lowest PE = 12.23/10.2 (DPS 0.22)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1424*4 = 0.5696, estimate highest/lowest PE = 14.04/10.8 (DPS 0.15)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.1221*4 = 0.4884, estimate highest/lowest PE = 13.21/9.89 (DPS 0.15)