Thursday, July 05, 2007

Top Glove

I was looking through some of the comments posted by some research houses.

1. RHB: Following the earnings downgrade, our indicative fair value has been trimmed to rm9.56, based on unchanged 20x CY08 EPS. Maintain Outperform. ( CY08 estimated earnings is 134 million)

2. Alliance: Maintain BUY with a Target Price of RM10.30, based on PER21X EPS FY8/08 of 49sen. (FY08 estimated earnings is 147.1 million)

3. SJ Securities: We have fairly valued the Group at RM9.40 based on a forward PER of 17x. (Estimated earnings is 137 million)

4. OSK: Maintain BUY. Fair value remain unchanged at RM10.10 by using the composite PE of 21x over FY08 EPS of 46 sen and 4.4x P/B over FY08 BV/share of RM2.37. (Estimated FY08 earnings is 142.1 million).

I find the earnings estimates overly optimistic.

As it is, current fiscal year 2007 (3 quarters) earnings for Top Glove is around 76.115 million and current twelve month earnings is around 94.656 million. So one is perhaps looking at around 95-100 million in earnings for Top Glove for its fiscal 2007. However, look at the above estimates. Most of the research houses is estimating that the next fiscal year Top Glove would earn around 134 to 147 million! If assuming Top Glove does achieve 100 million in earnings for its fiscal year 2007, they are expecting Top Glove earnings to grow between 34% to 47% for its fy 2008.

Isn't this too optmistic?