Top Glove (RM5.18, noon closing) by HG Tan
2Q core PAThAMI of RM2.865.1bn (+20.7% QoQ, +25x YoY ) brought 1HFY21 core PATAMI to RM5.220.9bn (22x YoY).
Analysts will say it is is in line as their full yr forecasts are around RM10 to 10.5bn (see Edge Daily today, pg 9).
Personally, believe results are aboved given the lead time taken to deliver earnings. Estimate full yr net profit to be closer to RM12bn in FY21
Declared DPS of 25.2 sen (1Q21: 16.5sen), ex on 23 March. 1HFY21: 41.7 sen., 1HFY20: None.
GHW maintains Buy call with TP of RM8.06
There will be a Zoom meeting in afternoon. Analyst will issue report later
For Top Glove, given the dented sentiments with volatile share prices and investors attention on economuc recovery stocks, believe analysts' esply the brokers analysts (including our analyst) will hesitate in revising up earnings and TPs.
Personally believe analysts will remain behind the curve on earnings forecasts of Top Glove 🤣
Top Glove Result
1. Earnings matched expectations. 1HFY21 earnings of MYR5.23bn makes up 51% of consensus and 49% of our full year estimates. 1HFY21 earnings surged 23x YoY due to better ASPs and higher volume of gloves sold.
2. 2QFY21 earnings improved 21% QoQ. Higher ASP supported the increase in better earnings.
3. Announced 25.2 sen dividend. Top Glove paid 70% of its profit in 2QFY21 as promised. Recall that the Company has pledged to increase its payout ratio to 70% from 50% for FY21 beginning 2QFY21 onwards.
4. Prospects. Top Glove stated that "Global glove demand is estimated to grow from a pre-pandemic level of about 10% per annum to about 15% per annum post-pandemic, following increase in usage coupled with heightened hygiene awareness. To ensure it remains well-positioned to meet the continued strong glove demand, the Group will continue to pursue organic expansion, inorganic expansion and strategic investments.
RHB Research
Comments on Top Glove results by HG Tan :
As per my watsapp yestetday, personally construed TG's, 1HFY21 results to be aboved expectations as management guided that 2H is better than 1H.
With locked in sales and normalisation in production (2Q disrupted by closure of factories), expect earnings to trend higher in 3Q.
Personally estimate full yr FY21 earnings to come closer to RM12bn versus consensus/GHW's projection of RM10 to 10.5bn.
Expect FY22 earnings to ease but probably not as sharp as 50% reduction as anticipated by GHW/consensus given the lead time in delivering earnings
Believe our analyst Gan Huan Wen is reluctant to revise up FY21 earnings as it may translate into higher TP.. As it is, he has previously revised down TP following the sharp fall in mkt price of TG...
Judging from the reply of Tan Sri Lim when asked whether the group will continue to pay 70% of net profit as dividend in FY22, the reply alluding to positive rather than negative.. As such, can expect another high dividend year in FY22.
Believe the commendable dividends will cushion share prices.
Meanwhile, funds raise via dual primary listing of TG in HK will further strengthen its war chest enriched by the strong cashflows. This will enhance its competitive edge in pursuing M&A when opportunities arise.
