Analysts lowered their earnings projections on Top Glove Corp Bhd after taking into account the low average selling price (ASP) in the future.
MIDF Research through its note today, reduced its earnings forecast by 14.9% for the company’s financial year ended August 31, 2021 (FY21) and 30.9% for FY22.
The research firm explained that the projection was made after taking into account ASPs and lower profit margins reflecting changes in supply-demand dynamics.
MIDF also expects an increase in operating costs in the medium term due to higher spending to further improve Top Glove's environmental, social and governance (ESG) practices.
The firm expects Top Glove to record a profit after tax of RM9.03 billion for FY21 and RM2.47 billion for FY22.
Top Glove yesterday announced that the net profit recorded in the third quarter of FY21 (3QFY21) fell 29.03% to RM2.04 billion from RM2.87 billion recorded in the previous quarter.
The company's revenue declined 22.42% quarter -on -quarter to RM4.16 billion from RM5.37 billion while earnings per share (EPS) declined to 25.44 sen from 35.77 sen previously.
At 10.17am, Top Glove shares traded 1.03% or 5 sen higher at RM4.89.
While maintaining a ‘buy’ rating for Top Glove, MIDF lowered its target price (TP) on the counter to RM5.73 from RM8.29 previously.
“The dividend yield is estimated at 3.1% for FY22. Risks to our expectations include a prolonged ban on the shipment of Malaysian -made gloves to the US, tighter business competition and disruption to its operations, ”MIDF explained.
