Top Glove’s fantastic performance

Koon Yew Yin 11 June 2020

After I read Top Glove’s fantastic performance, I re-produced it for your benefit. I believe it will help to pull up the share prices of the other glove manufacturers namely Confort, Supermax etc. As I said before “rising tide lifts all boats”. 

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The only reason for Comfort and Supermax to plunge in the last few days is that many investors are forced to sell to meet margin call. Forced selling is a vicious cycle. The more they sold, the more the share price would drop-thus be creating more selling. Moreover, big players are pushing the price down so that they can buy at cheaper prices. 

The safest strategy is to buy and wait patiently.  

KUALA LUMPUR, June 11 ― Top Glove Corporation Bhd’s net profit surged 365.92 per cent to an all-time high of RM347.90 million for the third quarter ended May 31, 2020 (Q3 2020) versus RM74.67 million in the same period last year.

Revenue jumped 42 per cent to RM1.69 billion from RM1.19 billion previously.

In a filing with Bursa Malaysia today, the world’s largest manufacturer of natural rubber gloves and surgical gloves attributed the group’s extraordinary performance to unparalleled growth in sales volume on the back of the Covid-19 pandemic.

“Monthly sales orders went up by some 180 per cent resulting in long lead times, which went up from 40 days to around 400 days, whereby orders placed now would only be delivered over a year later,” it said.

In a separate statement, Top Glove said the Q3 2020 performance is the most outstanding in the company’s 29-year history.

For the nine-month period ended May 31, 2020 (9M 2020), the company’s net profit was RM575.0 million versus RM290.51 million in the same period a year ago, while revenue stood at RM4.13 billion from RM3.61 billion previously.

Following the marked increase in glove demand from virtually every country in the world, Top Glove said its utilisation rate rose to above 95 per cent in Q3 2020 versus 85 per cent in the pre-Covid 19 period, resulting in greater efficiency and economies of scale.

“Additional capacity which came on stream in Q3 2020 enabled the group to meet demand growth, while upward revisions in average selling prices in line with prevailing market prices were also affected,” it said.

As at May 31, 2020, Top Glove’s financial position improved significantly, with a net cash position of RM279 million compared with net borrowings in Q2 2020. This has enabled the group to fund capital expenditure (CAPEX) requirements.

“To this end, Top Glove has earmarked RM3 billion for CAPEX to build 450 new lines, creating new capacity of 60 billion pieces of gloves from 2020 to 2026,” it said.

Moving forward, Top Glove said it would continue to expand its capacity to ensure it is well-positioned to fulfil global glove demand, which is expected to grow to 12-15 per cent per annum post-Covid-19 from a pre-Covid 19 level of 8-10 per cent per annum, backed by increased usage in both the medical and non-medical sectors, as well as heightened hygiene awareness. ― Bernama

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