KUALA LUMPUR (Dec 17): Hong Leong IB Research (HLIB) has maintained its “Hold” rating on Top Glove Corporate Bhd with an unchanged target price of RM4.56 and said the company’s 1Q15 core net profit of RM50.3 million came in within expectations, accounting for 24% and 25.8% of HLIB and consensus full year estimates, respectively.

In a note Wednesday, the research house said bottom line growth (+10.1% q-o-q) was underpinned by lower raw material prices and stronger US dollar.

However, the research house said this was partially offset by higher electricity and natural gas tariff as well as hampered cost pass-through from the intense competition in nitrile glove segment.

“Notwithstanding the competition, Top Glove will continue to expand its nitrile capacity to produce a more balanced product mix, in line with market trend. F29 will be operational by January 2015, increasing total installed capacity from 42 billion to 44.6 billion pieces per annum.

“Reiterate Hold on the back of unchanged target price of RM4.56, pegged to an unchanged multiple of 13.5x CY15 EPS based on 1SD below 3-year historical average P/E,” it said.