KUALA LUMPUR (March 15) : Top Glove Corp Bhd shares rose on Friday after its net profit in the second quarter ended Feb 29, 2012 (2QFY12) jumped 110% to RM53.46 million from RM25.41 million a year ago, as higher sales, and cheaper raw materials boosted the rubber glove manufacturer’s bottom line.
At 9.51am, Top Glove gained 10 sen to RM5.02 with 293,700 shares traded.
Top Glove on Thursday had said its revenue for the quarter in review rose 13% to RM548.99 million against RM485.21 million previously.
Cumulative first half net profit climbed 38% to RM84.89 million from RM61.46 million a year earlier, while revenue was up 12% to RM 1.1 billion from RM976.72 million.
However, CIMB Research in a note March 16 cautioned that investors should not get excited about Top Glove’s interims as the outperformance came from wider margins arising from a 21.5% quarter-on-quarter (q-o-q) fall in natural rubber (NR) prices.
“This is unsustainable as NR prices went up 15.4% q-o-q in 2Q. Switch to Hartalega, our top glove pick,” it said.
The research house said the strong 1H would not be repeated as NR prices are on the uptrend again.
“We believe that Top Glove’s strong performance resulted mainly from the clawback of costs from the 21.5% decline in NR prices during 1Q as NR is purchased on a lagged basis.
“NR prices were already up 15.4% q-o-q in 2Q, which we believe will crimp 3Q margins and earnings,” it said.
At 9.51am, Top Glove gained 10 sen to RM5.02 with 293,700 shares traded.
Top Glove on Thursday had said its revenue for the quarter in review rose 13% to RM548.99 million against RM485.21 million previously.
Cumulative first half net profit climbed 38% to RM84.89 million from RM61.46 million a year earlier, while revenue was up 12% to RM 1.1 billion from RM976.72 million.
However, CIMB Research in a note March 16 cautioned that investors should not get excited about Top Glove’s interims as the outperformance came from wider margins arising from a 21.5% quarter-on-quarter (q-o-q) fall in natural rubber (NR) prices.
“This is unsustainable as NR prices went up 15.4% q-o-q in 2Q. Switch to Hartalega, our top glove pick,” it said.
The research house said the strong 1H would not be repeated as NR prices are on the uptrend again.
“We believe that Top Glove’s strong performance resulted mainly from the clawback of costs from the 21.5% decline in NR prices during 1Q as NR is purchased on a lagged basis.
“NR prices were already up 15.4% q-o-q in 2Q, which we believe will crimp 3Q margins and earnings,” it said.
