KUALA LUMPUR: Shares of Top Glove Corp Bhd rose in late afternoon, Friday, May 20 on some fund buying despite the stock had been downgraded due to the weaker earnings outlook.
At 3.18pm, it was up 15 sen to RM5.33 with 1.08 million shares done.
The FBM KLCI rose 0.51 of a point to 1,544.53. Turnover was 593.35 million shares valued at RM791.60 million. There were 319 gainers, 365 losers and 317 stocks unchanged.
RHB Research said in its research note that it recently spoke with management and understand that customers continue to hold back their orders in view of the high latex prices.
'Consequently, this suggests that 3Q revenue could remain flat qoq. Bottomline, however, could be adversely impacted given that latex prices remain high and US$ continues to weaken against the ringgit,' it said.
It also said Top Glove management had stated that capacity expansion plans have been pushed back by two to eight months respectively.
'As we expect no significant improvement in its 3Q results and coupled with the delay in its capacity expansion plans, we have cut our FY11-13 revenue forecasts by 2.8-8.5% respectively,' it said.
'We have lowered our fair value to RM4.09 (from RM5.38), based on lower target PER of 15x (from 17x previously). Given the weaker earnings outlook, we downgrade our call to Underperform,' it said.
At 3.18pm, it was up 15 sen to RM5.33 with 1.08 million shares done.
The FBM KLCI rose 0.51 of a point to 1,544.53. Turnover was 593.35 million shares valued at RM791.60 million. There were 319 gainers, 365 losers and 317 stocks unchanged.
RHB Research said in its research note that it recently spoke with management and understand that customers continue to hold back their orders in view of the high latex prices.
'Consequently, this suggests that 3Q revenue could remain flat qoq. Bottomline, however, could be adversely impacted given that latex prices remain high and US$ continues to weaken against the ringgit,' it said.
It also said Top Glove management had stated that capacity expansion plans have been pushed back by two to eight months respectively.
'As we expect no significant improvement in its 3Q results and coupled with the delay in its capacity expansion plans, we have cut our FY11-13 revenue forecasts by 2.8-8.5% respectively,' it said.
'We have lowered our fair value to RM4.09 (from RM5.38), based on lower target PER of 15x (from 17x previously). Given the weaker earnings outlook, we downgrade our call to Underperform,' it said.
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