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By Stella Goh

The demand of gloves and the Average Selling Price (ASP) soared due to the Covid-19 pandemic. As of 31 August 2020, the Q4 results net profit increased by 1642% from RM74.16mil to RM1.29bil, hit record high!

According to the board of directors, the company announced that it would distribute 8.5sen or RM691.8mil due to the company’s outstanding performance. The ex-date for dividend will be on 17 November 2020. The company’s annual dividend payout has increases by 9.33sen or 373% based on year-on-year basis to 11.83sen, and the total dividend payout ratio was at 51%!

According to the news, the demand for gloves has increased sharply due to the epidemic situation, especially in Asia, Western Europe and Eastern Europe, which have increased by 110%, 73% and 64% respectively. The demand for nitrile gloves has increased by 31% and the rubber gloves increased by 7% as well as the average price of gloves has also increased accordingly. Moreover, the Aspiron which acquired by Top Glove, also made a profit of RM139.9mil before tax. The company’s cash flow is also healthy, and has achieved good performance as it helped to reduce loans and save 33% of the interest cost per month.

According to the Executive Chairman Tan Sri Lim Wei Chai, he expects the demand for gloves will increase by 10% annually compared with the pre-epidemic level, which is mainly comes from medical and non-medical gloves. The plant in Vietnam is expected to start its production in October in this year, with 10 production lines initially producing 2.4bil of gloves.

The company will inject RM8bil of capital expenditure in order to increase 100bil of gloves from FY2021 to FY2026. RM8bil is said to be used for the production capacity, strengthening existing production facilities, gamma ray disinfection facilities, acquiring land for future expansion, industry 4.0 and improving the worker’s facilities. In addition to internal growth, Mr Lim also said it would also promote the growth through M&A opportunities.

He predicted the demand for gloves would increase by 20% and 25% in FY2020 and FY2021 (up to 15% before the outbreak of Covid-19). He predicted that 195 exporting countries would demand for their gloves, even if the vaccines were available. The monthly orders for gloves increased by 150% compared with those before the outbreak, and it took 40 to 400 days for delivery. With strong demand and higher average price, Mr Lim expected better performance in the next few quarters.

The demand for gloves is increasing, and Top Gloves will be better in the future. The company will continue to strive to produce more gloves!

 

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https://klse.i3investor.com/blogs/stockpick2u/2020-09-18-story-h1513551683-Top_Glove_s_Final_Quarter_Profit_Soared_16_4_times_Earnings_RM1_29bil_a.jsp