Top Glove Corp: Buy, target price RM15.15

The research house said the results for the period ended May 31 2010 came within its expectations, despite the numbers being not as good as the previous quarter, mainly due to unfavourable external factors like rising latex price and the weakening US dollar against the ringgit.

"We continue to like the company's market leadership at 23 per cent and its good product mix targeting the right markets," OSK said in a report yesterday.

It said that the leadership position allows Top Glove to determine the selling prices of gloves, economies of scale which lowers cost per piece and marketability of its products due to its size.

"We also like Top Glove's product mix of 80 per cent natural rubber gloves, which is the basic entry for examination gloves, targeting the right market," OSK added.
Its target price for Top Glove at RM15.15 is based on the existing price earnings ratio valuation of 17 times financial year 2011 earnings per share.