ANALYSTS are slightly positive on TOP Glove Corp Bhd’s revised plan for its dual listing on the Hong Kong Stock Exchange (HKEX) given this will be less dilutive for its existing shareholders.
For comparison, MIDF Research estimated the dilutive impact following the latest revision to the company’s earnings per share (EPS) now at circa 9% from circa 15% previously.
The world’s largest glove maker has proposed to issue 793.5 million new shares (against 1.5 billion shares originally) to raise up to HK$7.94 bil (RM4.2bil) (the original plan was to raise RM7.8 bil).
The proposal includes an additional 103.5million new shares which may be issued under the over-allotment option, if exercised in full.
“Due to the changes, we expect the exercise to be delayed slightly, possibly by about a month (Top Glove has previously targeted the listing exercise to take place by May or June),” opined analyst Ng Bei Shan in a company update.
“On the other hand, Top Glove will still be able to boost its corporate profile in the Greater China and international market through the listing in Hong Kong.”
All-in, MIDF Research maintained its “buy” rating on Top Glove with an unchanged target price of RM8.29.
“We make no changes to our earnings estimates pending the completion of the exercise,” justified the research house.
“Our theoretical ex-price will be adjusted to RM7.54 (compared to RM6.99 previously) if the over-allotment option is fully-taken up for its dual-listing plan on HKEX.”
Meanwhile, AmBank Research tweaked upward its fair value on Top Glove to RM5.24 (from RM4.75 previously) to reflect the effect of an expected lower share base. The research house nevertheless retained its “hold” rating on Top Glove.
“We believe that Top Glove’s average selling price (ASP) has peaked in 2Q FY2021,” noted the research house. “In contrast, its peers are likely to experience ASP growth in the coming quarter as they have increased their ASP at a much slower pace.”
Despite a resurgence in global cases in recent times, AmBank Research doubted that the renewed glove urgency would push Top Glove’s ASP back to peak levels.
At 10.35am, Top Glove was up 9 sen or 1.6% to RM5.71 with 15.91 million shares traded, thus valuing the company at RM46.86 bil. – April 23, 2021
