KUALA LUMPUR – CGS-CIMB remains neutral on news that Top Glove Corporation Bhd is planning to raise up to US$1 billion to US$2 billion (RM4.15 billion to RM8.3 billion) from a listing on the Hong Kong stock exchange, saying that key details are still scarce and the glove manufacturing giant has yet to confirm the news.
The stockbroking house reiterated its “Add” call without changing the target price of RM10 for the stock.
Reuters, citing two unnamed sources, reported that the world’s largest rubber glove maker, which is already listed in Malaysia and Singapore, had hired three banks – Citigroup C.N, China International Capital Corporation, and Union Bank of Switzerland (UBS) – to arrange a HK listing.
The global news service said Top Glove targeted to raise as much as US$2 billion from this HK listing.
“Our channel checks reveal that a potential HK listing would take up to six to nine months," CGS-CIMB said in a research note.
In a filing with Bursa Malaysia on Monday, Top Glove announced that the company was evaluating a dual primary listing on the Stock Exchange of Hong Kong Ltd (HKEX).
It also said the evaluation process was still at the preliminary stages and the structure of the proposed HKEX listing had not been finalised.
Assuming that US$1 billion to US$2 billion was raised, CGS-CIMB said there was potentially a 5-10% dilution to its earnings per share projection for financial years 2021-2023.
"Note that we only peg Top Glove to its current five-year mean despite the current favourable operating environment and robust earnings prospects, as we acknowledge that the financial year 2021 forecast could potentially be a one-off exceptional year.
"We continue to like Top Glove, as it is the key beneficiary of higher glove demand owing to Covid-19 given its position as the world’s largest glove maker," it added.
At 3:39pm the counter was up 38 sen at RM9.47. – Bernama, October 14, 2020
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