Faculty of Business & Management

BKK2213 Financial Management 1

Title : Group ASSIGNMEN

Submission Date : Week 11
Lecturer :
Academic Honesty Sahadat
Policy Hossain
Statement:

STUDENT NAME STUDENT ID SIGNATURE

I hereby attest that the contents of these attachments are my/our own work.
Referenced work, articles, arts, programs, papers or part thereof are
acknowledged at the end of this paper. This includes data excerpted from the
Internet, other private networks, other people’s disk or computer systems.

for office use only

DATE : ________________
TIME : ________________
LECTURER’S COMMENTS / GRADE RECEIVER’S NAME :
________________
Contents
Background of companies ............................................................................................................... 3

Analysis of the Financial Statements (Axiata Malaysia) ................................................................. 4

Liquidity ratios ................................................................................................................................ 4

Asset Management ratios ........................................................................................................... 5

Leverage ratios ............................................................................................................................ 6

Profitability ratios ........................................................................................................................ 8

Valuation ratios ......................................................................................................................... 10

Analysis of the Financial Statements (Top gloves Malaysia) ....................................................... 11

Liquidity ratios .............................................................................................................................. 11

Asset Management ratios ......................................................................................................... 12

Leverage ratios .......................................................................................................................... 13

Profitability ratios ...................................................................................................................... 14

Valuation ratios ......................................................................................................................... 15

Changes in Capital Structure ......................................................................................................... 16

Evaluate the performance from the creditor’s point of view ....................................................... 16

Recommendation .......................................................................................................................... 17

References ..................................................................................................................................... 18

Appendix........................................................................................................................................ 18

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Background of companies
Axiata
Axiata Group Berhad is a Malaysia-based telecommunications company, which manages
Axiata Group. The Group has controlling interests in six mobile operators under the brand
names of 'Celcom' in Malaysia, 'XL' in Indonesia, 'Dialog' in Sri Lanka, 'Robi' in
Bangladesh, 'Smart' in Cambodia and 'Ncell' in Nepal, as well as minority interests in 'Idea'
in India and 'M1' in Singapore. Axiata Group's products and services include prepaid and
postpaid mobile services, television broadcasting and cable television services, Internet
services, enterprise solutions, digital marketing and e-commerce services, mobile
advertising and machine-to-machine (M2M) solutions, among others. Via 'edotco', its
infrastructure company, the Group also delivers telecommunications infrastructure
services and operates telecommunications towers regionally. Other regular undertakings of
the Group include investment holding and the distribution of communication device and
related products.

Top Glove Corporation Bhd

Top glove is the world’s largest manufacturer of gloves, with operations spanning across
Malaysia, Thailand, China, US and Europe. Listed on the Malaysian Bourse in March 2001
and on the Mainboard of the Singapore Exchange in June 2016, it has demonstrated steady
growth with a compound annual growth rate (CAGR) of 22.1% for revenue and 20.9% for
profit after tax over the past 17 years. It is also a component stock of the MSCI Global
Standard Index, FTSE Bursa Malaysia ("FBM") Mid 70 Index, FBM Top 100 Index, FBM
Emas Index, FBM Emas Syariah Index, FTSE Bursa Malaysia Hijrah Shariah Index and
FTSE4Good Bursa Malaysia Index.The Top Glove success story began a quarter of a
century ago in 1991, as a local business enterprise with a single factory and 1 glove
production line. Today, it has captured 25% of the world market share and offers a
comprehensive product range, fulfilling demand in both the healthcare and non-healthcare
segment. Top Glove serves a network of over 2,000 satisfied customers in more than 195
countries, and these numbers are still growing.

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Analysis of the Financial Statements (Axiata Malaysia)

Liquidity ratios
 Current Ratio

The current ratio is mainly used to give an idea of the company's ability to pay back its
short-term liabilities with its short-term assets.

Axiata Group Bhd's Current Ratio for the fiscal year that ended in Dec. 2017

Current Ratio =Total Current Assets /Total Current Liabilities

=2894.35/4486.89 =0.65

Axiata Group Bhd has a current ratio of 0.65. It indicates that the company may have
difficulty meeting its current obligations. Low values, however, do not indicate a critical
problem. If Axiata Group Bhd has good long-term prospects, it may be able to borrow
against those prospects to meet current obligations. Current Ratio is ranked lower than
80% of the 414 Companies in the Global industry.

 Quick asset Ratio

The quick ratio measures a company's ability to meet its short-term obligations with its
most liquid assets. For this reason, the ratio excludes inventories from current assets.

Axiata Group Bhd's Quick Ratio for the fiscal year that ended in Dec. 2017 is calculated
as

Quick Ratio=(Total Current Assets-Total Inventories)/Total Current Liabilities

=(2894.35-42.74)/4486.89=0.64

Axiata Group Bhd has a quick ratio of 0.64. It indicates that the company cannotcurrently
fully pay back its current liabilities.Quick Ratio is ranked lower than 77% of the 414
Companies. The quick ratio is more conservative than the Current Ratio because it excludes
inventories from current assets. The ratio derives its name presumably from the fact that

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assets such as cash and marketable securities are quick sources of cash. Inventories
generally take time to be converted into cash, and if they have to be sold quickly, the
company may have to accept a lower price than book value of these inventories. As a result,
they are justifiably excluded from assets that are ready sources of immediate cash.

 Cash Ratio

The cash ratio goes a step further and examines the ability of the firm to settle short-term liabilities
using only cash and cash equivalents such as marketable securities. In other words, the cash ratio
indicates the extent to which current liabilities can be paid through very liquid assets.

Cash Ratio = (Cash +Marketable Securities) / Current Liabilities.

$1,670.86 Million/ 4,486.90 million= 0.372.

Cash +Marketable Securities cover 0.37% from Current Liabilities.

Asset Management ratios

Asset management ratios also known as efficiency ratios indicate the efficiency of the use of assets
in generating sales. There are five (05) more important efficiency ratios: average collection period,
inventory turnover, cash conversion cycle, fixed assets turnover and total assets turnover.

 Average Collection Period

The average collection period is the average number of days between 1) the date that a
credit sale is made, and 2) the date that the money is received from the customer. The
average collection period is also referred to as the days' sales in accounts receivable.
The average collection period can be calculated as follows: 365 days in a year divided by
the accounts receivable turnover ratio. Assuming that a company has an accounts
receivable turnover ratio of 10 times per year, the average collection period is 36.5 days
(365 divided by 10).
Average Collection Period = Receivables / (Annual credit Sales/365)
= 472.02/ (0/360) = 0
 Inventory / Stock Turnover

The inventory turnover indicates whether inventory levels are reasonable in relation to cost of
goods sold. Inventory Turnover ratio is calculated as follows:

Inventory Turnover (A: Dec. 2017 )=Cost of Goods Sold /Total Inventories

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=Cost of Goods Sold (A: Dec. 2017 )/ ((Total Inventories (A: Dec. 2016 )+Total Inventories (A:
Dec. 2017 ))/2 )

=1119.84/ ((39.20+42.743)/2 )=1119.84/40.97 =27.33

 Cash Conversion Cycle

Cash Conversion Cycle (CCC) measures how fast a company can convert cash on hand
into even more cash on hand. This metric looks at the amount of time needed to sell
inventory, the amount of time needed to collect receivables and the length of time the
company is afforded to pay its bills without incurring penalties.Cash Conversion Cycle is
one of several measures of management effectiveness.

Axiata Group Bhd's Cash Conversion Cycle for the fiscal year that ended in Dec. 2017 is
calculated as

Cash Conversion Cycle=Days Sales Outstanding+ Days Inventory-Days Payable

=28.79+13.35-217.47=-175.33

 Total Asset Turnover

Asset Turnover measures how quickly a company turns over its asset through sales. It is
calculated as Revenue divided by Total Assets.

Axiata Group Bhd's Asset Turnover for the fiscal year that ended in Dec. 2017 is calculated as

Asset Turnover =Sales/Average Total Assets

=Revenue (A: Dec. 2017 )/( (Total Assets (A: Dec. 2016 )+Total Assets (A: Dec. 2017 )) / 2 )

=5984.64/( (15873.51+17145.55)/ 2 ) =5984.64/16509.53=0.36

Leverage ratios
 Debt Ratio

The debt ratio indicates the proportion of assets financed through both short-term and longterm
debt. This ratio is computed as total debt, which is the sum of short-term and long-term debt, as a
percentage of total assets. A higher ration indicates higher leverage. A higher ration also means

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lower debt capacity in that the ability for the firm to raise funds through more debt is lower due to
already high debt levels.

Axiata Group Bhd's Debt-to-Asset Ratio for the fiscal year that ended in Dec. 2017 is
calculated as

Debt-to-Asset =Total Debt/Total Assets

=(Current Portion of Long-Term Debt+Long-Term Debt & Capital Lease Obligation)/Total

Assets

=(1116.85+3628.77)/17145.55 =0.28

 Debt – Equity Ratio

The debt to equity ratio (D/E) is also widely used as an indication of the level of financial leverage.
While there are several ways of computing this ratio, the most useful version is to express long
term debt as percent of total equity. Thus it focuses only on the long-term financing, both debt and
equity, and it is meaningful when we want to examine the long-term leverage. Total equity includes
both preferred equity and common equity. A higher debt equity ratio indicates greater leverage
and potentially higher financial risk.

Axiata Group Bhd's Debt to Equity Ratio for the fiscal year that ended in Dec. 2017 is
calculated as

Debt to Equity =Total Debt/Total Stockholders Equity

=(Current Portion of Long-Term Debt+Long-Term Debt & Capital Lease Obligation)/Total

Stockholders Equity

=(1116.85+3628.77)/6065.26=0.78

A high debt to equity ratio generally means that a company has been aggressive in financing its
growth with debt.

 Interest Cover

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on
outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest
Expense.

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Axiata Group Bhd's Interest Coverage for the fiscal year that ended in Dec. 2017 is
calculated as

Here, for the fiscal year that ended in Dec. 2017, Axiata Group Bhd's Interest Expense was
$-187 Mil. Its Operating Income was $890 Mil. And its Long-Term Debt & Capital Lease
Obligation was $3,629 Mil.

Interest Coverage=-1*Operating Income /Interest Expense

=-1*890.23/-186.52 =4.77

Profitability ratios
 Gross Profit Margin

The gross profit margin (GPM) shows the firm`s profit margin after deducting costs of goods
sold but before deducting operating expenses, interest expenses, and taxes. This ratio is also
known as gross profit ratio.

Axiata Group Bhd's Gross Margin for the fiscal year that ended in Dec. 2017 is calculated as

Gross Margin % =Gross Profit /Revenue

=4864.8/5984.6

=(Revenue - Cost of Goods Sold)/Revenue

=(5984.64 - 1119.84)/5984.64 =81.29 %.

Gross Margin % is ranked higher than 96% of the 385 Companies in the Global industry.

 Operating Profit margin

The operating profit margin (OPM) shows the firm`s profit margin after deducting cost of goods
sold and operating expenses but before interest expenses and taxes. The operating profit is the
earnings before interest and taxes or EBIT as a percent of sales.

Axiata Group Bhd's Operating Margin for the fiscal year that ended in Dec. 2017 is calculated
as

Operating Margin %=Operating Income /Revenue

=890.23/5984.64=14.88 %.

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Operating Margin of Axiata % is ranked higher than 60% of the 415 Companies.

 Net Profit Margin

This is the bottom line profitability, which most analysts and investors pay attention to on a
regular basis. The net profit margin (NPM) shows the firm`s profit margin after all the costs and
expenses. It is the profit available for distribution to common shareholders a percentage of sales.

Axiata Group Bhd's Net Margin for the fiscal year that ended in Dec. 2017 is calculated as

Net Margin=Net Income/Revenue

=223.04/5984.64=3.73 %.

Net Margin % is ranked lower than 62% of the 415 Companies in the Global industry.

 Return on assets

The return on assets (ROA) measures the return earned on total assets employed in the business.
We define the return as the net income available for distribution to shareholders plus the interest
expenses paid to debt holders. This return is divided by the average total assets, which represents
the simple average of the total assets at the beginning and ending balance sheets.

Axiata Group Bhd's annualized Return on Assets (ROA) for the fiscal year that ended in Dec.
2017 is calculated as:

ROA=Net Income /( (Total Assets +Total Assets)/ 2 )

=223.04/( (15873.51+17145.55)/ 2 )

=223.04/16509.53

=1.35 %

 Return on Equity

The return on equity (ROE) measures the return earned on the capital provided by the common
stockholders (Equity holders). It is the net income as a percent of the average common equity,
where the averge common equity is the simple average of the common equity at the beginning and
ending balance sheets. The net income is the income available for distribution to ordinary
shareholders after deducting any preferred dividends.

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ROE=Net Income attributable to Common Stockholders /( (Total Stockholders Equity (A: Dec.
2016 ) +Total Stockholders Equity)/ 2 )

=223.04/( (5290.34+6065.2)/ 2 )

=223.04/5677.80=3.93 %

Valuation ratios
 Price / Earnings ratio (P/E)

This is the most widely used valuation ratio. It indicates the market price of a share in terms of
earnings. It is the rupee amount an investor has to pay for each rupee of earnings made by the firm
for the ordinary shareholder.

Price to Owner Earnings (TTM) Ratio=Share Price/Owner Earnings per Share.

=1.08 /-0.06= 18.

 Price / Book Value Ratio (P/BV)

Price / Book Value is also a regularly reported and watched valuation ratio. It indicates the market
price of a share in terms of the book value of equity. It is the rupee amount an investor has to pay
for each rupee of book value.

Book Value Per Share =(Total Stockholders Equity-Preferred Stock)/Shares Outstanding (EOP)

=(5,043-0)/9,050 =0.56

Price to Tangible Book =Share Price/Tangible Book per Share

=1.08 /0.56 =1.92

 Price / Cash Flow Ratio

The price/cash flow indicates the price of a share in terms of the cash flow per share. It shows
the rupee amount an investor has to pay for each rupee of cash flow generated.

Price-to-Free-Cash-Flow Ratio =Share Price/Free Cash Flow per Share (TTM)

=1.08/-0.008

 Dividend Yield (DY)

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 The dividend yield indicates the dividend income as a percentage of the investment. It is calculated
as the common dividend per share dividend by the market price per share.

Dividend Yield %=Most Recent Full Year Dividend/Current Share Price

=0.01/1.08 =1.09 %

Axiata Group Bhd has posted a net profit of RM24.73mil in its fourth quarter ended Dec 31, 2017
compared with a net loss of RM309.50mil previously on the back of strong growth from the
group’s key mobile operating entities in Indonesia, Malaysia and Bangladesh.

Revenue, meanwhile, rose to RM6.26bil from RM5.79bil a year earlier, bolstered by continued
traction in the data revenue segment.

In a filing with Bursa Malaysia yesterday, the telecommunications group said earnings before
interest, taxes, depreciation and amortisation (Ebitda) increased by 17.5% quarter-on-quarter,
driven by a strong increase in revenue growth and a cost-optimisation drive across the group.

For financial year 2017 ended Dec 31, Axiata’s net profit grew to RM909.48mil from
RM504.25mil in the previous corresponding period, while revenue increased to RM24.40bil from
RM21.57bil a year earlier.

Axiata has also declared a higher full-year total dividend of 8.5 sen per ordinary share, including
the interim dividend of five sen per ordinary share paid in 2017. Total dividend for 2017 translates
to a 64% dividend payout ratio compared to 50% in 2016.

Analysis of the Financial Statements (Top gloves Malaysia)

Liquidity ratios
 Current Ratio

The current ratio is mainly used to give an idea of the company's ability to pay back its
short-term liabilities with its short-term assets.

Current Ratio =Total Current Assets /Total Current Liabilities

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=292.23/185.83=1.57

 Quick asset Ratio

The quick ratio measures a company's ability to meet its short-term obligations with its
most liquid assets. For this reason, the ratio excludes inventories from current assets.

Quick Ratio=(Total Current Assets-Total Inventories)/Total Current Liabilities

=(292.23-73.74)/185.83 = 1.18

 Cash Ratio

The cash ratio goes a step further and examines the ability of the firm to settle short-term liabilities
using only cash and cash equivalents such as marketable securities. In other words, the cash ratio
indicates the extent to which current liabilities can be paid through very liquid assets.

Cash Ratio = (Cash +Marketable Securities) / Current Liabilities.

104.39/185.83=0.56

Asset Management ratios

Asset management ratios also known as efficiency ratios indicate the efficiency of the use of assets
in generating sales. There are five (05) more important efficiency ratios: average collection period,
inventory turnover, cash conversion cycle, fixed assets turnover and total assets turnover.

 Inventory / Stock Turnover

The inventory turnover indicates whether inventory levels are reasonable in relation to cost of
goods sold. Inventory Turnover ratio is calculated as follows:

Inventory Turnover =Cost of Goods Sold/Total Inventories

=Cost of Goods Sold / ( (Total Inventories +Total Inventories )/2 )

=654.80/ ((65.56+73.74)/2 )= 9.40

 Cash Conversion Cycle

Cash Conversion Cycle (CCC) measures how fast a company can convert cash on hand
into even more cash on hand. This metric looks at the amount of time needed to sell

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inventory, the amount of time needed to collect receivables and the length of time the
company is afforded to pay its bills without incurring penalties.Cash Conversion Cycle is
one of several measures of management effectiveness.

Cash Conversion Cycle=Days Sales Outstanding+ Days Inventory-Days Payable

=43.63 +38.83 -30.4= 52.06

 Total Asset Turnover

Asset Turnover measures how quickly a company turns over its asset through sales. It is
calculated as Revenue divided by Total Assets.

Asset Turnover =Sales/Average Total Assets

=796.16/( (658.67+685.71)/ 2 )=796.1/672.19=1.18

Leverage ratios
 Debt Ratio

The debt ratio indicates the proportion of assets financed through both short-term and longterm
debt. This ratio is computed as total debt, which is the sum of short-term and long-term debt, as a
percentage of total assets.

Debt-to-Asset =Total Debt/Total Assets

=(Current Portion of Long-Term Debt+Long-Term Debt & Capital Lease Obligation)/Total

Assets

= 87.9/ 683.6=771.5

 Debt – Equity Ratio

The debt to equity ratio (D/E) is also widely used as an indication of the level of financial leverage.
While there are several ways of computing this ratio, the most useful version is to express long
term debt as percent of total equity

Debt to Equity =Total Debt/Total Stockholders Equity

(73.48+14.42)/467.83=0.19

 Interest Cover

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Interest Coverage is a ratio that determines how easily a company can pay interest expenses on
outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest
Expense.

Interest Coverage=-1*Operating Income /Interest Expense

The company did not have earnings to cover the interest expense.

Profitability ratios
 Gross Profit Margin

The gross profit margin (GPM) shows the firm`s profit margin after deducting costs of goods sold
but before deducting operating expenses, interest expenses, and taxes. This ratio is also known as
gross profit ratio.

Gross Margin % =Gross Profit /Revenue

=(Revenue - Cost of Goods Sold)/Revenue

=(796.164409155 - 654.800794021)/796.164409155 =17.76 %

Gross Margin % is ranked higher than 96% of the 385 Companies in the Global industry.

 Operating Profit margin

The operating profit margin (OPM) shows the firm`s profit margin after deducting cost of goods
sold and operating expenses but before interest expenses and taxes. The operating profit is the
earnings before interest and taxes or EBIT as a percent of sales.

Operating Margin %=Operating Income /Revenue

=74.6564689397/796.164409155=9.38 %

 Net Profit Margin

This is the bottom line profitability, which most analysts and investors pay attention to on a regular
basis. The net profit margin (NPM) shows the firm`s profit margin after all the costs and expenses.
It is the profit available for distribution to common shareholders a percentage of sales.

Net Margin=Net Income/Revenue

=76.75/796.16=9.64 %

Net Margin % is ranked lower than 62% of the 415 Companies in the Global industry.

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 Return on assets

The return on assets (ROA) measures the return earned on total assets employed in the business.
We define the return as the net income available for distribution to shareholders plus the interest
expenses paid to debt holders. This return is divided by the average total assets, which represents
the simple average of the total assets at the beginning and ending balance sheets.

ROA=Net Income /( (Total Assets +Total Assets)/ 2 )

=76.73 /( (658.67+685.71)/ 2 )=76.73/672.19=11.42 %

 Return on Equity

The return on equity (ROE) measures the return earned on the capital provided by the common
stockholders (Equity holders). It is the net income as a percent of the average common equity,
where the averge common equity is the simple average of the common equity at the beginning and
ending balance sheets. The net income is the income available for distribution to ordinary
shareholders after deducting any preferred dividends.

ROE=Net Income attributable to Common Stockholders /( (Total Stockholders Equity (A: Dec.
2016 ) +Total Stockholders Equity)/ 2 )

=76.73 /( (452.02+467.83)/ 2 ) =76.73/459.93 =16.68 %

Valuation ratios
 Price / Earnings ratio (P/E)

This is the most widely used valuation ratio. It indicates the market price of a share in terms of
earnings. It is the rupee amount an investor has to pay for each rupee of earnings made by the firm
for the ordinary shareholder.

Price to Owner Earnings (TTM) Ratio=Share Price/Owner Earnings per Share.

=10.32 /0.21 =49.14

 Price / Book Value Ratio (P/BV)

Price / Book Value is also a regularly reported and watched valuation ratio. It indicates the market
price of a share in terms of the book value of equity. It is the rupee amount an investor has to pay
for each rupee of book value.

Book Value Per Share =(Total Stockholders Equity-Preferred Stock)/Shares Outstanding (EOP)

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=(467.8 -0.0)/313.5= 1.49

The price/cash flow indicates the price of a share in terms of the cash flow per share. It shows the
rupee amount an investor has to pay for each rupee of cash flow generated.

Price-to-Free-Cash-Flow Ratio =Share Price/Free Cash Flow per Share (TTM)

 Dividend Yield (DY)

The dividend yield indicates the dividend income as a percentage of the investment. It is calculated
as the common dividend per share dividend by the market price per share.

Dividend Yield %=Most Recent Full Year Dividend/Current Share Price

=0.152 /10.32= 1.47 %

Top Glove Corporation Bhd posted a strong set of earnings in the first quarter ended Nov 30, 2017
(1QFY18), underpinned by a record revenue, riding on the strong nitrile glove sales.

The world's largest glove maker announced on Tuesday its earnings rose 43.8% to RM105.44mil
from RM73.31mil from a year aog.

Its revenue increased 19.4% to a record RM938.11mil from RM785.58mil a year ago. Earnings per
share rose to 8.41 sen from 5.85 sen.

Top Glove said the revenue was 4% higher than the Q4 FY17. Profit before tax increased by 35.9%
to RM122mil from a year ago and 23.1% from Q4 FY17. Sales volume rose 17% on-year and 8%
on-quarter. Nitrile glove sales volume grew the most, compared with a year ago and on-quarter.

When compared with 4QFY17, the average natural rubber latex price eased 10% to RM5 a kg while
the average nitrile latex price was US$1.01 a kg, up marginally by 3%.

However, raw material prices were on the uptrend compared with 1QFY17, with average natural
rubber latex and nitrile latex prices higher by 12.1% and 3% respectively.

Changes in Capital Structure

During the past five years there has been no change in the capital structure of both companies.

Evaluate the performance from the creditor’s point of view

Financial analysts expect the market capitalization of both companies to rise as demand for glove
products in emerging markets rises. Market awaits next move after telco and two other major

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shareholders decide not to sell stakes in M1. IT was estimated that Axiata Group Bhd would have
made RM1.8bil from the expected sale of its stake in Singapore telco player M1, enhancing its
earnings in financial year 2018.

Analysts had estimated that the M1 stake sale, together the expected sale of Axiata stake in India’s
Idea Cellular, could have raised a total of RM7bil for the company. However, Axiata, along with
two other major shareholders of M1 Ltd, said on Tuesday that they had decided not to sell their
stakes in M1. The other two major shareholders, which had embarked on the strategic review of
their shareholdings in M1 back in March 2017, are Keppel Telecommunications and Transportation
Ltd and Singapore Press Holdings Ltd. The three shareholders collectively own over 60% in M1 –
Axiata owns 28.39%, Keppel T&T 19.23% and Singapore Press Holdings 13.38%.

The research house says the unsuccessful sale is likely due to low market valuations attached to
M1, which registered a 21% year-on-year drop in second quarter 2017 net profit as a result of lower
average revenue per user, amid higher depreciation and subscriber acquisition costs. While
consensus expects M1’s net profit to decline by 7% in financial year 2017 (FY17) and 10% in
FY18, it says the telco is still expected to remain profitable.

The research house says M1’s FY17 enterprise value/earnings before interest, tax, depreciation and
amortisation of 7.7 times is higher than Axiata’s 6 times but below competitors Singapore
Telecommunication’s 14 times and Star Hub’s 8.6 times. We think the presently high valuation
could stay in the second half of 2018 (2H18) on our expectations for capacity expansion-led
earnings growth. We expect aggregate core net profit of the three glove stocks under our coverage
to expand +19.1% in 2018, triple our research universe’s +6.8% core earnings growth forecast.
Additionally, we believe the consolidation of Aspion’s earnings from 3QFY8/18 (March-May
2018) would see Top Glove’searnings base surpass that of Hartalega Holdings Bhd in 4QFY8/18
and propel further rerating.

Recommendation
Investment in the shares of the two companies is profitable. I think that my friend should invest
some money in the share of top gloves company. I expect aggregate core net profit of the three
glove stocks under our coverage to expand +19.1% in 2018, triple our research universe’s +6.8%
core earnings growth forecast. Additionally, we believe the consolidation of Aspion’s earnings
from 3QFY8/18 (March-May 2018) would see Top Glove’searnings base surpass that of Hartalega
Holdings Bhd in 4QFY8/18 and propel further rerating.

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References

https://m.axiata.com/investor-relations/2017/ar/governance.html

http://www.topglove.com/App_ClientFile/7ff8cb3f-fbf6-42e7-81da
6db6a0ab2ef4/Assets/anual_report/TopGloveAR2017.pdf

https://www.gurufocus.com/term/netmargin/AXXTF/Net-Margin-
Percentage/Axiata%20Group%20Bhd

https://www.gurufocus.com/term/yield/TGLVY/Dividend-Yield-
Percentage/Top%20Glove%20Corp%20Bhd

Appendix

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Top gloves

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