Top Glove: Propsoed Secondary Listing On The Main Board Of SGX

Stock Code : 7113

WHAT’S NEW

Top Glove announced that it would undertake a proposed secondary listing of and quotation of its entire issued and paid-up share capital on the Main Board of the SGX. The proposed scheme will entail the secondary listing and quotation of all the existing ordinary shares in Top Glove, which are listed and quoted on the Main Market of Bursa Malaysia, on the Main Board of the SGX by way of introduction. Bursa Securities will remain as the primary stock exchange on which the Top Glove Shares are listed.

COMMENT:

• No dilution impact to existing shareholders as the exercise will not involve any issuance of new Top Glove shares. Instead, Top Glove intends to explore with its substantial shareholders the possibility of selling a portion of their shareholdings in the company amounting to approximately S$20m (or approximately RM59.4m) in value in the open market of the SGX to create liquidity. While the

quantum of reduction in shareholdings of the relevant substantial shareholders’ could not be quantified at this juncture, we are positive on this latest development as the exercise should help enhance liquidity of Top Glove shares and would allow the company to tap into the new platform for potential future fund raising activities.

• Maintain HOLD with a lower target price of RM5.47, based on 16x FY17 PE (from 18x previously). While we do not discount the possibility of the share price reacting positively to the latest news flow, we believe that current valuations at +1SD above its historical mean PE) are already fair and have largely reflected most of the positive near-term sector catalysts. Furthermore, we note that the stock could remain susceptible to: a) downward moderation in upcoming 2QFY16 earnings (due to the recovery in nitrile and latex raw material prices and reversal in the US dollar strength), and b) potential valuation derating (back to its historical mean PE (14x 2017F PE) in the event of a sustained strengthening of the ringgit to below RM4.00/US$. Entry price: RM5.20.

source: UOBKayHian - 15/03/2016

TOP GLOVE CORPORATION BERHAD

The principal activities of the Company are investment holding and the provision of management services. The principal activities of the subsidiaries are manufacture and trading of gloves and property investment