KUALA LUMPUR: Top Glove Corp Bhd has emerged as the third largest company on Bursa Malaysia in terms of market capitalisation (market cap), overtaking Tenaga Nasional Bhd (TNB) after the former's share jumped as much as 11.2 per cent to an all-time high of RM24.50 this morning.
At midday, Top Glove's share was traded at RM23.9 or 9.03 per cent higher than its opening price at RM22.5 per share, pushing its market cap to RM65.7 billion, more than the national utility company whose share price settled at RM64.6 billion.
With over 20 million shares traded today, Top Glove is trailing Public Bank Bhd, whose market cap stood at RM71.5 billion and Malayan Banking Bhd, which ranked first with a market cap at RM88.8 billion at midday.
The likes of Kenanga Investment Bank Bhd thinks Top Glove's share price can breach RM32 given its prospects over the next few quarters fuelled by sustained high average selling prices (ASPs).
"Contrary to our earlier assumptions, the industry ASPs have risen even further month- on-month in anticipation of tighter supply and supernormal demand due to the pandemic," said Kenanga IB analyst Raymond Choo Ping Khoon.
In a research note today, Choo said Top Glove's August ASP was 30 per cent higher month-on-month instead of its earlier guidance of 10 per cent higher.
'This prompts us to raise our Top Glove's financial years ending Aug 31, 2020 and 2021 net profit by 16 per cent and 120 per cent respectively.
"Our target price is raised from RM25 to RM32, based on 21.5 times calendar year 2021 estimated earnings per share of 152.3 sen from 36 times previously," he said.
Choo said Top Glove's merits included strong management, a resilient earnings base due to its pricing power and its sheer size in capacity in the industry and solid earnings growth averaging over 100 per cent for FY21 compared to a price earnings ratio of 15 times.
MIDF Research analyst Jessica Low Jze Tieng said Top Glove's earnings outlook remained positive as glove ASP would be higher in the fourth quarter (Q4) of 2020.
"Top Glove revises its ASP on monthly basis in line with prevailing market prices and rakes it higher percentage of spot sales with higher spot market price," she said in a report last Friday.
Low said new gloves production capacity of Top Glove was expected to grow 36 per cent from 73.8 billion pieces in the third-quarter of 2020 to 100.4 billion pieces in Q4 FY21.
"Hence, we revise our FY20/21/22F earnings by 97.3 per cent, 74.2 per cent and 54.1 per cent and expect Top Glove to post record profit in FY20."