Top Glove Expected To See Poor Performance In FY 2011

Top Glove Corporation Bhd, the world's largest rubber glove manufacturer, is expected to extend its poor performance going forward. In a Malaysia Equity Investment Research, OSK Research said it had downgraded its forecast for Top Glove's earnings'for financial year ending Aug 31, 2011 and 2012 by 11-22 per cent in line with its current poor performance and going forward.

It forecast, Top Glove's net profit in financial year 2011 to drop to RM196.2 million, compared with RM245.3 million in the financial year 2010.


"Top Gloves first quarter financial year 2011 result was below consensus and our expectations, making up 15 per cent and 14 per cent of the financial year 2011 forecasts," said OSK Rsearch.

Top Glove's net profit for the first quarter ended Nov 30, 2010 slipped to RM36.0 million from RM65.2 million in the same quarter of the previous year.

Revenue, however, was higher at RM491.5 million from RM472.3 million previously.

The lower-than-expected result was mainly due to the normalising demand for examination gloves, which led to only about 70 per cent to 80 per cent of the company's latex cost increase, OSK Research said.

OSK Research said the latex price will either pull back in the first quarter of calendar year 2011 or continue to go up until April/May 2011 when wintering season for rubber trees ends.

The latex price is now inching toward RM10.00 per kg level. Yesterday, it already reached RM9.58 per kg. OSK Research reduced the target price for Top Glove to RM5.74 from RM6.06 previously. For the latest updates PRESS CTR + D or visit Stock Market news Today

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