Topglove has revised its target dividend payout ratio to 40 per cent from its net profit, up from 30 per cent in previous years.

TOP Glove Corp Bhd (7113) , the world's largest glove manufacturer, saw its net profit for the second quarter to February 2010 double to RM72.3 million year-on-year.

This was attributed to the new sales secured especially from emerging countries and cost-saving measures implemented at all factories.

The quarterly net profit was also higher than the RM70.7 million net profit recorded in the first six months of 2009.

Its sales revenue rose 47 per cent to RM509.9 million during the quarter under review, Top Glove said in a statement.

Top Glove remains optimistic of its future outlook despite ongoing challenges such as the rise in raw material cost and weakening US dollar.

The company has revised its target dividend payout ratio to 40 per cent from its net profit, up from 30 per cent in previous years.

OSK Research Sdn Bhd said the interim results had been expected, given the continuous strong demand for natural rubber gloves.

The firm has maintained its "buy" call and target price at RM15.15.

It is valuing Top Glove at a premium to the industry average due to its leading market share of 22 per cent.

OSK Research also likes the company for having the right product mix (80 per cent natural rubber gloves which is the basic entry for examination gloves) and targeting the right market (developing countries).

"Traditionally, these countries such as Brazil have proven to give significant sales boost to the rubber glove companies once their government implemented the compulsory usage of gloves in their healthcare sector."

The firm said the main risk for Top Glove is when supply catches up with demand. 

When that happens, the rubber glove manufacturers will no longer be able to sell their gloves at a premium price as well as pass on the entire cost rise to their customers in a timely manner.

Top Glove's group net profit for the first six months of 2010 was RM138.8 million, up 96 per cent from the previous first half.

Total revenue for the six months increased 34 per cent to RM982.2 million from RM732.6 million a year ago.

Top Glove has a large customer base spread over more than 180 countries and with a diversified range of products.